CARRIER GLOBAL Corp 10-Q for FY2023 Q1

CARRIER GLOBAL Corp (CARR)

10-Q 2023-04-26 For: 2023-03-31

Added on April 11, 2026

About this 10-Q

CARRIER GLOBAL Corp filed this 10-Q on April 26, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.27B; up 13.3% from $4.65B a year earlier
Net income: $387M; down 72.1% from net income of $1.39B a year earlier
Diluted EPS: $0.44; down 72.2% from $1.58 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)			7

Notes to Condensed Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			26

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			27

Item 3. Quantitative and Qualitative Disclosures About Market Risk			37

Item 4. Controls and Procedures			37

PART II – OTHER INFORMATION			38

Item 1. Legal Proceedings			38

Item 1A. Risk Factors			38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38



Item 6. Exhibits			40

SIGNATURES			41


	Three Months Ended March 31,
(In millions, except per share amounts)	2023		2022
Net sales
Product sales	$	4,686	$	4,170
Service sales	587		484
Total Net sales	5,273		4,654
Costs and expenses
Cost of products sold	(3,458)		(2,998)
Cost of services sold	(437)		(363)
Research and development	(139)		(125)
Selling, general and administrative	(721)		(601)
Total Costs and expenses	(4,755)		(4,087)
Equity method investment net earnings	44		58
Other income (expense), net	(7)		1,112
Operating profit	555		1,737
Non-service pension (expense) benefit	—		(1)
Interest (expense) income, net	(46)		(48)
Income from operations before income taxes	509		1,688
Income tax (expense) benefit	(122)		(301)
Net income from operations	387		1,387
Less: Non-controlling interest in subsidiaries' earnings from operations	14		8









Net income attributable to common shareowners	$	373	$	1,379

Earnings per share
Basic	$	0.45	$	1.62
Diluted	$	0.44	$	1.58

Weighted-average number of shares outstanding
Basic	835.0		853.3
Diluted	852.2		874.1


	Three Months Ended March 31,
(In millions)	2023		2022
Net income from operations	$	387	$	1,387


Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments arising during period	54		(61)









Pension and post-retirement benefit plan adjustments	—		(2)
Chubb divestiture	—		(245)












Other comprehensive income (loss), net of tax	54		(308)
Comprehensive income (loss)	441		1,079
Less: Comprehensive income (loss) attributable to non-controlling interest	16		8
Comprehensive income (loss) attributable to common shareowners	$	425	$	1,071


	As of
(In millions)	March 31, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	3,347	$	3,520
Accounts receivable, net	3,032		2,833
Contract assets, current	568		537
Inventories, net	2,803		2,640
Other assets, current	408		349
Total current assets	10,158		9,879
Future income tax benefits	639		612
Fixed assets, net	2,277		2,241
Operating lease right-of-use assets	625		642
Intangible assets, net	1,287		1,342
Goodwill	9,987		9,977
Pension and post-retirement assets	29		26
Equity method investments	1,103		1,148

Other assets	306		219
Total Assets	$	26,411	$	26,086

Liabilities and Equity
Accounts payable	$	2,926	$	2,833
Accrued liabilities	2,374		2,610
Contract liabilities, current	516		449

Current portion of long-term debt	142		140
Total current liabilities	5,958		6,032
Long-term debt	8,708		8,702
Future pension and post-retirement obligations	354		349
Future income tax obligations	581		568
Operating lease liabilities	506		529

Other long-term liabilities	1,836		1,830
Total Liabilities	17,943		18,010
Commitments and contingent liabilities (Note 19)
Equity
Common stock	9		9
Treasury stock	(1,972)		(1,910)
Additional paid-in capital	5,494		5,481
Retained earnings	6,239		5,866
Accumulated other comprehensive loss	(1,636)		(1,688)
Non-controlling interest	334		318
Total Equity	8,468		8,076
Total Liabilities and Equity	$	26,411	$	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


















































































(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


(In millions)	HVAC		Refrigeration		Fire & Security		Total
Balance as of December 31, 2022	$	6,392	$	1,197	$	2,388	$	9,977
Acquisitions / divestitures	(13)		(4)		—		(17)

Foreign currency translation	16		3		8		27
Balance as of March 31, 2023	$	6,395	$	1,196	$	2,396	$	9,987


(In millions)	March 31, 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	408		404
Other debt (including project financing obligations and finance leases)	152		149
Discounts and debt issuance costs	(60)		(61)
Total debt	8,850		8,842
Less: current portion of long-term debt	142		140
Long-term debt, net of current portion	$	8,708	$	8,702


(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2023


Derivative assets (1)(3)	$	20	$	—	$	20	$	—
Derivative liabilities (2)(3)	$	(71)	$	—	$	(71)	$	—

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		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)


(In millions)	August 1, 2022
Cash and cash equivalents	$	462
Accounts receivable	426
Inventories	373
Other assets, current	54
Fixed assets	343
Intangible assets	965
Goodwill	876
Other assets	293
Accounts payable	(412)
Accrued liabilities	(445)
Contract liabilities, current	(21)
Other long-term liabilities	(574)
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


	Three Months Ended March 31, 2023
Organic	4	%
Foreign currency translation	(2)	%
Acquisitions and divestitures, net	11	%

Total % change	13	%


	March 31, 2023						December 31, 2022
(In millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Amortized:
Customer relationships	$	1,426	$	(734)	$	692	$	1,431	$	(720)	$	711
Patents and trademarks	404		(199)		205		401		(191)		210

Service portfolios and other	956		(630)		326		953		(595)		358
	2,786		(1,563)		1,223		2,785		(1,506)		1,279
Unamortized:
Trademarks and other	64		—		64		63		—		63
Intangible assets, net	$	2,850	$	(1,563)	$	1,287	$	2,848	$	(1,506)	$	1,342



Summary performance for each of our segments is as follows:
	Net Sales				Operating Profit				Operating Profit Margin
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
(In millions)	2023		2022		2023		2022		2023		2022
HVAC	$	3,622	$	2,970	$	435	$	470	12.0	%	15.8	%
Refrigeration	898		976		108		107		12.0	%	11.0	%
Fire & Security	869		818		93		1,218		10.7	%	148.9	%
Total segment	$	5,389	$	4,764	$	636	$	1,795	11.8	%	37.7	%


	Operating Profit
Operational	(7)	%
Foreign currency translation	(1)	%
Acquisitions and divestitures, net	8	%
Restructuring	1	%
Amortization of acquired intangibles	(7)	%
Other	(1)	%
Total % change in Operating profit	(7)	%


	Operating Profit
Operational	(15)	%
Foreign currency translation	(3)	%

Restructuring	(3)	%

Other	22	%
Total % change in Operating profit	1	%


	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
January 1 - January 31	459	$43.55	459	$2,171
February 1 - February 28	421	$45.10	421	$2,152
March 1 - March 31	506	$45.40	506	$2,129
Total	1,386	$44.70	1,386


Exhibit Number						Exhibit Description
10.1						Schedule of Terms for Performance Share Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (rev. February 1, 2023)*+
10.2						Schedule of Terms for Restricted Stock Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1, 2023)*+
10.3						Schedule of Terms for Stock Appreciation Right Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1, 2023)*+
10.4						Schedule of Terms for Performance Share Unit Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (rev. February 1, 2023)*+
10.5						Schedule of Terms for Restricted Stock Unit Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1, 2023)*+
10.6						Schedule of Terms for Stock Appreciation Right Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1, 2023)*+
10.7						Form of Award Agreement for 2023 Performance Share Unit and Stock Appreciation Right Awards granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan*+
10.8						Carrier Global Corporation Executive Annual Bonus Plan (amended and restated January 1, 2023)*+
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:	April 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:	April 26, 2023	by:	/s/KYLE CROCKETT
			Kyle Crockett
			Vice President, Controller

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


Retirement Type	Company Consents to Early Retirement *	Exercise Period***
Normal Retirement (age 65)	N/A	SARs may be exercised until the expiration of their term
Early Retirement on or after age 55 + 10 years of continuous service as of the Termination Date	Yes	SARs may be exercised until the expiration of their term
	No	SARs may be exercised for three (3) years following the Termination Date or until the expiration of the SAR, whichever is earlier
Rule of 65** (Early Retirement on or after age 50, but prior to age 55 + years of continuous service = 65+ as of the Termination Date)	Yes	SARs may be exercised for five (5) years following the Termination Date or until the expiration of the SAR, whichever is earlier
	No	SARs may be exercised for three (3) years following the Termination Date or until the expiration of the SAR, whichever is earlier
* The Company’s consent to the Participant’s Retirement will be at the sole discretion of the Company based on its ability to effectively transition the Participant’s responsibilities as of the Termination Date and such other factors as it may deem appropriate. Applicable only for Participants who were actively employed by the Corporation at an M/P7 or F1/F2 level or above on December 31, 2021. *Exercise periods for certain employees may be shorter where required by local law. For example, in no event will SARs be exercisable after 6 months following the Termination Date for Participants subject to exchange control regulations in the People’s Republic of China.


Grant Type			Performance Share Unit (PSU)
Award Weighting (% of total award)			50%
Grant Date			February 1, 2023
Vest Date			February 1, 2026
Performance Period			January 1, 2023 to December 31, 2025
Performance Measure 1			Earnings per Share (EPS) Compound Annual Growth Rate (CAGR)
Performance Measure 1 Weighting			50%
Performance Measure 1 Payout Range			0% to 200%
Performance Measure 2			Total Shareholder Return (TSR) relative to a subset of industrial companies in the S&P 500 index approved by the Carrier Compensation Committee
Performance Measure 2 Weighting			50%
Performance Measure 2 Payout Range			0% to 200%; maximum payout of 100% if TSR is negative (regardless of relative performance)
Dividend Eligibility			PSUs do not earn dividends/dividend equivalents


Grant Type			Stock Appreciation Right (SAR)
Award Weighting (% of total award)			50%
Grant Date			February 1, 2023
Vest Date			February 1, 2026
Expiration Date			January 31, 2033
Grant Price			Closing stock price on grant date


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