CARRIER GLOBAL Corp 10-Q for FY2023 Q3

CARRIER GLOBAL Corp (CARR)

10-Q 2023-10-26 For: 2023-09-30

Added on April 11, 2026

About this 10-Q

CARRIER GLOBAL Corp filed this 10-Q on October 26, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.73B; up 5.1% from $5.45B a year earlier
Net income: $381M; down 71.4% from net income of $1.33B a year earlier
Diluted EPS: $0.42; down 72.5% from $1.53 a year earlier

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Delaware						83-4051582
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


			Page

PART I – FINANCIAL INFORMATION			3

Item 1. Financial Statements:			3

Condensed Consolidated Statement of Operations (Unaudited)			3



Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)			4

Condensed Consolidated Balance Sheet (Unaudited)			5

Condensed Consolidated Statement of Changes in Equity (Unaudited)			6

Condensed Consolidated Statement of Cash Flows (Unaudited)			8

Notes to Condensed Consolidated Financial Statements (Unaudited)			9

Report of Independent Registered Public Accounting Firm			29

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			31

Item 3. Quantitative and Qualitative Disclosures About Market Risk			48

Item 4. Controls and Procedures			48

PART II – OTHER INFORMATION			49

Item 1. Legal Proceedings			49

Item 1A. Risk Factors			49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49

Item 5. Other Information			50

Item 6. Exhibits			51

SIGNATURES			52


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share amounts)	2023		2022		2023		2022
Net sales
Product sales	$	5,081	$	4,891	$	15,122	$	13,723
Service sales	650		560		1,874		1,593
Total Net sales	5,731		5,451		16,996		15,316
Costs and expenses
Cost of products sold	(3,428)		(3,569)		(10,655)		(9,930)
Cost of services sold	(487)		(405)		(1,392)		(1,169)
Research and development	(157)		(143)		(447)		(390)
Selling, general and administrative	(831)		(624)		(2,336)		(1,839)
Total Costs and expenses	(4,903)		(4,741)		(14,830)		(13,328)
Equity method investment net earnings	75		63		171		222
Other income (expense), net	(258)		753		(648)		1,872
Operating profit	645		1,526		1,689		4,082
Non-service pension (expense) benefit	—		—		—		(2)
Interest (expense) income, net	(51)		(56)		(164)		(165)
Income from operations before income taxes	594		1,470		1,525		3,915
Income tax (expense) benefit	(213)		(138)		(524)		(609)
Net income from operations	381		1,332		1,001		3,306
Less: Non-controlling interest in subsidiaries' earnings from operations	24		20		72		42









Net income attributable to common shareowners	$	357	$	1,312	$	929	$	3,264

Earnings per share
Basic	$	0.43	$	1.56	$	1.11	$	3.86
Diluted	$	0.42	$	1.53	$	1.09	$	3.78

Weighted-average number of shares outstanding
Basic	838.7		839.6		836.6		846.1
Diluted	854.7		856.5		852.7		864.3


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Net income from operations	$	381	$	1,332	$	1,001	$	3,306


Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments arising during period	(246)		(645)		(255)		(1,195)









Pension and post-retirement benefit plan adjustments	—		2		—		2
Unrealized cash flow hedging gain (loss) arising during period	80		—		80		—
Chubb divestiture	—		—		—		(245)












Other comprehensive income (loss), net of tax	(166)		(643)		(175)		(1,438)
Comprehensive income (loss)	215		689		826		1,868
Less: Comprehensive income (loss) attributable to non-controlling interest	23		7		65		20
Comprehensive income (loss) attributable to common shareowners	$	192	$	682	$	761	$	1,848


	As of
(In millions)	September 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	3,902	$	3,520
Accounts receivable, net	3,030		2,833
Contract assets, current	605		537
Inventories, net	2,562		2,640
Other assets, current	412		349
Total current assets	10,511		9,879
Future income tax benefits	712		612
Fixed assets, net	2,210		2,241
Operating lease right-of-use assets	577		642
Intangible assets, net	1,100		1,342
Goodwill	9,825		9,977
Pension and post-retirement assets	29		26
Equity method investments	1,166		1,148

Other assets	414		219
Total Assets	$	26,544	$	26,086

Liabilities and Equity
Accounts payable	$	2,887	$	2,833
Accrued liabilities	2,832		2,610
Contract liabilities, current	496		449

Current portion of long-term debt	134		140
Total current liabilities	6,349		6,032
Long-term debt	8,651		8,702
Future pension and post-retirement obligations	337		349
Future income tax obligations	553		568
Operating lease liabilities	465		529

Other long-term liabilities	1,687		1,830
Total Liabilities	18,042		18,010
Commitments and contingent liabilities (Note 19)
Equity
Common stock	9		9
Treasury stock	(1,972)		(1,910)
Additional paid-in capital	5,517		5,481
Retained earnings	6,486		5,866
Accumulated other comprehensive loss	(1,856)		(1,688)
Non-controlling interest	318		318
Total Equity	8,502		8,076
Total Liabilities and Equity	$	26,544	$	26,086


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2022	$	(1,688)	$	9	$	(1,910)	$	5,481	$	5,866	$	318	$	8,076
Net income	—		—		—		—		373		14		387
Other comprehensive income (loss), net of tax	52		—		—		—		—		2		54

Shares issued under incentive plans, net	—		—		—		(9)		—		—		(9)
Stock-based compensation	—		—		—		22		—		—		22



Treasury stock repurchase	—		—		(62)		—		—		—		(62)


Balance as of March 31, 2023	$	(1,636)	$	9	$	(1,972)	$	5,494	$	6,239	$	334	$	8,468

Net income	—		—		—		—		199		34		233
Other comprehensive income (loss), net of tax	(55)		—		—		—		—		(8)		(63)
Dividends declared on common stock (1)	—		—		—		—		(309)		—		(309)
Shares issued under incentive plans, net	—		—		—		(18)		—		—		(18)
Stock-based compensation	—		—		—		18		—		—		18

Dividends attributable to non-controlling interest	—		—		—		—		—		(41)		(41)




Balance as of June 30, 2023	$	(1,691)	$	9	$	(1,972)	$	5,494	$	6,129	$	319	$	8,288

Net income	—		—		—		—		357		24		381
Other comprehensive income (loss), net of tax	(165)		—		—		—		—		(1)		(166)


Stock-based compensation	—		—		—		23		—		—		23

Dividends attributable to non-controlling interest	—		—		—		—		—		(2)		(2)

Sale of non-controlling interest	—		—		—		—		—		(22)		(22)



Balance as of September 30, 2023	$	(1,856)	$	9	$	(1,972)	$	5,517	$	6,486	$	318	$	8,502

(1) Cash dividends declared were $0.37 per share for the three months ended June 30, 2023.

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.


CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2021	$	(989)	$	9	$	(529)	$	5,411	$	2,865	$	327	$	7,094
Net income	—		—		—		—		1,379		8		1,387
Other comprehensive income (loss), net of tax	(308)		—		—		—		—		—		(308)

Shares issued under incentive plans, net	—		—		—		(17)		—		—		(17)
Stock-based compensation	—		—		—		21		—		—		21
Dividends attributable to non-controlling interest	—		—		—		—		—		(1)		(1)


Sale of non-controlling interest	—		—		—		—		—		(5)		(5)

Treasury stock repurchase	—		—		(741)		—		—		—		(741)
Balance as of March 31, 2022	$	(1,297)	$	9	$	(1,270)	$	5,415	$	4,244	$	329	$	7,430

Net income	—		—		—		—		573		14		587
Other comprehensive income (loss), net of tax	(478)		—		—		—		—		(9)		(487)
Dividends declared on common stock (1)	—		—		—		—		(253)		—		(253)
Conversion of cash settled awards	—		—		—		6		—		—		6

Stock-based compensation	—		—		—		20		—		—		20
Dividends attributable to non-controlling interest	—		—		—		—		—		(38)		(38)





Treasury stock repurchase	—		—		(273)		—		—		—		(273)
Balance as of June 30, 2022	$	(1,775)	$	9	$	(1,543)	$	5,441	$	4,564	$	296	$	6,992


Net income	—		—		—		—		1,312		20		1,332
Other comprehensive income (loss), net of tax	(630)		—		—		—		—		(13)		(643)


Stock-based compensation	—		—		—		17		—		—		17
Dividends attributable to non-controlling interest	—		—		—		—		—		(1)		(1)

Acquisition of non-controlling interest	—		—		—		5		—		22		27

Sale of non-controlling interest	—		—		—		—		—		(13)		(13)

Treasury stock repurchase	—		—		(248)		—		—		—		(248)
Balance as of September 30, 2022	$	(2,405)	$	9	$	(1,791)	$	5,463	$	5,876	$	311	$	7,463


(1) Cash dividends declared were $0.30 per share for the three months ended June 30, 2022.


(In millions)	HVAC		Refrigeration		Fire & Security		Total
Balance as of December 31, 2022	$	6,392	$	1,197	$	2,388	$	9,977
Acquisitions / divestitures	—		(4)		—		(4)

Foreign currency translation	(91)		(16)		(41)		(148)
Balance as of September 30, 2023	$	6,301	$	1,177	$	2,347	$	9,825


	September 30, 2023						December 31, 2022
(In millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Amortized:
Customer relationships	$	1,387	$	(766)	$	621	$	1,431	$	(720)	$	711
Patents and trademarks	375		(201)		174		401		(191)		210

Service portfolios and other	915		(674)		241		953		(595)		358
	2,677		(1,641)		1,036		2,785		(1,506)		1,279
Unamortized:
Trademarks and other	64		—		64		63		—		63
Intangible assets, net	$	2,741	$	(1,641)	$	1,100	$	2,848	$	(1,506)	$	1,342


(In millions)	Total		Level 1		Level 2		Level 3
September 30, 2023


Derivative assets (1)(3)	$	116	$	—	$	116	$	—
Derivative liabilities (2)(3)	$	(408)	$	—	$	(408)	$	—

December 31, 2022


Derivative assets (1) (3)	$	28	$	—	$	28	$	—
Derivative liabilities (2) (3)	$	(48)	$	—	$	(48)	$	—


(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Unrealized Hedging Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2022	$	(1,604)	$	(84)	$	—	$	(1,688)
Other comprehensive income (loss) before reclassifications, net	52		—		—		52
Amounts reclassified, pre-tax	—		—		—		—
Tax expense (benefit) reclassified	—		—		—		—

Balance as of March 31, 2023	$	(1,552)	$	(84)	$	—	$	(1,636)
Other comprehensive income (loss) before reclassifications, net	(55)		—		—		(55)
Amounts reclassified, pre-tax	—		—		—		—
Tax expense (benefit) reclassified	—		—		—		—

Balance as of June 30, 2023	$	(1,607)	$	(84)	$	—	$	(1,691)
Other comprehensive income (loss) before reclassifications, net	(245)		—		80		(165)
Amounts reclassified, pre-tax	—		—		—		—
Tax expense (benefit) reclassified	—		—		—		—

Balance as of September 30, 2023	$	(1,852)	$	(84)	$	80	$	(1,856)


(In millions)	August 1, 2022
Cash and cash equivalents	$	462
Accounts receivable	428
Inventories	373
Other assets, current	54
Fixed assets	330
Intangible assets	965
Goodwill	876
Other assets	299
Accounts payable	(412)
Accrued liabilities	(445)
Contract liabilities, current	(21)
Other long-term liabilities	(569)
Net assets acquired	$	2,340
Less: Fair value of non-controlling interests	(22)
Less: Fair value of previously held TCC equity investments	(1,398)
Total cash consideration	$	920


(In millions)	Estimated Useful Life (in years)	Intangible Assets Acquired
Customer relationships	23	$	497
Technology	7	220
Trademark	26	180
Backlog	1	60
Land use rights	45	8
Total intangible assets acquired		$	965


	Nine Months Ended September 30,
(In millions)	2023		2022
Operating Activities
Net income from operations	$	1,001	$	3,306
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	407		257
Deferred income tax provision	(151)		(107)
Stock-based compensation costs	63		58
Equity method investment net earnings	(171)		(222)

(Gain) loss on extinguishment of debt	—		(36)
(Gain) loss on sale of investments / deconsolidation	278		(1,844)

Changes in operating assets and liabilities
Accounts receivable, net	(297)		(433)
Contract assets, current	(74)		(201)
Inventories, net	7		(492)
Other assets, current	(75)		(3)
Accounts payable and accrued liabilities	491		180
Contract liabilities, current	55		34
Defined benefit plan contributions	(17)		(10)
Distributions from equity method investments	45		55
Other operating activities, net	(17)		78
Net cash flows provided by (used in) operating activities	1,545		620

Investing Activities
Capital expenditures	(236)		(213)
Investment in businesses, net of cash acquired	(69)		(472)
Dispositions of businesses	54		2,944

Settlement of derivative contracts, net	(66)		(202)
Kidde-Fenwal, Inc. deconsolidation	(134)		—
Other investing activities, net	20		(12)
Net cash flows provided by (used in) investing activities	(431)		2,045

Financing Activities
Increase (decrease) in short-term borrowings, net	(35)		(125)
Issuance of long-term debt	14		421
Repayment of long-term debt	(15)		(1,185)


(In millions)	September 30, 2023		December 31, 2022


2.242% Notes due February 15, 2025	$	1,200	$	1,200
2.493% Notes due February 15, 2027	900		900
2.722% Notes due February 15, 2030	2,000		2,000
2.700% Notes due February 15, 2031	750		750
3.377% Notes due April 5, 2040	1,500		1,500
3.577% Notes due April 5, 2050	2,000		2,000


Total long-term notes	8,350		8,350
Japanese Term Loan Facility	362		404
Other debt (including project financing obligations and finance leases)	154		149
Discounts and debt issuance costs	(81)		(61)
Total debt	8,785		8,842
Less: current portion of long-term debt	134		140
Long-term debt, net of current portion	$	8,651	$	8,702


	Three Months Ended September 30, 2023
Organic	3	%
Foreign currency translation	1	%
Acquisitions and divestitures, net	1	%

Total % change	5	%


	Nine Months Ended September 30, 2023
Organic	4	%
Foreign currency translation	(1)	%
Acquisitions and divestitures, net	8	%

Total % change	11	%


	Net Sales				Operating Profit				Operating Profit Margin
	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
(In millions)	2023		2022		2023		2022		2023		2022
HVAC	$	4,008	$	3,734	$	763	$	1,314	19.0	%	35.2	%
Refrigeration	924		923		107		116		11.6	%	12.6	%
Fire & Security	923		905		164		142		17.8	%	15.7	%
Total segment	$	5,855	$	5,562	$	1,034	$	1,572	17.7	%	28.3	%


	Operating Profit
Operational	12	%

Acquisitions and divestitures, net	1	%
Restructuring	(2)	%

Other	(53)	%
Total % change in Operating profit	(42)	%



Summary performance for each of our segments is as follows:
	Net Sales				Operating Profit				Operating Profit Margin
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022		2023		2022
HVAC	$	11,846	$	10,092	$	1,940	$	2,369	16.4	%	23.5	%
Refrigeration	2,794		2,940		327		370		11.7	%	12.6	%
Fire & Security	2,724		2,610		100		1,494		3.7	%	57.2	%
Total segment	$	17,364	$	15,642	$	2,367	$	4,233	13.6	%	27.1	%


	Operating Profit
Operational	2	%




KFI deconsolidation	(21)	%
Chubb gain	(74)	%
Total % change in Operating profit	(93)	%


	Total Number of Shares Purchased (in 000's)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of a Publicly Announced Program (in 000's)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
2023




July 1 - July 30	—	$	—	—	$	2,129
August 1 - August 31	—	$	—	—	$	2,129
September 1 - September 30	—	$	—	—	$	2,129
Total	—	$	—	—


Exhibit Number						Exhibit Description
10.1						Amendment Number One to the Carrier Global Corporation Company Automatic Contribution Excess Plan*+
10.2						Amendment Number One to the Carrier Global Corporation Pension Preservation Plan*+
10.3						Amendment Number One to the Carrier Global Corporation Amended and Restated Savings Restoration Plan*+
15						Letter Re: Unaudited Interim Financial Information*
31.1						Rule 13a-14(a)/15d-14(a) Certification*
31.2						Rule 13a-14(a)/15d-14(a) Certification*
31.3						Rule 13a-14(a)/15d-14(a) Certification*
32						Section 1350 Certifications*
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* (File name: carr-20220331.xml)
101.SCH						XBRL Taxonomy Extension Schema Document.* (File name: carr-20220331.xsd)
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.* (File name: carr-20220331_cal.xml)
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.* (File name: carr-20220331_def.xml)
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.* (File name: carr-20220331_lab.xml)
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.* (File name: carr-20220331_pre.xml)
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101


		CARRIER GLOBAL CORPORATION (Registrant)

Dated:	October 26, 2023	by:	/s/PATRICK GORIS
			Patrick Goris
			Senior Vice President and Chief Financial Officer

			(on behalf of the Registrant and as the Registrant's Principal Financial Officer)

Dated:	October 26, 2023	by:	/s/KYLE CROCKETT
			Kyle Crockett
			Vice President, Controller

			(on behalf of the Registrant and as the Registrant's Principal Accounting Officer)


Date:	October 26, 2023	/s/David Gitlin
		David Gitlin
		Chairman and Chief Executive Officer