Carrier Global Corporation · NYSE:CARR
Carrier Global — Q4 2022 Earnings Presentation
32 slides from Carrier Global's earnings presentation, Feb 7, 2023
Slide 1: Q4 2022 Earnings Conference Call
Q4 2022 EARNINGS CONFERENCE CALL February 7, 2023
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 2022 Summary
Q4 2022 Summary $5,105M Highlights Sales Organic* +5% Y/Y Double digit sales growth in commercial HVAC, light commercial HVAC, controls and global truck/trailer Adjusted Operating Profit* $516M Continued double-digit aftermarket growth Container and commercial refrigeration sales decline Price/cost
Slide 4: 2022 – Strong Financial Performance
2022 – Strong Financial Performance Strong 2022 Adjusted EPS* Performance 2/8/22 10/27/22 FY 2022 Guidance Guidance** Results** +~15% excl. Chubb Sales ~$20B ~$20.4B $20.4B $2.25 – $2.35 $2.30 – $2.35 $2.34 Organic* up HSD Organic* up HSD Organic* up 8% $2.20 – $2.30 $2.27 ~($0.24) Adjusted Up 60 bp
Slide 5: Sustainability and Healthy Building Leadership
Sustainability and Healthy Building Leadership • NA residential heat pump sales up ESG Highlights and Recognitions: 35% in Q4 • European commercial heat pump ✓ Committed to set greenhouse gas emissions reduction targets Sustainability sales up 30% in Q4 in line with a Science Based Targets initiativ
Slide 6: Digitally-Enabled Aftermarket Solutions
Digitally-Enabled Aftermarket Solutions Aftermarket Sales Aftermarket Highlights Double-digit aftermarket growth +HSD- LDD Over 1B square feet monitored by Abound +10% ~$7B+ +11% Continued customer interest and adoption of Lynx platform ~$5B $4.5B ~70K chillers under long-term agreements; expect ano
Slide 7: Portfolio Optimization and Disciplined Capital Deployment
Portfolio Optimization and Disciplined Capital Deployment Portfolio Actions Improved Financial Strength M&A Priorities Significant Net Debt Reduction Acquisitions ✓ Enhance sustainability leadership ~$10B • Toshiba Carrier ~$7B ~$5B ✓ Bolster building and cold chain • Giwee ecosystems Apr-20 2021 20
Slide 8: 2023 Guidance
2023 Guidance 2023 Guidance** Key Focus Areas ~$22B • Accelerate differentiated technical / digital Sales Organic* up LSD - MSD FX down ~1% offerings M&A up ~6% • Double-digit aftermarket growth Adjusted Operating Margin* ~14% Includes ~50 bps negative impact from TCC • Sustainability and ESG leader
Slide 9: Q4 2022 Results
Q4 2022 Results Q4 2022 Q4 2021 Y/Y Sales $5,105M $5,133M (1%) Organic sales* 5% Acquisitions / divestitures, net (2%) FX (4%) Adjusted operating profit* $516M $521M (1%) Adjusted operating margin* 10.1% 10.2% (10 bps) Adjusted effective tax rate* 24.3% 13.6% Adjusted EPS* $0.40 $0.44 Free cash flow
Slide 10: Q4 2022 HVAC Results
Q4 2022 HVAC Results Q4 2022 Y/Y Highlights Sales $3,316M 21% LSD sales growth in NA residential HVAC Organic sales* 9% Acquisitions / divestitures, net 16% Light commercial grew over 40% FX (4%) Commercial HVAC aftermarket and controls up double-digits Y/Y Adjusted operating profit* $317M 29% Adjus
Slide 11: Q4 2022 Refrigeration Results
Q4 2022 Refrigeration Results Q4 2022 Y/Y Highlights Sales $943M (14%) North America and Europe Truck/Trailer sales up double-digits Organic sales* (7%) FX (7%) Global Truck/Trailer orders up ~30% Y/Y Adjusted operating profit* $114M (9%) Container and Commercial Refrigeration sales and orders down
Slide 12: Q4 2022 Fire & Security Results
Q4 2022 Fire & Security Results Q4 2022 Y/Y Highlights Sales $960M (33%) Access Solutions sales growth over 40% Organic sales* 6% Acquisitions / divestitures, net (36%) FX (3%) Double digit sales growth in the Americas Sales excluding Chubb** 7% Commercial Fire Americas sales growth over 30% Adjuste
Slide 13: Organic Order Trends
Organic Order Trends Orders by Segment and Total Backlog* Orders by Key Business Line Q4 2022 (Y/Y) Backlog* Orders* HVAC** ~(15%) Residential & Light Commercial ~(30%) Commercial HVAC** >10% Global Comfort Solutions (20%)-(15%) Refrigeration ~(10%) Transport Refrigeration Flat Commercial Refrigerat
Slide 14: 2023 Guidance
2023 Guidance Total Company** Segment Sales ~$22B Organic* up MSD HVAC Reported up LDD Sales Organic* up LSD - MSD FX down ~1% M&A up ~6% Organic* flattish Refrigeration Reported flattish Adjusted Operating Margin* ~14% Fire & Security Organic* up LSD Includes ~50 bps negative impact from TCC Report
Slide 15: 2023 Adjusted EPS Guidance Bridge
2023 Adjusted EPS* Guidance Bridge $0.02 $0.02 $0.05 $0.18 ($0.02) ($0.04) $2.55 $2.34 2022 Adjusted EPS Operational Acquisitions, net of FX Interest expense, net Tax rate Share count 2023 Adjusted EPS integration expense (guidance midpoint) *See appendix for additional information regarding non-GAA
Slide 16: Capital Allocation
Capital Allocation 2022 ending cash balance: ~$3.5B; ~$1.9B 2023 FCF* guide Organic growth ✓ Capital expenditures expected to be ~$400M in 2023 Inorganic growth ✓ Active and growing M&A pipeline; portfolio optimization to continue Growing dividend ✓ Increased dividend payment by over 20% to about 30
Slide 17: Summary
Summary • Strong 2022 performance • Targeting another strong year in 2023 despite an uncertain environment • Balance sheet and portfolio optimization allows for further capital deployment opportunities Global leader in 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 2023 guidance Shares outstanding (diluted) ~840M Corporate expenses / eliminations ~$200M Adjusted interest expense, net* ~$225M Adjusted effective tax rate* ~23% Non-service pension income / (expense) ~$0M Capital expenditures ~$400M Depreciation & amortization ~$500M *See appendix
Slide 21: Q4 2022 Adjusted EPS Bridge
Q4 2022 Adjusted EPS* Bridge $0.07 $0.02 ($0.06) ~($0.07) $0.44 $0.40 2021 Adjusted EPS Divestitures Operational Tax rate Share count 2022 Adjusted EPS *See appendix for additional information regarding non-GAAP measures 20
Slide 22: Carrier Q4 2022 vs 2021 Sales Reconciliation
Carrier Q4 2022 vs 2021 Sales Reconciliation Y/Y % Three Months Ended December 31, 2022 Compared with Three Months Ended December 31, 2021 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 9% (4)% 16% —% 21% Refri
Slide 23: 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 24: 2021 Adjusted Operating Profit Reconciliation
2021 Adjusted Operating Profit Reconciliation (Unaudited) Three Months Ended December 31, 2021 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 2,730 $ 1,090 $ 1,431 $ (118) $ — $ 5,133 Segment operating profit $ 227 $ 107 $ 182 $
Slide 25: 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 26: 2021 Adjusted Operating Profit Reconciliation
2021 Adjusted Operating Profit Reconciliation (Unaudited) Year Ended December 31, 2021 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 11,390 $ 4,127 $ 5,515 $ (419) $ — $ 20,613 Segment operating profit $ 1,738 $ 476 $ 662 $ (96
Slide 27: 2022 EPS Reconciliation
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 (1,6
Slide 28: 2021 EPS Reconciliation
2021 EPS Reconciliation (Unaudited) Three Months Ended December 31, 2021 Year Ended December 31, 2021 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,133 $ — $ 5,133 $ 20,613 $ — $ 20,613 Operating profit $ 463 58 a $ 521 $ 2,645 174
Slide 29: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY (In millions) 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 Net cash flows provided by operating activities $ 184 $ 561 $ 579 $ 913 $ 2,237 $ (202) $ 32 $ 790 $ 1,123 $ 1,743 Less: Capital expenditures 53 79 74 138 344 56 66
Slide 30: Net Debt Reconciliation
Net Debt Reconciliation (Unaudited) As of December 31, (In millions) 2022 2021 2020(1) Long-term debt $ 8,702 $ 9,513 $ 10,036 Current portion of long-term debt 140 183 191 Less: Cash and cash equivalents 3,520 2,987 3,115 Net debt $ 5,322 $ 6,709 $ 7,112 (1) On April 1 and April 2, 2020, Carrier re
Slide 31: Net Sales Excluding Chubb Reconciliation
Net Sales Excluding Chubb Reconciliation Y/Y % (Unaudited) Three Months Ended Year Ended December 31, December 31, 2021 2021 Fire and Fire and Carrier Security Carrier Security Net Sales: Reported $ 5,133 $ 1,431 $ 20,613 $ 5,515 Chubb (536) (536) (2,158) (2,158) Net sales excluding impact of Chubb
Slide 32: Amortization of Acquired Intangibles
Amortization of Acquired Intangibles (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY (In millions) 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 HVAC $ — $ 4 $ 7 $ 4 $ 15 $ 4 $ 4 $ 16 $ 22 $ 46 Fire & Security — — — — — 1 1 1 1 4 Total Carrier — 4 7 4 15 5 5 17 23 50 Associated tax effect — (1) (2) (1