Carrier Global Corporation
CEO : Mr. David L. Gitlin
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 15.0% YoY | -40.3% | -64.7% | 2023-07-27 |
Patrick Goris says,
Record Sales and Growth
- Reported sales of $6 billion, up 15% YoY
- 6% organic growth
- 9% growth from acquisitions and divestitures
Adjusted Operating Profit and Margin
- Q2 adjusted operating profit of $964 million, up 12% YoY
- Adjusted operating margin of 16.1%, including a 100 basis point headwind from the consolidation of Toshiba Carrier
- Adjusted operating margin would have expanded about 60 basis points, excluding the impact from TCC consolidation
EPS and Free Cash Flow
- Adjusted EPS of $0.79, ahead of expectations
- Free cash flow generation of $310 million, up significantly compared to last year
- Positioned to deliver approximately $1.9 billion of free cash flow for the full year
HVAC Segment Performance
- Excellent performance with organic sales up 9%
- Adjusted operating profit up 29% YoY
- Adjusted operating margin up 70 basis points despite a 200 basis point headwind from TCC consolidation
- 2023 full year HVAC segment margins expected to be closer to 16%
Toshiba Carrier Acquisition
- Acquired Toshiba Carrier for $900 million with outstanding performance
- Double-digit operating margins achieved, projecting $200 million of cost synergies
- Using their experience and playbook for the Viessmann integration
David Gitlin says,
Organic Sales Growth and Financial Performance
- Q2 organic sales growth of 6% with HVAC and Fire & Security up 9%.
- Strong double-digit growth in light commercial and commercial HVAC, global truck and trailer, controls, and aftermarket.
- Adjusted operating profit and adjusted EPS up 12% and 13%, respectively.
- Free cash flow of over $300 million.
Full Year Guidance
- Raising full year guidance for organic growth, adjusted operating margins, and adjusted EPS due to strong first half performance.
Sustainability and Healthy Buildings
- Leaning into secular trends around sustainability and healthy buildings.
- Seeing traction from sustainability-driven growth initiatives.
- Residential heat pump sales in North America up double-digits year-to-date.
- Over 20% growth in commercial heat pump sales in Europe.
- Electric transport units doubled in Europe.
- Healthy buildings pipeline up over 2x to $1.6 billion, driven by K-12 orders in the U.S.
Digitally-Enabled Aftermarket Solutions
- Double-digit aftermarket growth in Q2 and on track to deliver double-digit growth for the year.
- Expanding capabilities and deployment of Abound and Lynx, key digital platforms.
- Increasing part sales, attachment rates, and overall coverage across the portfolio.
- Deploying connected devices to increase recurring and subscription-based revenues.
- Embedding AI and generative AI capabilities into Abound.
Portfolio Transformation
- Viessmann Climate Solutions performing well, with first half sales up 20% YoY.
- Viessmann Climate Solutions on track to deliver €4 billion in sales and €700 million in EBITDA this year.
- Confident in €200 million of cost synergies.
- Tracking sequencing for Fire & Security and commercial refrigeration exits.
Q & A sessions,
Viessmann growth and German legislation
- Confident in growth regardless of German legislation
- Clear transition to heat pumps in Germany
- 40% growth in heat pumps without proposed legislation
- 17 countries in Europe have announced bans on fossil fuels
- 19 countries have heat pump incentives
- 12 European countries have bans on fossil fuel boilers for newbuilds
Cultural integration and cost synergies in TCC
- Cultural integration with multi-country representation
- Focus on value creation in TCC
- Expected cost synergies of at least $200 million
- Tremendous synergies on revenue side from Toshiba and Viessmann Climate Solutions
- Allow Viessmann Climate Solutions to operate independently while seeking areas of combined value creation
Inventory levels and sales outlook
- Closed 2Q with balanced inventory levels
- Furnaces down mid-single digits, splits higher
- Expect destocking of splits in second half
- Sales for full year expected to be flat with volume down high-single digits
- Residential new construction down better than expected, probably closer to 10%
Divestitures and future prospects for Fire & Security and commercial refrigeration
- Fire & Security and commercial refrigeration will be divestitures
- Targeting to have first two divestitures in the market before end of September
- Industrial fire divestiture to follow a month later
- Options being weighed for commercial and residential fire businesses
- Confident that businesses in the hands of strategic or sponsor owners will create value
Update on KFI process and Chapter 11 discharge
- First two divestitures planned for KFI to be in the market a bit after Labor Day
- Commercial and residential fire businesses still considering different forms of divestiture, spin, or split
- Progressing well and appropriately through Chapter 11 process
- Anticipate sale process for KFI to begin in the next couple of months
- Anticipate Chapter 11 discharge within the next year
No bad stock 