Carrier Global (CARR) Q4 2022 earnings summary

Executive summary

• 2022 sales were broadly stable as organic growth and pricing offset currency effects and portfolio changes; adjusted operating margin expanded to 14.2% from 13.7%.

• Double-digit parts and service growth and investment in digital lifecycle solutions supported a strategic shift toward higher recurring revenue and customer services.

Financial highlights

• Net sales were $20.421B, down 1% YoY; organic growth of 8% was offset by FX translation of -3% and acquisitions/divestitures, net, of -6%.

• GAAP net income attributable to common shareowners was $3.534B vs. $1.664B; diluted EPS was $4.10 vs. $1.87, including significant transaction-related gains.

• Adjusted operating profit was $2.894B and adjusted operating margin 14.2%; adjusted diluted EPS was $2.34 vs. $2.27.

• Gross margin was $5.464B, or 26.8% of sales, vs. $5.980B and 29.0%; TCC acquisition-related costs, commodity and component inflation, supply constraints and freight weighed on margin.

• Free cash flow was $1.390B vs. $1.893B, primarily reflecting lower operating cash flow as working capital increased.

Outlook and guidance

• For 2023, higher interest rates may constrain global growth; priorities include leaning into secular demand, aftermarket initiatives, cost reduction and margin expansion, with no numerical guidance stated in the cited outlook.

• Parts and service revenue is targeted to grow from approximately $5B in 2022 to $7B in 2026; connected-device commitment is 1.1M devices by 2026.

• Targeting customer carbon-footprint reductions exceeding 1 gigaton by 2030 and carbon-neutral operations by 2030; value-chain net-zero emissions target is 2050.