07/25/2024 | Press release | Distributed by Public on 07/25/2024 04:59
Current Guidance |
Prior Guidance
|
|
Sales
|
~$25.5B
Organic* up MSD
FX (1%)
Acquisitions +16%
Divestitures (5%)
|
~$26B
Organic* up MSD
FX (0%)
Acquisitions +18%
Divestitures (6%)
|
Adjusted Operating Margin*
|
~15.5%
|
~15.5%
|
Adjusted EPS*
|
$2.80 - $2.90
|
$2.80 - $2.90
|
Free Cash Flow*
|
~$0.4B
Includes ~$2B of expected tax payments on the gains from the announced business exits, restructuring, and transaction-related costs
|
~$0.4B
Includes ~$2B of expected tax payments on the gains from the announced business exits, restructuring, and transaction-related costs
|
(Unaudited) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(In millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||
Net sales | ||||||||
Product sales | $ | 6,004 | $ | 5,355 | $ | 11,546 | $ | 10,041 |
Service sales | 685 | 637 | 1,325 | 1,224 | ||||
Total Net sales | 6,689 | 5,992 | 12,871 | 11,265 | ||||
Costs and expenses | ||||||||
Cost of products sold | (4,296) | (3,769) | (8,294) | (7,227) | ||||
Cost of services sold | (515) | (468) | (994) | (905) | ||||
Research and development | (187) | (151) | (411) | (290) | ||||
Selling, general and administrative | (975) | (784) | (1,960) | (1,505) | ||||
Total Costs and expenses | (5,973) | (5,172) | (11,659) | (9,927) | ||||
Equity method investment net earnings | 90 | 52 | 121 | 96 | ||||
Other income (expense), net | 2,885 | (383) | 2,858 | (390) | ||||
Operating profit | 3,691 | 489 | 4,191 | 1,044 | ||||
Non-service pension (expense) benefit | (1) | - | (1) | - | ||||
Interest (expense) income, net | (166) | (67) | (331) | (113) | ||||
Income from operations before income taxes | 3,524 | 422 | 3,859 | 931 | ||||
Income tax (expense) benefit | (1,155) | (189) | (1,201) | (311) | ||||
Net income from operations | 2,369 | 233 | 2,658 | 620 | ||||
Less: Non-controlling interest in subsidiaries' earnings from operations | 32 | 34 | 52 | 48 | ||||
Net income attributable to common shareowners | $ | 2,337 | $ | 199 | $ | 2,606 | $ | 572 |
Earnings per share | ||||||||
Basic | $ | 2.59 | $ | 0.24 | $ | 2.90 | $ | 0.68 |
Diluted | $ | 2.55 | $ | 0.23 | $ | 2.85 | $ | 0.67 |
Weighted-average number of shares outstanding | ||||||||
Basic | 902.4 | 836.0 | 900.2 | 835.5 | ||||
Diluted | 915.3 | 850.9 | 913.6 | 851.5 |
(Unaudited) | ||||
(In millions) | June 30, 2024 | December 31, 2023 | ||
Assets | ||||
Cash and cash equivalents | $ | 2,919 | $ | 10,015 |
Accounts receivable, net | 3,187 | 2,481 | ||
Contract assets | 333 | 306 | ||
Inventories, net | 3,045 | 2,217 | ||
Assets held for sale | 1,601 | 3,314 | ||
Other current assets | 488 | 447 | ||
Total current assets | 11,573 | 18,780 | ||
Future income tax benefits | 939 | 739 | ||
Fixed assets, net | 3,117 | 2,293 | ||
Operating lease right-of-use assets | 635 | 491 | ||
Intangible assets, net | 7,048 | 1,028 | ||
Goodwill | 15,245 | 7,989 | ||
Pension and post-retirement assets | 81 | 32 | ||
Equity method investments | 1,221 | 1,140 | ||
Other assets | 565 | 330 | ||
Total Assets | $ | 40,424 | $ | 32,822 |
Liabilities and Equity | ||||
Accounts payable | $ | 3,181 | $ | 2,742 |
Accrued liabilities | 4,262 | 2,811 | ||
Contract liabilities | 493 | 425 | ||
Liabilities held for sale | 687 | 862 | ||
Current portion of long-term debt | 2,052 | 51 | ||
Total current liabilities | 10,675 | 6,891 | ||
Long-term debt | 11,270 | 14,242 | ||
Future pension and post-retirement obligations | 247 | 155 | ||
Future income tax obligations | 2,184 | 535 | ||
Operating lease liabilities | 501 | 391 | ||
Other long-term liabilities | 1,468 | 1,603 | ||
Total Liabilities | 26,345 | 23,817 | ||
Equity | ||||
Common stock | 9 | 9 | ||
Treasury stock | (1,972) | (1,972) | ||
Additional paid-in capital | 8,563 | 5,535 | ||
Retained earnings | 8,854 | 6,591 | ||
Accumulated other comprehensive loss | (1,686) | (1,486) | ||
Non-controlling interest | 311 | 328 | ||
Total Equity | 14,079 | 9,005 | ||
Total Liabilities and Equity | $ | 40,424 | $ | 32,822 |
(Unaudited) | ||||
Six Months Ended June 30, | ||||
(In millions) | 2024 | 2023 | ||
Operating Activities | ||||
Net income from operations | $ | 2,658 | $ | 620 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||||
Depreciation and amortization | 625 | 273 | ||
Deferred income tax provision | (338) | (110) | ||
Stock-based compensation costs | 48 | 40 | ||
Equity method investment net earnings | (121) | (96) | ||
(Gain) loss on sale of investments / deconsolidation | (2,881) | 276 | ||
Changes in operating assets and liabilities | ||||
Accounts receivable, net | (286) | (406) | ||
Contract assets | (62) | (40) | ||
Inventories, net | (2) | (59) | ||
Other current assets | (52) | (105) | ||
Accounts payable and accrued liabilities | 1,118 | 120 | ||
Contract liabilities | (19) | 37 | ||
Distributions from equity method investments | 12 | 10 | ||
Other operating activities, net | - | (56) | ||
Net cash flows provided by (used in) operating activities | 700 | 504 | ||
Investing Activities | ||||
Capital expenditures | (215) | (144) | ||
Investment in businesses, net of cash acquired | (10,779) | (56) | ||
Dispositions of businesses | 4,877 | 36 | ||
Settlement of derivative contracts, net | (185) | (14) | ||
Kidde-Fenwal, Inc. deconsolidation | - | (134) | ||
Other investing activities, net | 29 | 16 | ||
Net cash flows provided by (used in) investing activities | (6,273) | (296) | ||
Financing Activities | ||||
Increase (decrease) in short-term borrowings, net | - | (19) | ||
Issuance of long-term debt | 2,555 | 6 | ||
Repayment of long-term debt | (3,542) | (12) | ||
Repurchases of common stock | - | (62) | ||
Dividends paid on common stock | (330) | (309) | ||
Dividends paid to non-controlling interest | (67) | (41) | ||
Other financing activities, net | (22) | (69) | ||
Net cash flows provided by (used in) financing activities | (1,406) | (506) | ||
Effect of foreign exchange rate changes on cash and cash equivalents | (82) | (13) | ||
Net increase (decrease) in cash and cash equivalents and restricted cash, including cash classified in current assets held for sale | (7,061) | (311) | ||
Less: Change in cash balances classified as assets held for sale | 34 | - | ||
Net increase (decrease) in cash and cash equivalents and restricted cash | (7,095) | (311) | ||
Cash, cash equivalents and restricted cash, beginning of period | 10,017 | 3,527 | ||
Cash, cash equivalents and restricted cash, end of period | 2,922 | 3,216 | ||
Less: restricted cash | 3 | 7 | ||
Cash and cash equivalents, end of period | $ | 2,919 | $ | 3,209 |
(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(In millions) | Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | ||||||||
Net sales | ||||||||||||||||
HVAC | $ | 4,970 | $ | 4,970 | $ | 4,216 | $ | 4,216 | $ | 9,511 | $ | 9,511 | $ | 7,838 | $ | 7,838 |
Refrigeration | 973 | 973 | 972 | 972 | 1,857 | 1,857 | 1,870 | 1,870 | ||||||||
Fire & Security | 871 | 871 | 932 | 932 | 1,758 | 1,758 | 1,801 | 1,801 | ||||||||
Segment sales | 6,814 | 6,814 | 6,120 | 6,120 | 13,126 | 13,126 | 11,509 | 11,509 | ||||||||
Eliminations and other | (125) | (125) | (128) | (128) | (255) | (255) | (244) | (244) | ||||||||
Net sales | $ | 6,689 | $ | 6,689 | $ | 5,992 | $ | 5,992 | $ | 12,871 | $ | 12,871 | $ | 11,265 | $ | 11,265 |
Operating profit | ||||||||||||||||
HVAC | $ | 687 | $ | 991 | $ | 742 | $ | 791 | $ | 1,116 | $ | 1,711 | $ | 1,177 | $ | 1,281 |
Refrigeration | 113 | 118 | 112 | 119 | 210 | 217 | 220 | 230 | ||||||||
Fire & Security | 3,001 | 155 | (157) | 137 | 3,154 | 319 | (64) | 245 | ||||||||
Segment operating profit | 3,801 | 1,264 | 697 | 1,047 | 4,480 | 2,247 | 1,333 | 1,756 | ||||||||
Eliminations and other | (23) | (20) | (146) | (35) | (98) | (54) | (184) | (71) | ||||||||
General corporate expenses | (87) | (31) | (62) | (48) | (191) | (53) | (105) | (79) | ||||||||
Operating profit | $ | 3,691 | $ | 1,213 | $ | 489 | $ | 964 | $ | 4,191 | $ | 2,140 | $ | 1,044 | $ | 1,606 |
Operating margin | ||||||||||||||||
HVAC | 13.8 | % | 19.9 | % | 17.6 | % | 18.8 | % | 11.7 | % | 18.0 | % | 15.0 | % | 16.3 | % |
Refrigeration | 11.6 | % | 12.1 | % | 11.5 | % | 12.2 | % | 11.3 | % | 11.7 | % | 11.8 | % | 12.3 | % |
Fire & Security | 344.5 | % | 17.8 | % | (16.8) | % | 14.7 | % | 179.4 | % | 18.1 | % | (3.6) | % | 13.6 | % |
Total Carrier | 55.2 | % | 18.1 | % | 8.2 | % | 16.1 | % | 32.6 | % | 16.6 | % | 9.3 | % | 14.3 | % |
(Unaudited) | ||||||||||||
Three Months Ended June 30, 2024 | ||||||||||||
(In millions) | HVAC | Refrigeration | Fire & Security | Eliminations and Other | General Corporate Expenses | Carrier | ||||||
Net sales | $ | 4,970 | $ | 973 | $ | 871 | $ | (125) | $ | - | $ | 6,689 |
Segment operating profit | $ | 687 | $ | 113 | $ | 3,001 | $ | (23) | $ | (87) | $ | 3,691 |
Reported operating margin | 13.8 | % | 11.6 | % | 344.5 | % | 55.2 | % | ||||
Adjustments to segment operating profit: | ||||||||||||
Restructuring costs | $ | 25 | $ | 1 | $ | 3 | $ | 3 | $ | - | $ | 32 |
Amortization of acquired intangibles | 170 | - | - | - | - | 170 | ||||||
Acquisition step-up amortization (1)
|
109 | - | - | - | - | 109 | ||||||
Acquisition/divestiture-related costs | - | 4 | 32 | - | 56 | 92 | ||||||
Access Solutions gain | - | - | (2,881) | - | - | (2,881) | ||||||
Total adjustments to operating profit | $ | 304 | $ | 5 | $ | (2,846) | $ | 3 | $ | 56 | $ | (2,478) |
Adjusted operating profit | $ | 991 | $ | 118 | $ | 155 | $ | (20) | $ | (31) | $ | 1,213 |
Adjusted operating margin | 19.9 | % | 12.1 | % | 17.8 | % | 18.1 | % |
(Unaudited) | ||||||||||||
Three Months Ended June 30, 2023 | ||||||||||||
(In millions) | HVAC | Refrigeration | Fire & Security | Eliminations and Other | General Corporate Expenses | Carrier | ||||||
Net sales | $ | 4,216 | $ | 972 | $ | 932 | $ | (128) | $ | - | $ | 5,992 |
Segment operating profit | $ | 742 | $ | 112 | $ | (157) | $ | (146) | $ | (62) | $ | 489 |
Reported operating margin | 17.6 | % | 11.5 | % | (16.8) | % | 8.2 | % | ||||
Adjustments to segment operating profit: | ||||||||||||
Restructuring costs | $ | 3 | $ | 7 | $ | (1) | $ | - | $ | - | $ | 9 |
Amortization of acquired intangibles | 36 | - | 2 | - | - | 38 | ||||||
Acquisition step-up amortization (1)
|
10 | - | - | - | - | 10 | ||||||
Acquisition/divestiture-related costs | - | - | - | - | 14 | 14 | ||||||
Viessmann-related hedges | - | - | - | 111 | - | 111 | ||||||
KFI deconsolidation | - | - | 293 | - | - | 293 | ||||||
Total adjustments to operating profit | $ | 49 | $ | 7 | $ | 294 | $ | 111 | $ | 14 | $ | 475 |
Adjusted operating profit | $ | 791 | $ | 119 | $ | 137 | $ | (35) | $ | (48) | $ | 964 |
Adjusted operating margin | 18.8 | % | 12.2 | % | 14.7 | % | 16.1 | % |
(Unaudited) | ||||||||||||
Six Months Ended June 30, 2024 | ||||||||||||
(In millions) | HVAC | Refrigeration | Fire & Security | Eliminations and Other | General Corporate Expenses | Carrier | ||||||
Net sales | $ | 9,511 | $ | 1,857 | $ | 1,758 | $ | (255) | $ | - | $ | 12,871 |
Segment operating profit | $ | 1,116 | $ | 210 | $ | 3,154 | $ | (98) | $ | (191) | $ | 4,191 |
Reported operating margin | 11.7 | % | 11.3 | % | 179.4 | % | 32.6 | % | ||||
Adjustments to segment operating profit: | ||||||||||||
Restructuring costs | $ | 32 | $ | 1 | $ | 10 | $ | 4 | $ | - | $ | 47 |
Amortization of acquired intangibles | 342 | - | - | - | - | 342 | ||||||
Acquisition step-up amortization (1)
|
220 | - | - | - | - | 220 | ||||||
Acquisition/divestiture-related costs | 1 | 6 | 36 | - | 138 | 181 | ||||||
Viessmann-related hedges | - | - | - | 86 | - | 86 | ||||||
Gain on liability adjustment (2)
|
- | - | - | (46) | - | (46) | ||||||
Access Solutions gain | - | - | (2,881) | - | - | (2,881) | ||||||
Total adjustments to operating profit | $ | 595 | $ | 7 | $ | (2,835) | $ | 44 | $ | 138 | $ | (2,051) |
Adjusted operating profit | $ | 1,711 | $ | 217 | $ | 319 | $ | (54) | $ | (53) | $ | 2,140 |
Adjusted operating margin | 18.0 | % | 11.7 | % | 18.1 | % | 16.6 | % |
(Unaudited) | ||||||||||||
Six Months Ended June 30, 2023 | ||||||||||||
(In millions) | HVAC | Refrigeration | Fire & Security | Eliminations and Other | General Corporate Expenses | Carrier | ||||||
Net sales | $ | 7,838 | $ | 1,870 | $ | 1,801 | $ | (244) | $ | - | $ | 11,265 |
Segment operating profit | $ | 1,177 | $ | 220 | $ | (64) | $ | (184) | $ | (105) | $ | 1,044 |
Reported operating margin | 15.0 | % | 11.8 | % | (3.6) | % | 9.3 | % | ||||
Adjustments to segment operating profit: | ||||||||||||
Restructuring costs | $ | 2 | $ | 10 | $ | 12 | $ | 2 | $ | - | $ | 26 |
Amortization of acquired intangibles | 73 | - | 4 | - | - | 77 | ||||||
Acquisition step-up amortization (1)
|
21 | - | - | - | - | 21 | ||||||
Acquisition/divestiture-related costs | - | - | - | - | 26 | 26 | ||||||
Viessmann-related hedges | - | - | - | 111 | - | 111 | ||||||
TCC acquisition-related gain (3)
|
8 | - | - | - | - | 8 | ||||||
KFI deconsolidation | - | - | 293 | - | - | 293 | ||||||
Total adjustments to operating profit | $ | 104 | $ | 10 | $ | 309 | $ | 113 | $ | 26 | $ | 562 |
Adjusted operating profit | $ | 1,281 | $ | 230 | $ | 245 | $ | (71) | $ | (79) | $ | 1,606 |
Adjusted operating margin | 16.3 | % | 12.3 | % | 13.6 | % | 14.3 | % |
(Unaudited) | ||||||||||||
Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||
(In millions, except per share amounts) | Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | ||||||
Net sales | $ | 6,689 | $ | - | $ | 6,689 | $ | 12,871 | $ | - | $ | 12,871 |
Operating profit | $ | 3,691 | (2,478) | a | $ | 1,213 | $ | 4,191 | (2,051) | a | $ | 2,140 |
Operating margin | 55.2 | % | 18.1 | % | 32.6 | % | 16.6 | % | ||||
Income from operations before income taxes | $ | 3,524 | (2,466) | a,b | $ | 1,058 | $ | 3,859 | (2,039) | a,b | $ | 1,820 |
Income tax expense | $ | (1,155) | 922 | c | $ | (233) | $ | (1,201) | 791 | c | $ | (410) |
Effective tax rate | 32.8 | % | 22.0 | % | 31.1 | % | 22.5 | % | ||||
Net income attributable to common shareowners | $ | 2,337 | $ | (1,544) | $ | 793 | $ | 2,606 | $ | (1,248) | $ | 1,358 |
Summary of Adjustments: | ||||||||||||
Restructuring costs | $ | 32 | a | $ | 47 | a | ||||||
Amortization of acquired intangibles | 170 | a | 342 | a | ||||||||
Acquisition step-up amortization (1)
|
109 | a | 220 | a | ||||||||
Acquisition/divestiture-related costs | 92 | a | 181 | a | ||||||||
Access Solutions gain | (2,881) | a | (2,881) | a | ||||||||
Viessmann-related hedges | - | a | 86 | a | ||||||||
Gain on liability adjustment (2)
|
- | a | (46) | a | ||||||||
Debt prepayment costs | 12 | b | 12 | b | ||||||||
Total adjustments | $ | (2,466) | $ | (2,039) | ||||||||
Tax effect on adjustments above | $ | 976 | $ | 880 | ||||||||
Tax specific adjustments | (54) | (89) | ||||||||||
Total tax adjustments | $ | 922 | c | $ | 791 | c | ||||||
Shares outstanding - Diluted | 915.3 | 915.3 | 913.6 | 913.6 | ||||||||
Earnings per share - Diluted | $ | 2.55 | $ | 0.87 | $ | 2.85 | $ | 1.49 |
(Unaudited) | ||||||||||||
Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||||||
(In millions, except per share amounts) | Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | ||||||
Net sales | $ | 5,992 | $ | - | $ | 5,992 | $ | 11,265 | $ | - | $ | 11,265 |
Operating profit | $ | 489 | 475 | a | $ | 964 | $ | 1,044 | 562 | a | $ | 1,606 |
Operating margin | 8.2 | % | 16.1 | % | 9.3 | % | 14.3 | % | ||||
Income from operations before income taxes | $ | 422 | 496 | a,b | $ | 918 | $ | 931 | 583 | a,b | $ | 1,514 |
Income tax expense | $ | (189) | (25) | c | $ | (214) | $ | (311) | (43) | c | $ | (354) |
Effective tax rate | 44.8 | % | 23.3 | % | 33.4 | % | 23.4 | % | ||||
Net income attributable to common shareowners | $ | 199 | $ | 471 | $ | 670 | $ | 572 | $ | 540 | $ | 1,112 |
Summary of Adjustments: | ||||||||||||
Restructuring costs | $ | 9 | a | $ | 26 | a | ||||||
Amortization of acquired intangibles | 38 | a | 77 | a | ||||||||
Acquisition step-up amortization (1)
|
10 | a | 21 | a | ||||||||
Acquisition/divestiture-related costs | 14 | a | 26 | a | ||||||||
Viessmann-related hedges | 111 | a | 111 | a | ||||||||
TCC acquisition-related gain (2)
|
- | a | 8 | a | ||||||||
KFI deconsolidation | 293 | a | 293 | a | ||||||||
Bridge loan financing costs | 21 | b | 21 | b | ||||||||
Total adjustments | $ | 496 | $ | 583 | ||||||||
Tax effect on adjustments above | $ | (25) | $ | (43) | ||||||||
Total tax adjustments | $ | (25) | c | $ | (43) | c | ||||||
Shares outstanding - Diluted | 850.9 | 850.9 | 851.5 | 851.5 | ||||||||
Earnings per share - Diluted | $ | 0.23 | $ | 0.79 | $ | 0.67 | $ | 1.31 |
Three Months Ended June 30, 2024 Compared withThree Months Ended June 30, 2023
|
||||||||||
(Unaudited) | ||||||||||
Factors Contributing to Total % change in Net Sales | ||||||||||
Organic | FX Translation | Acquisitions / Divestitures, net | Other | Total | ||||||
HVAC | 2 | % | (1) | % | 17 | % | - | % | 18 | % |
Refrigeration | 1 | % | (1) | % | - | % | - | % | - | % |
Fire & Security | 3 | % | - | % | (10) | % | - | % | (7) | % |
Consolidated | 2 | % | (1) | % | 11 | % | - | % | 12 | % |
Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
|
||||||||||
(Unaudited) | ||||||||||
Factors Contributing to Total % change in Net Sales | ||||||||||
Organic | FX Translation | Acquisitions / Divestitures, net | Other | Total | ||||||
HVAC | 2 | % | (1) | % | 20 | % | - | % | 21 | % |
Refrigeration | (1) | % | - | % | - | % | - | % | (1) | % |
Fire & Security | 5 | % | - | % | (7) | % | - | % | (2) | % |
Consolidated | 2 | % | (1) | % | 13 | % | - | % | 14 | % |
(Unaudited) | ||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | ||||||||
(In millions) | 2023 | 2023 | 2023 | 2023 | 2023 | 2024 | 2024 | |||||||
HVAC | $ | 37 | $ | 36 | $ | 35 | $ | 35 | $ | 143 | $ | 172 | $ | 170 |
Fire & Security | 2 | 2 | 2 | - | 6 | - | - | |||||||
Total Carrier | 39 | 38 | 37 | 35 | 149 | 172 | 170 | |||||||
Associated tax effect | (12) | (11) | (11) | (11) | (45) | (46) | (42) | |||||||
Net impact to adjusted results | $ | 27 | $ | 27 | $ | 26 | $ | 24 | $ | 104 | $ | 126 | $ | 128 |
(Unaudited) | ||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | ||||||||
(In millions) | 2023 | 2023 | 2023 | 2023 | 2023 | 2024 | 2024 | |||||||
Net cash flows provided by (used in) operating activities | $ | 120 | $ | 384 | $ | 1,041 | $ | 1,062 | $ | 2,607 | $ | 40 | $ | 660 |
Less: Capital expenditures | 70 | 74 | 92 | 233 | 469 | 104 | 111 | |||||||
Free cash flow | $ | 50 | $ | 310 | $ | 949 | $ | 829 | $ | 2,138 | $ | (64) | $ | 549 |
(Unaudited) | ||||
(In millions) | June 30, 2024 | December 31, 2023 | ||
Long-term debt | $ | 11,270 | $ | 14,242 |
Current portion of long-term debt | 2,052 | 51 | ||
Less: Cash and cash equivalents | 2,919 | 10,015 | ||
Net debt | $ | 10,403 | $ | 4,278 |