Carrier Global Corporation · NYSE:CARR
Carrier Global — Q4 2023 Earnings Presentation
33 slides from Carrier Global's earnings presentation, Feb 6, 2024
Slide 1: Q4 2023 Earnings Conference Call
Q4 2023 EARNINGS CONFERENCE CALL February 6, 2024
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. These forward-looking statements are intended to provide management's current expectations or pla
Slide 3: Q4 2023 Summary
Q4 2023 Summary $5,102M Highlights Sales Organic* +0% Y/Y Commercial HVAC and Refrigeration sales up HSD organically Adjusted Operating $557M Profit* Weaker than expected North America residential HVAC +8% Y/Y sales as distributors reduced inventory levels Third consecutive year of double-digit afte
Slide 4: 2023 – Strong Financial Performance
2023 – Strong Financial Performance Strong 2023 Adjusted EPS* Performance 2/7/23 10/26/23 FY 2023 Guidance Guidance Results +17% $2.73 ~$2.70 $2.55 – $2.65 $2.50 – $2.60 Sales ~$22B Over $22B $22.1B $2.34 ~14% ~14.5% 14.5% Adjusted Includes ~50bps Includes ~50bps Includes ~50bps Op. Margin* negative
Slide 5: Differentiated Shareholder Returns
Differentiated Shareholder Returns Total Shareholder Return (TSR) Adjusted Earnings Per Share Carrier ~350% $2.73 S&P Industrial Peers S&P 500 $1.66 +18% CAGR ~110% ~100% 2020 Spin 2023 2020 Adj. EPS 2023 Adj. EPS Adjusted Operating Margins A New Carrier ✓ Mission clarity focused on 14.5% ✓ Growth o
Slide 6: Global Leader in Intelligent Climate and Energy Solutions
Global Leader in Intelligent Climate and Energy Solutions Differentiated Sustainability Sustainability Commitments on New Products Outcomes Track Automated Logic WebCTRL enhanced European commercial heat pumps up ~25% On-track for 1 Gigaton commitment, over weather forecasting add-on in 2023 270M me
Slide 7: Digitally-Enabled Lifecycle Solutions
Digitally-Enabled Lifecycle Solutions Aftermarket Sales Results Aftermarket Highlights Double-digit aftermarket growth in Q4 +12% +10% +11% Third consecutive year of double-digit aftermarket growth ~$5.5B ~$5B Significant Abound wins closed in Q4 with major global scale customers $4.5B Connected ~30
Slide 8: Viessmann Climate Solutions: Transformational Combination
Viessmann Climate Solutions: Transformational Combination Day 1 Viessmann Value Creation Thomas Heim leads Carrier EMEA residential & light commercial HVAC 2024: forecasting MSD sales growth (from approximately $4.2B in 2023), with high-teens adjusted EBITDA* margins Iconic brands sold through an un
Slide 9: Business Exits Tracking to Plan
Business Exits Tracking to Plan Gross Transaction Type Highlights Proceeds Security Sale ~$5.0B Definitive agreements signed for Security and Commercial Refrigeration with strong progress on Industrial Fire Commercial Refrigeration Sale ~$0.8B ~$4.5B of total net proceeds from already executed agree
Slide 10: 2024 Guidance
2024 Guidance 2024 Guidance** Highlights / Assumptions ~$26.5B Full-year of Viessmann Climate Solutions Organic* up MSD Sales FX 0% Acquisitions +20% Security and Commercial Refrigeration contributing Divestitures (5%) six months Mid-single digit organic growth Adjusted Operating Margin* 15.0 - 15.5
Slide 11: Q4 2023 Results
Q4 2023 Results Q4 2023 Q4 2022 Y/Y Sales $5,102M $5,105M 0% Organic sales* 0% Acquisitions / Divestitures, net (1%) FX 1% Adjusted operating profit* $557M $516M 8% Adjusted operating margin* 10.9% 10.1% 80 bps Adjusted effective tax rate* 10.5% 24.3% Adjusted EPS* $0.53 $0.40 Free cash flow* $829M
Slide 12: Q4 2023 HVAC Results
Q4 2023 HVAC Results Q4 2023 Y/Y Highlights North America Residential HVAC sales down High- Sales $3,293M (1%) Teens Organic sales* (1%) Acquisitions / divestitures, net (1%) North America Light Commercial HVAC sales up ~20% FX 1% Commercial HVAC sales up HSD Adjusted operating profit* $397M 25% Ano
Slide 13: Q4 2023 Refrigeration Results
Q4 2023 Refrigeration Results Q4 2023 Y/Y Highlights As expected, returned to year-over-year organic growth Sales $1,024M 9% Organic sales* 6% Container sales up ~60% FX 3% Global Truck & Trailer sales up LSD Adjusted operating profit* $108M (5%) Sensitech up HSD Adjusted operating margin* 10.5% (16
Slide 14: Q4 2023 Fire & Security Results
Q4 2023 Fire & Security Results Q4 2023 Y/Y Highlights Industrial Fire up high-teens Sales $909M (5%) Organic sales* (1%) Commercial and Residential Fire down LSD FX 1% Deconsolidation of KFI (5%) Security down DD versus +40% prior year Adjusted operating profit* $129M (7%) Strong price/cost and pro
Slide 15: Organic Order Trends
Organic Order Trends Backlog Trend* Orders by Key Business Line Q4 2023 Orders by Geography Q4 2023 (Y/Y) (Y/Y) All Other Backlog* C-HVAC Backlog* HVAC** 0% - 5% Americas** (20%) - (15%) Residential & Light Commercial ~(10%) Commercial HVAC** ~5% EMEA ~10% Refrigeration ~(20%) Transport Refrigeratio
Slide 16: 2024 Guidance
2024 Guidance Total Company** Segment Sales Organic* up MSD HVAC ~$26.5B Reported up ~35% Organic* up ~MSD Sales FX 0% Acquisitions up 20% Organic* up MSD Refrigeration Divestitures (5%) Reported down Mid-Teens Organic* up MSD Fire & Security Reported down Low Double-Digits Adjusted Operating Margin
Slide 17: 2024 Adjusted EPS Guidance Bridge
2024 Adjusted EPS Guidance Bridge ~$0.35 $2.85 $2.73 ($0.07) ($0.05) (~$0.10) $2.55 Net Viessmann $2.23 Earnings ~$0.60 Interest (~$0.45) Share dilution (~$0.20) Net Impact (~$0.07) Net Exits (Half Year) Earnings divested ~($0.20) Interest savings $0.15 Net Impact (~$0.05) 2023 Adj EPS 2024 Growth N
Slide 18: Summary
Summary Strong 2023 financial results Projecting another strong year in 2024 Portfolio transformation well underway Path to ~2x net leverage by end of 2024 Performing while transforming 17 *See appendix for additional information regarding non-GAAP measures
Slide 19: Appendix
APPENDIX
Slide 20: 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 21: Additional Items
Additional Items 2024 Guidance (Includes Viessmann Climate Solutions) Shares outstanding (diluted) ~915M Corporate expenses / eliminations ~$275M Adjusted interest expense, net* $525M - $550M Adjusted effective tax rate* ~23% Capital expenditures ~$550M Depreciation & amortization ~$850M 20 *See app
Slide 22: Carrier Q4 2023 vs 2022 Sales Reconciliation
Carrier Q4 2023 vs 2022 Sales Reconciliation Y/Y % Three Months Ended December 31, 2023 Compared with Three Months Ended December 31, 2022 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC (1)% 1% (1)% —% (1)% Ref
Slide 23: 2023 Adjusted Operating Profit Reconciliation
2023 Adjusted Operating Profit Reconciliation (Unaudited) Three Months Ended December 31, 2023 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 3,293 $ 1,024 $ 909 $ (124) $ — $ 5,102 Segment operating profit $ 335 $ 101 $ 109 $ 2
Slide 24: 2022 Adjusted Operating Profit Reconciliation
2022 Adjusted Operating Profit Reconciliation (Unaudited) Three Months Ended December 31, 2022 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 3,316 $ 943 $ 960 $ (114) $ — $ 5,105 Segment operating profit $ 241 $ 113 $ 136 $ (30
Slide 25: 2023 Adjusted Operating Profit Reconciliation
2023 Adjusted Operating Profit Reconciliation (Unaudited) Year Ended December 31, 2023 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 15,139 $ 3,818 $ 3,633 $ (492) $ — $ 22,098 Segment operating profit $ 2,275 $ 428 $ 209 $ (27
Slide 26: 2022 Adjusted Operating Profit Reconciliation
2022 Adjusted Operating Profit Reconciliation (Unaudited) Year Ended December 31, 2022 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 13,408 $ 3,883 $ 3,570 $ (440) $ — $ 20,421 Segment operating profit $ 2,610 $ 483 $ 1,630 $ (
Slide 27: Q4 2023 EPS Reconciliation
Q4 2023 EPS Reconciliation (Unaudited) Three Months Ended December 31, 2023 Year Ended December 31, 2023 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,102 $ — $ 5,102 $ 22,098 $ — $ 22,098 Operating profit $ 607 (50) a $ 557 $ 2,296
Slide 28: Q4 2022 EPS Reconciliation
Q4 2022 EPS Reconciliation (Unaudited) Three Months Ended December 31, 2022 Year Ended December 31, 2022 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,105 $ — $ 5,105 $ 20,421 $ — $ 20,421 Operating profit $ 433 83 a $ 516 $ 4,515 (
Slide 29: 2020 Adjusted Operating Profit Reconciliation
2020 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 Restructuring (
Slide 30: 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 31: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY (In millions) 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 Net cash flows provided by operating activities $ (202) $ 32 $ 790 $ 1,123 $ 1,743 $ 120 $ 384 $ 1,041 $ 1,062 $ 2,607 Less: Capital expenditures 56 66 91 140 353 7
Slide 32: Net Debt Reconciliation
Net Debt Reconciliation (Unaudited) As of December 31, (In millions) 2023 2022 Long-term debt $ 14,242 $ 8,702 Current portion of long-term debt 51 140 Less: Cash and cash equivalents 10,015 3,520 Net debt $ 4,278 $ 5,322 31 See “Use and Definitions of Non-GAAP Financial Measures” for additional inf
Slide 33: Amortization of Acquired Intangibles
Amortization of Acquired Intangibles (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY (In millions) 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 HVAC $ 4 $ 4 $ 16 $ 22 $ 46 $ 37 $ 36 $ 35 $ 35 $ 143 Fire & Security 1 1 1 1 4 2 2 2 — 6 Total Carrier 5 5 17 23 50 39 38 37 35 149 Associated tax effect (1