Carrier (US:CARR)2023-02-06 16:00Acquisition and Investments - The company completed the acquisition of Toshiba Carrier Corporation on August 1, 2022, enhancing its HVAC segment with advanced research and development capabilities and a product pipeline[48]. - The company acquired a majority ownership interest in TCC for $930 million, resulting in the recognition of intangible assets valued at $220 million for technology, $180 million for trademark, and $497 million for customer relationships[250]. - The Company completed the sale of its Chubb Fire and Security business on January 3, 2022, as part of a strategic divestiture[318]. - The Company entered into a five-year, JPY 54 billion (approximately $400 million) senior unsecured term loan facility in July 2022 to fund a portion of the TCC acquisition[343]. Financial Performance - Total net sales for 2022 were $20,421 million, a slight decrease from $20,613 million in 2021[253]. - Product sales increased to $18,250 million in 2022 from $17,214 million in 2021, while service sales decreased to $2,171 million from $3,399 million[253]. - Operating profit for 2022 was $4,515 million, significantly higher than $2,645 million in 2021[253]. - Net income attributable to common shareholders rose to $3,534 million in 2022, compared to $1,664 million in 2021, reflecting a substantial increase[253]. - Basic earnings per share increased to $4.19 in 2022 from $1.92 in 2021, indicating strong profitability growth[253]. - Net income from operations for the year 2022 was $3,584 million, significantly up from $1,701 million in 2021, representing a growth of approximately 111%[261]. - Comprehensive income attributable to common shareholders for 2022 was $2,835 million, up from $1,420 million in 2021, reflecting a 99% increase[280]. - The company’s comprehensive income for 2022 was $2,859 million, compared to $1,457 million in 2021, marking a 96% increase[280]. Cash Flow and Dividends - The company reported net cash flows provided by operating activities of $1,743 million in 2022, down from $2,237 million in 2021[261]. - The company declared dividends of $0.64 per share for the year ended December 31, 2022, totaling $699 million, compared to $442 million in 2021 for $0.51 per share[284]. - The company’s quarterly cash dividends are subject to the discretion of the Board of Directors and may be altered based on market conditions and business strategy[76]. Debt and Liabilities - The company incurred $11.0 billion in debt obligations during the spin-off from United Technologies Corporation, which may impact future financial flexibility[51]. - Long-term debt decreased to $8,702 million in 2022 from $9,513 million in 2021, a decline of about 8.5%[257]. - The company’s long-term debt maturities include $1,202 million due in 2025 and $1,306 million due in 2027[371]. - The Company has a $2.0 billion unsecured commercial paper program, with no borrowings outstanding as of December 31, 2022[345]. Assets and Equity - Total assets as of December 31, 2022, were $26,086 million, a slight decrease from $26,172 million in 2021[257]. - Total equity rose to $8,076 million in 2022 from $7,094 million in 2021, an increase of about 14%[257]. - Retained earnings increased to $5,866 million in 2022 from $2,865 million in 2021, reflecting a growth of approximately 105%[257]. Operational and Market Trends - The company’s strategy focuses on organic growth through innovation, emphasizing environmentally-friendly technologies and energy efficiency[52]. - The company’s operations are influenced by global trends such as urbanization and climate change, which are expected to drive demand for its products[47]. - The company actively manages its business portfolio and seeks potential acquisitions to enhance its product offerings and market position[52]. Legal and Compliance Risks - The company is subject to various legal and compliance risks, which could result in significant fines and reputational harm if found responsible[60]. - The company has commitments and contingent liabilities related to various legal proceedings, but does not expect these to materially affect its financial condition[91]. Research and Development - The Company incurred research and development costs of $539 million, $503 million, and $419 million for the years ended December 31, 2022, 2021, and 2020, respectively, indicating a year-over-year increase of 7.1% from 2021 to 2022[332]. Inventory and Asset Management - The total inventories increased from $1,970 million in 2021 to $2,640 million in 2022, representing a growth of about 33.9%[361]. - The allowance for expected credit losses as of December 31, 2022, was $117 million, an increase from $88 million in 2021, indicating a 33% rise in estimated credit losses[297]. - The Company conducts periodic assessments to determine excess and obsolete inventory, recording necessary provisions to reduce inventories to the lower of cost or estimated net realizable value[338]. Currency and Market Risks - The company is exposed to fluctuations in foreign currency exchange rates, interest rates, and commodity prices, but no significant changes in market risk exposure were noted for the year ended December 31, 2022[239]. - The foreign currency translation adjustments for the year ended December 31, 2022, resulted in a loss of $1,125 million, compared to a loss of $314 million in 2021[280].