Core Insights - Carrier Global Corporation will participate in the Baird 2025 Global Industrial Conference on November 12, 2025, with Chairman & CEO David Gitlin and Senior Vice President & CFO Patrick Goris speaking [1] - The company is recognized as a global leader in intelligent climate and energy solutions, focusing on innovations that enhance comfort, safety, and sustainability [2] Company Overview - Carrier Global Corporation has a long history of innovation, having invented modern air conditioning in 1902, and continues to lead in climate solutions such as temperature control and air quality [2] - The company emphasizes an inclusive workforce that prioritizes customer needs in its operations [2] Financial Updates - Carrier's Board of Directors has approved a $5 billion share repurchase authorization, indicating confidence in the company's financial health and future prospects [5]

Core Insights - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 while maintaining lower volatility and higher income [1] - The approach emphasizes long-term holding of investments unless there is a compelling reason to sell, with a focus on intrinsic value [1] Investment Strategy - The individual manages a personal portfolio since 1998, aiming for total return maximization by purchasing assets when prices are low relative to their intrinsic value [1] - There is no specific preference for asset class, market cap, sector, or yield, indicating a broad investment approach [1] Position Disclosure - The individual holds a beneficial long position in the shares of CARR, indicating confidence in the company's future performance [2]

Core Insights - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 while maintaining lower volatility and higher income [1] - The approach emphasizes long-term holding of investments unless there is a compelling reason to sell, with a focus on intrinsic value [1] Investment Strategy - The individual manages a personal portfolio since 1998, aiming for total return maximization by purchasing assets when prices are low relative to their intrinsic value [1] - There is no specific preference for asset class, market cap, sector, or yield, indicating a broad investment approach [1] Position Disclosure - The individual holds a beneficial long position in the shares of CARR, indicating confidence in the company's future performance [2]

Core Insights - Carrier Global Corporation reported mixed financial results for Q3 2025, achieving an EPS of $0.67, exceeding the estimated EPS of $0.63, but its revenue of $5.58 billion fell short of the anticipated $5.65 billion [1][6] Financial Performance - The company’s revenue declined by 6.8% compared to the same quarter last year, indicating challenges in the current market environment [2][6] - Despite the revenue shortfall, Carrier outperformed the Zacks Consensus Estimate of $5.53 billion, resulting in a positive surprise of 0.93% [2] - Carrier's EPS of $0.67, while down from $0.83 in the previous year, represented a significant positive surprise of 21.82% against the consensus EPS estimate of $0.55 [3] Shareholder Value - The company returned $3 billion to shareholders year-to-date, including $2.4 billion in share repurchases, demonstrating its commitment to shareholder value [4][6] - The board approved a $5 billion share repurchase authorization, reflecting confidence in the company's strategy and future prospects [4] Financial Metrics - Carrier's financial metrics include a price-to-earnings (P/E) ratio of approximately 12.52 and a debt-to-equity ratio of about 0.83, indicating a moderate level of debt relative to equity [5] - The current ratio of approximately 1.14 suggests the company’s ability to cover short-term liabilities with short-term assets, reinforcing its financial health [5]

Financial Performance - For the three months ended September 30, 2025, net sales were $5.6 billion, a 7% decrease compared to the same period in 2024[132]. - Gross margin for the same period was $1.4 billion, a 14% decrease year-over-year, with a gross margin percentage of 26.0% compared to 28.0% in 2024[134]. - Operating profit decreased to $539 million, down 29% from $763 million in the prior year[132]. - Non-operating income (expense), net was $(106) million, a significant decrease of 1,614% compared to $7 million in 2024[139]. - Adjusted operating profit for the three months ended September 30, 2025, was $823 million, down from $1.0 billion in 2024[143]. - For the nine months ended September 30, 2025, net sales were $16.9 billion, a 2% decrease compared to the same period in 2024[145]. - Gross margin for the same period was $4.7 billion, reflecting a 1% increase year-over-year, with a gross margin percentage of 27.6%[146]. - Adjusted operating profit for the nine months ended September 30, 2025, was $2.8 billion, slightly down from $2.9 billion in 2024[154]. - Non-operating income (expense), net was $278 million, a 5% decrease compared to the prior year, primarily due to reduced interest expense[151]. Tax and Expenses - The effective tax rate for the three months ended September 30, 2025, was a benefit of 0.2%, compared to 22.3% in the same period of 2024[141]. - The effective tax rate for the nine months ended September 30, 2025, was 15.2%, down from 21.4% in 2024, driven by various tax benefits[152]. - Operating expenses were $910 million, flat compared to the same period in 2024, with selling, general and administrative expenses increasing by 1%[135]. - Operating expenses decreased by 6% to $2.6 billion, with selling, general and administrative expenses at $2.3 billion, a 2% decrease from 2024[147]. Segment Performance - Organic sales decreased by 4% year-over-year, primarily due to reduced demand in the Climate Solutions Americas segment[133]. - Climate Solutions Americas segment reported net sales of $2.7 billion for the three months ended September 30, 2025, down from $3.0 billion in 2024[157]. - Segment operating profit for Climate Solutions Americas was $533 million, a 29% decrease year-over-year[160]. - Climate Solutions Europe reported net sales of $1.3 billion, a 4% increase compared to the same period in 2024[161]. - Segment operating profit for Climate Solutions Europe was $120 million, a 7% decrease year-over-year[162]. - Climate Solutions Asia Pacific, Middle East & Africa had net sales of $833 million, a 1% decrease compared to the same period in 2024[163]. - Segment operating profit for Climate Solutions Asia Pacific, Middle East & Africa was $97 million, an 8% decrease year-over-year[164]. - Climate Solutions Transportation reported net sales of $745 million, a 20% decrease compared to the same period in 2024[165]. - Segment operating profit for Climate Solutions Transportation was $115 million, a 16% decrease year-over-year[166]. Cash Flow and Capital Structure - As of September 30, 2025, the company had cash and cash equivalents of $1.4 billion, with approximately 94% held by foreign subsidiaries[179]. - As of September 30, 2025, the company had cash and cash equivalents of $1,423 million, down from $3,969 million on December 31, 2024[182]. - Total debt stood at $11,916 million, with a total equity of $14,839 million, resulting in a total debt to total capitalization ratio of 45%[182]. - The company completed several divestitures in 2024, raising a total of $9.0 billion from the sale of various business units, which were used for debt repayment and growth initiatives[186]. - During the nine months ended September 30, 2025, the company repurchased 36.3 million shares for $2.4 billion, leaving approximately $811 million remaining under the current share repurchase authorization[188]. - Dividends paid during the nine months ended September 30, 2025, totaled $583 million, with a declared dividend of $0.225 per share payable on November 18, 2025[189]. - Net cash flows from continuing operating activities for the nine months ended September 30, 2025, were $1,076 million, a decrease from $1,208 million in the prior year[190]. - Cash used in continuing investing activities was $232 million, significantly lower than $11.3 billion in the same period of 2024, primarily due to a major acquisition in the prior year[192]. - Net cash used in continuing financing activities was $3.9 billion, driven by stock repurchases of $2.4 billion and long-term debt repayments of $1.2 billion[193]. - The company maintains a $2.0 billion USD-denominated facility and a $500 million Euro-denominated facility for general corporate purposes, with $415 million outstanding under the commercial paper program as of September 30, 2025[183]. - Credit ratings from major agencies as of September 30, 2025, include BBB+ from S&P and Baa1 from Moody's, indicating stable and positive outlooks respectively[185]. Strategic Actions - The company acquired the climate solutions business of Viessmann Group, enhancing its portfolio in sustainable building solutions[127]. - The company divested its Commercial Refrigeration business during 2024, part of a broader portfolio transformation strategy[127].

Core Insights - Carrier Global (CARR) reported third-quarter 2025 adjusted earnings of 67 cents per share, exceeding the Zacks Consensus Estimate by 21.82%, but down 19.3% year over year [1][10] - Net sales reached $5.58 billion, surpassing the Zacks Consensus Estimate by 0.93%, yet decreased 6.8% year over year [1][10] - The company announced a $5 billion share buyback and projected 4% EPS growth for 2025 [10][12] Financial Performance - Product sales, accounting for 87.9% of net sales, totaled $4.90 billion, down 7.6% year over year [1] - Service sales, making up 12.1% of net sales, were $673 million, a decline of 0.6% year over year [1] - R&D expenses decreased 12.2% year over year to $151 million, while SG&A expenses increased 0.5% to $803 million [7] - Adjusted operating margin contracted 260 basis points year over year to 14.8% [7] Segment Performance - Climate Solutions Americas revenues were $2.71 billion, contributing 48.6% to net sales, down 8.4% year over year [3] - Climate Solutions Europe revenues increased 3.5% year over year to $1.29 billion, contributing 23.1% to net sales [4] - Climate Solutions Asia Pacific, Middle East & Africa revenues were $833 million, a decline of 1% year over year [5] - Climate Solutions Transportation revenues decreased 20.5% year over year to $745 million [6] Cash Flow and Balance Sheet - The company generated $341 million in cash from operations, down from $649 million in the previous quarter [11] - Free cash flow was $224 million, compared to $568 million in the prior quarter [11] - As of September 30, 2025, cash and cash equivalents were $1.42 billion, down from $1.8 billion as of June 30, 2025 [9] 2025 Outlook - Carrier expects 2025 sales of $22 billion, reflecting flat organic growth [12] - Adjusted operating margin is projected to be between 15% and 15.5%, down 50 basis points from 2024 [12] - Anticipated adjusted earnings are $2.65 per share, indicating a year-over-year growth of 4% [12]

Financial Data and Key Metrics Changes - Reported sales for Q3 were $5.6 billion, with adjusted operating profit at $823 million and adjusted EPS at $0.67, reflecting a year-over-year decline primarily due to lower volumes in the CSA residential business [16][17] - Total company organic growth was down 4%, with adjusted operating profit down 21% and adjusted EPS down 13% [16][17] - Free cash flow was approximately $225 million, impacted by lower operating profit and higher working capital levels due to a sudden reduction in sales [17] Business Line Data and Key Metrics Changes - In the CSA segment, organic sales declined 8%, with residential sales down 30% driven by a 40% decline in volume, while commercial sales were up 30% [17][18] - The CSE segment saw residential and light commercial sales down low single digits, while commercial sales declined mid-single digits [18] - The CSAME segment experienced a 2% decline in organic sales, with strong growth in India and the Middle East offset by weakness in China [18] - The CSD segment reported organic sales up 6%, led by strong growth in container sales [19] Market Data and Key Metrics Changes - Field inventories were down 12% year-over-year at the end of Q3, with expectations to decrease by 30% by year-end [8][14] - In Europe, residential heat pump sales were up about 15%, with Germany seeing a 45% increase [9][10] - The overall backlog for data centers is expected to end the year around $900 million, supporting growth into 2026 [70] Company Strategy and Development Direction - The company is focused on three vectors of growth: products, aftermarket, and systems, with significant progress in each area [5][6] - A new $5 billion share repurchase authorization was approved, reflecting confidence in the company's strategy and execution [5] - The company aims to maintain a balanced portfolio with leading positions in targeted geographies and verticals, while aggressively managing costs [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the residential market, particularly in North America, but expressed confidence in recovery due to strong positions in commercial HVAC and aftermarket businesses [14][15] - The company expects to end 2025 with destocking behind them, although the first half of 2026 may present difficult comparisons [22][23] - Management anticipates a low single-digit organic growth for 2026, with a focus on structural cost reductions and maintaining competitive pricing [23] Other Important Information - The company is taking aggressive cost actions, including the elimination of about 3,000 indirect positions to right-size for demand [5][15] - The company is leveraging AI and other technologies to improve operational efficiency and reduce structural costs [39] Q&A Session Summary Question: Can you unpack the inventory situation and sell-through dynamics? - Management indicated that consolidated inventories are up about $500 million, primarily due to a sudden decline in residential volume and purposeful increases for components replacement [26][28] Question: How does the inventory destocking impact pricing for 2026? - Management expects to announce a mid-single-digit price increase for 2026, with a yield in the low single-digit range [37] Question: What is the outlook for the RLC business in Europe? - Management noted that the German heating market is at historic lows but anticipates a recovery, particularly in heat pump sales [92][93] Question: How is the demand in non-data center verticals? - Non-data center demand in the commercial HVAC business was up in the low teens, while data center orders were significantly higher [50][51] Question: What are the expectations for the data center backlog? - Management confirmed a target of about $1 billion in revenue for the data center segment this year, with a backlog expected to be around $900 million [70][68]

Financial Data and Key Metrics Changes - Reported sales for Q3 were $5.6 billion, with adjusted operating profit at $823 million and adjusted EPS at $0.67, reflecting a year-over-year decline primarily due to lower volumes in the CSA residential business [16][17] - Total company organic growth was down 4%, with adjusted operating profit down 21% and adjusted EPS down 13% [16][17] - Free cash flow was approximately $225 million, impacted by lower operating profit and higher working capital levels due to a sudden reduction in sales [17] Business Line Data and Key Metrics Changes - Organic sales in the CSA segment declined 8%, with residential sales down 30% driven by a 40% decline in volume, while commercial sales increased by 30% [17] - The CSE segment saw residential and light commercial sales down low single digits, while commercial sales declined mid-single digits [18] - The CSAME segment experienced a 2% decline in organic sales, with strong growth in India and the Middle East offset by weakness in China [18] - CSD organic sales were up 6%, led by strong growth in container sales, which increased by 100% [19] Market Data and Key Metrics Changes - In Europe, residential heat pump sales were up about 15%, with Germany seeing a 45% increase [9] - The overall market for heating units in Germany is at 15-year lows, indicating potential for recovery [10] - The company expects field inventory levels to decrease by 30% year-over-year, reaching the lowest levels since 2018 [8] Company Strategy and Development Direction - The company is focused on three vectors of growth: products, aftermarket, and systems, with significant progress reported in each area [5] - A new $5 billion share repurchase authorization was approved, reflecting confidence in the company's strategy and execution [5] - The company aims to maintain a balanced portfolio with leading positions in targeted geographies and verticals, while controlling costs aggressively [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the North American residential market, projecting a $500 million sales challenge and a 20%-25% adjusted EPS headwind [4] - The company expects continued strong performance in commercial HVAC and aftermarket businesses, which together constitute nearly 45% of sales [14] - For 2026, management anticipates a low single-digit organic growth assumption, with a focus on cost actions and maintaining a clean slate in inventory levels [23] Other Important Information - The company is taking aggressive cost actions, including the elimination of about 3,000 indirect positions to right-size for demand [5] - Connectivity and digital differentiation are foundational to the company's strategy, with significant growth in connected chillers and digital platform subscriptions [6] Q&A Session Summary Question: Inventory levels and sell-through dynamics - Management indicated that consolidated inventories are up about $500 million, primarily due to a sudden decline in residential volume and purposeful increases for components replacement [26][28] - They expect inventory levels to start reducing and aim for a clean slate at the beginning of the next year [29][30] Question: Repair versus replace dynamics - Management noted that while parts sales are up, there is a trend of consumers opting for repairs over replacements, although quantifying this is challenging [31] Question: Pricing dynamics for 2026 - Management plans to announce a mid-single digit price increase for 2026, expecting to yield low single-digit results [37] Question: Structural cost reductions - Management confirmed that the focus is on structural cost reductions, not just short-term cuts, with a goal to maintain efficiency and avoid adding back eliminated positions [39] Question: Outlook for CSA residential business - Management expects CSA residential sales to be down high single digits, with a focus on managing inventory levels and anticipating a difficult compare in early 2026 [20][22] Question: Data center backlog and growth - Management confirmed a target of about $1 billion in revenue from the data center segment for the year, with a strong backlog expected to support growth into 2026 [66][70]

Financial Data and Key Metrics Changes - Reported sales for Q3 2025 were $5.6 billion, with adjusted operating profit at $823 million and adjusted EPS at $0.67, reflecting a year-over-year decline primarily due to lower volumes in the CSA residential business [16][17] - Total company organic growth was down 4%, with adjusted operating profit down 21% and adjusted EPS down 13% [16][17] - Free cash flow was approximately $225 million, impacted by lower operating profit and higher working capital levels [16] Business Line Data and Key Metrics Changes - Organic sales in the CSA segment declined 8%, with residential sales down 30% due to a 40% decline in volume, while commercial sales increased by 30% [17] - CSE segment saw residential and light commercial sales down low single digits, while commercial declined mid-single digits [18] - CSAME segment organic sales declined 2%, with strong growth in India and the Middle East offset by weakness in China [18] - CSD segment organic sales were up 6%, led by strong growth in container sales [19] Market Data and Key Metrics Changes - In Europe, residential heat pump sales were up about 15%, with Germany seeing a 45% increase [9][10] - The overall market for heating units in Germany is at 15-year lows, indicating potential for recovery [10][11] - Commercial HVAC business in CSA has shown best-in-class performance, with expectations for continued growth driven by data centers [12][13] Company Strategy and Development Direction - The company is focused on three vectors of growth: products, aftermarket, and systems, with significant progress reported in each area [4][5] - A new $5 billion share repurchase authorization was approved, reflecting confidence in the company's strategy and execution [4] - The company aims to reduce overhead by eliminating about 3,000 indirect positions and is taking aggressive cost actions to right-size for demand [4][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the North American residential market, projecting a $500 million sales challenge and a 20% to 25% adjusted EPS headwind [3] - The company expects to end 2025 with CSA residential destocking behind it, anticipating a difficult comparison in the first half of 2026 [23][24] - Management remains optimistic about the recovery of the CSA residential business and expects continued strong performance in commercial HVAC and aftermarket segments [13][24] Other Important Information - The company is implementing significant cost actions expected to yield over $100 million in carryover savings for 2026 [21] - Adjusted EPS for the full year is projected to be about $2.65, with free cash flow expected to be around $2 billion [22] Q&A Session Summary Question: Inventory levels and sell-through dynamics - Management indicated that consolidated inventories are up about $500 million, primarily due to a sudden decline in residential volume and purposeful increases for components replacement [26][27] - They expect inventory levels to start reducing and aim for a 30% year-over-year decrease by year-end [29] Question: Pricing dynamics for 2026 - Management plans to announce a mid-single digit price increase for 2026, expecting to yield low single-digit range [34] Question: Structural cost reductions - The company is focused on structural cost reductions, targeting about 3,000 indirect positions, with a commitment to not add those back [35][36] Question: Outlook for CSA residential business - Management expects CSA residential volume to be flat to slightly up, with a focus on reducing inventory levels in the field [40][41] Question: Demand in non-data center verticals - Non-data center demand in commercial HVAC was up in the low teens, with mixed performance across various sectors [42][43] Question: Data center backlog and growth expectations - The company is on track to end the year with a backlog around $900 million, supporting growth expectations for 2026 [54][55]

Core Viewpoint - Carrier Global reported quarterly earnings of $0.67 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, but down from $0.83 per share a year ago, indicating an earnings surprise of +21.82% [1][2] Financial Performance - The company achieved revenues of $5.58 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.93%, but down from $5.98 billion year-over-year [2] - Over the last four quarters, Carrier Global has exceeded consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - Carrier Global shares have declined approximately 14.6% year-to-date, contrasting with the S&P 500's gain of 16.9% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $5.19 billion, and for the current fiscal year, it is $2.71 on revenues of $22.05 billion [7] - The trend of estimate revisions for Carrier Global was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Building Products - Air Conditioner and Heating industry is currently ranked in the bottom 11% of over 250 Zacks industries, suggesting potential challenges for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, emphasizing the importance of monitoring these changes [5]