Carrier Global Corporation (NYSE:CARR) Reports Q3 Results

Carrier Global Corporation, a leading provider of HVAC, refrigeration, fire, security, and building automation technologies, reported a 21% increase in third-quarter sales, totaling $6 billion, with organic sales growth of 4%. The company’s management, including CEO David Gitlin and CFO Patrick Goris, highlighted strong performance and strategic plans for continued growth into 2025.

Key Takeaways

• Q3 Sales: $6 billion, a 21% increase year-over-year, with organic sales growth of 4%.
• The HVAC segment experienced a 26% increase in sales, bolstered by the Viessmann Climate Solutions acquisition.
• Organic orders grew over 20%, supported by a strong backlog.
• Adjusted EPS from continuing operations was $0.77, reflecting a 3% increase from the previous year.
• Preliminary free cash flow for Q3 showed an outflow of approximately $370 million, primarily due to taxes related to business exits.
• Carrier anticipates 2024 sales of around $22.5 billion and expects adjusted EPS of $2.50.
• The company repurchased $400 million in shares in Q3 and aims for $1 billion in buybacks by year-end.

Company Outlook

• Carrier forecasts robust growth driven by investments in intelligent climate and energy solutions.
• The company is targeting over $100 million in revenue synergies and more than $200 million in cost synergies from the Viessmann integration by 2026.
• Carrier aims to reduce customer carbon emissions by one gigaton by 2030, focusing on sustainable products, including transitioning from boilers to heat pumps in Europe.

Bearish Highlights

• Anticipated free cash flow outflow of $200 million for the year due to cash tax payments related to business exits.
• Adjusted operating margin decreased by 40 basis points, primarily due to Viessmann consolidation.
• A 15% decline is expected in the light commercial sector in Q4, leading to low-single-digit growth for the year.

Bullish Highlights

• The HVAC segment is expected to drive mid-single-digit organic growth.
• Projected 20-30% growth in the residential market in Q4 compared to the previous year's weak performance.
• Orders in the data center segment surged 250% year-to-date, indicating strong aftermarket opportunities.

Misses

• The Refrigeration segment reported a modest 1% increase.
• There was a slowdown in residential orders in September affecting overall performance.

Q&A Highlights

• Gitlin mentioned that September orders were up about 10%, with improving trends seen in October.
• Ongoing subsidy payments in Germany are expected to positively affect orders.
• Carrier has adequate capacity for the pre-buy of 410A with no significant pre-buy anticipated.

InvestingPro Insights

Carrier’s strong Q3 performance is underscored by metrics such as a market capitalization of $72.18 billion. The company has increased its dividend for four consecutive years, appealing to income-focused investors. Carrier posted a 53.44% total return over the past year and a solid revenue growth of 8.63% in the last twelve months.

Carrier is effectively navigating market conditions and innovating for sustained growth. The focus on sustainability, aftermarket services, and strategic acquisitions positions them to capitalise on emerging opportunities in HVAC and refrigeration markets.