Carrier Global Corporation · NYSE:CARR
Carrier Global — Bank of America Global Industrials Conference 2023
24 slides from Carrier Global's conference presentation, Mar 21, 2023
Slide 1: Carrier Global Corporation
Carrier Global Corporation Patrick Goris, SVP & CFO Bank of America Global Industrials Conference March 21, 2023
Slide 2: Cautionary Statement
2 CARRIER 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 expectati
Slide 3: The Carrier Investment Thesis
3 CARRIER THE CARRIER INVESTMENT THESIS Iconic Outsized Growing Productivity Portfolio and brands with digitally- market with and capital leading enabled secular simplification deployment market aftermarket tailwinds focus optionality positions opportunity Compelling investment opportunity
Slide 4: Carrier Overview
4 CARRIER CARRIER OVERVIEW 2022 KEY DATA POINTS WHAT WE DO Fire & Service & $20.4B ~52,000 Security parts Asia Pacific SALES EMPLOYEES HVAC 14.2% 160+ SALES Americas SALES SALES ADJ. OP. MARGIN* % COUNTRIES MIX BY REGION $1.4B ~$250B Refrigeration EMEA FREE CASH FLOW* TAM1 New equipment DIGITAL AND
Slide 5: Segment Overview
5 CARRIER SEGMENT OVERVIEW HVAC Fire & Security Refrigeration $13.4B 15.2% $3.6B 15.2% $3.9B 12.8% NET SALES ADJ. OP. MARGIN* % NET SALES ADJ. OP. MARGIN* % NET SALES ADJ. OP. MARGIN* % WHAT WE DO WHAT WE DO WHAT WE DO • Heating, ventilation, and cooling • Building and home safety / security • Trans
Slide 6: Value Creation Framework
6 CARRIER VALUE CREATION FRAMEWORK Above- Strong market Margin Tax Capital revenue + expansion + efficiency + free cash + deployment flow growth Re-invest in profitable growth Acquisitions / 6-8% organic >50 ~23% ~100% net share-count revenue growth bps/year ongoing ETR1 of net income reduction2 Dou
Slide 7: Secular Trends Drive Sustained Growth
7 CARRIER SECULAR TRENDS DRIVE SUSTAINED GROWTH HEALTH AND WELLNESS SUSTAINABILITY DIGITALIZATION GROWING MIDDLE CLASS Wellness economy ($T)¹ Annual infrastructure investments for Global spend on digital Middle-class population global net zero by 2050 transformation ($T)³ (% total)⁴ ($T)² CAGR CAGR
Slide 8: Aftermarket Focus Fuels Growth
8 CARRIER AFTERMARKET FOCUS FUELS GROWTH… Attractive business • Gross margins 10+ points higher than HSD- LDD ~$7B+ Carrier average Large growth potential vs. TAM ~$5B • Massive current installed base ~$4.5B • ~$2.5B growth in ~5 years Proven playbook already delivering results High single to low do
Slide 9: Productivity and Simplification
9 CARRIER PRODUCTIVITY AND SIMPLIFICATION R&D FOCUS AREAS Selling Supply Chain • Material substitution • Low-cost sourcing G&A • Dual sourcing of critical components Factory 2-3% TARGETED COST • Footprint optimization Factory CATEGORIES • Automation • Carrier Excellence G&A • Organizational streamli
Slide 10: Portfolio Optimization and Capital Deployment
10 CARRIER PORTFOLIO OPTIMIZATION AND 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 11: Capital Deployment Priorities
11 CARRIER CAPITAL DEPLOYMENT PRIORITIES KEY MESSAGES • P&L investments funded by productivity Organic growth • Capex ~1.75% of sales • Primary metric: FCF yield > WACC + risk premium Inorganic growth by years 3-5 • Sustainable through the cycle Growing dividend • ~30% payout ratio • ~$2.2B authoriz
Slide 12: ESG Recognition
12 CARRIER ESG RECOGNITION Ranked No. 8 of Named to 100 Most Sustainable Companies Carbon Clean200 Barron’s, 2023 Corporate Knights, 2022 Achieved Achieved Prime ESG Corporate Rating ESG Leader Rating ISS ESG, 2022 MSCI ESG Ratings, 2022 Among Named an America’s Most Responsible Companies ESG Indust
Slide 13: The Carrier Investment Thesis
13 CARRIER THE CARRIER INVESTMENT THESIS 1 Iconic brands with leading market positions 2 Growing market with secular tailwinds 3 Outsized digitally-enabled aftermarket opportunity 4 Productivity and simplification focus 5 Portfolio and capital deployment optionality Global leader in healthy, safe, s
Slide 14: Appendix
14 CARRIER APPENDIX …and plenty of opportunity ahead
Slide 15: Use and Definitions of Non-GAAP Financial Measures
15 CARRIER 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
Slide 16: Carrier 2022 vs 2021 Sales Reconciliation
16 CARRIER CARRIER 2022 VS 2021 SALES RECONCILIATION (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 12% (2)% 8% —% 18% Refrigeration —% (6)% —% —% (6)% Fire & Security 5% (2)% (38)% —% (35)% Consolidated 8% (3)
Slide 17: 2022 Adjusted Operating Profit Reconciliation
17 CARRIER 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
Slide 18: 2021 Adjusted Operating Profit Reconciliation
18 CARRIER 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
Slide 19: 2022 EPS Reconciliation
19 CARRIER 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 $
Slide 20: 2021 EPS Reconciliation
20 CARRIER 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 $
Slide 21: Net Debt Reconciliation
21 CARRIER 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,
Slide 22: Net Sales Excluding Chubb Reconciliation
22 CARRIER NET SALES EXCLUDING CHUBB RECONCILIATION (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 C
Slide 23: Free Cash Flow Reconciliation
23 CARRIER 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 13
Slide 24: Amortization of Acquired Intangibles
24 CARRIER 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 —
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