CARRIER GLOBAL Corp SEC 10-K Report

Carrier Global Corporation, a leading provider of heating, ventilation, air conditioning (HVAC), and refrigeration solutions, has released its 2024 Form 10-K report. The report details the company's robust financial performance, significant business activities, strategic initiatives, and the challenges it faces in the evolving market landscape.

Financial Highlights

Carrier Global Corporation reported strong financial results for 2024, showcasing significant growth across key metrics:

• Total Net Sales: $22,486 million, a 19% increase compared to 2023, driven by acquisitions and divestitures, net contributing 16% to the growth.
• Gross Margin: $5,981 million, a 16% increase from 2023, primarily due to ongoing customer demand, pricing improvements, and productivity initiatives.
• Operating Profit: $2,646 million, a 23% increase from 2023, reflecting strong operational performance and favorable productivity initiatives.
• Net Earnings (Loss) Attributable to Common Shareowners: $5,604 million, a significant increase from $1,349 million in 2023, largely due to gains from discontinued operations.
• Diluted EPS: $6.15, compared to $1.58 in 2023, reflecting the substantial increase in net earnings attributable to common shareowners.

Business Highlights

Carrier Global Corporation's business performance in 2024 was marked by notable achievements and strategic moves:

• Revenue Segments: The company operates through two main segments: HVAC and Refrigeration. The HVAC segment, which includes brands like Carrier, Viessmann, and Toshiba, focuses on heating, cooling, and ventilation solutions. The Refrigeration segment provides transport refrigeration and monitoring products for trucks, trailers, and shipping containers.
• Geographical Performance: In 2024, net sales were distributed across the Americas (52%), Europe, Middle East, and Africa (31%), and Asia-Pacific (17%). The Americas saw growth driven by strong demand in the Commercial and Residential HVAC markets, while EMEA faced reduced volumes in residential markets. Asia experienced lower demand, particularly in China.
• New Product Launches: Carrier introduced Carrier Energy, a solution aimed at reducing energy consumption and costs for end-customers, as part of their strategy to offer digitally-enabled lifecycle solutions.
• Portfolio Transformation: The company completed several divestitures, including the sale of its Access Solutions, Industrial Fire, Commercial Refrigeration, and Commercial and Residential Fire businesses, to focus on core areas and enhance their position as a leader in intelligent climate and energy solutions.
• Future Outlook: Carrier aims to strengthen its global leadership in climate and energy solutions by focusing on innovation, electrification, and energy-efficient solutions. The acquisition of Viessmann's climate solutions business is expected to bolster their offerings in Europe, particularly in high-efficiency heating and renewable energy systems.

Strategic Initiatives

Carrier Global Corporation undertook significant strategic initiatives to enhance its market position and financial stability:

• Portfolio Transformation: The acquisition of Viessmann Climate Solutions for $14.2 billion aims to enhance the HVAC segment. The company also divested several businesses, generating substantial cash proceeds to focus on core operations and strengthen its position in intelligent climate and energy solutions.
• Capital Management: Carrier actively managed its capital structure by reducing total debt from $14.3 billion in 2023 to $12.3 billion in 2024. It issued new debt instruments, including USD and Euro-denominated notes, to fund acquisitions and refinance existing obligations. The company also repurchased $1.9 billion of its common stock and paid $670 million in dividends to shareholders. Carrier maintains a $2.5 billion revolving credit facility to support its liquidity needs.
• Future Outlook: Carrier plans to continue optimizing its business portfolio and capital structure to support growth and shareholder returns. The company anticipates changes to its management reporting structure in 2025, aligning with its strategic focus on core segments. It remains committed to investing in energy-efficient and sustainable technologies, with a goal to achieve carbon neutrality in its operations by 2030. Carrier also aims to leverage its strong liquidity position to explore further strategic acquisitions and investments.

Challenges and Risks

Carrier Global Corporation faces several challenges and risks that could impact its business operations and financial performance:

• International Operations: Approximately 50% of net sales are derived from international operations, exposing the company to exchange rate volatility, political instability, and regulatory changes.
• Joint Ventures and Strategic Relationships: Dependence on joint ventures, such as those with Watsco, Inc. and Midea Group, introduces risks related to partner alignment and operational control.
• Climate Events and Regulations: Increasing frequency of extreme weather and evolving climate regulations could disrupt operations and necessitate significant capital investments.
• Cybersecurity: The company faces risks from potential cyber-attacks that could disrupt operations and compromise sensitive data.
• Debt Obligations: With $12.3 billion in outstanding debt, Carrier's financial flexibility is constrained, potentially affecting its ability to invest in growth opportunities.
• Intellectual Property: Protecting intellectual property and managing third-party IP risks are critical to maintaining competitive advantage.
• Supply Chain: Reliance on single-source suppliers for key components poses risks of supply disruptions and increased costs.
• Product and Technology Innovation: The success of new product introductions is uncertain, and failure to meet regulatory standards could impact market competitiveness.
• Labor Relations: Unionized workforce and potential labor shortages could disrupt operations and increase costs.
• Legal and Compliance: The company is subject to various legal risks, including environmental regulations and U.S. government contracting requirements.

Management is focused on mitigating these risks through strategic initiatives such as enhancing digital capabilities, investing in sustainable technologies, and optimizing the business portfolio. The acquisition of the Viessmann Climate Solutions business is expected to strengthen the HVAC segment, while divestitures aim to streamline operations and focus on core competencies. The company is also prioritizing cybersecurity measures and supply chain resilience to address operational risks.

SEC Filing: CARRIER GLOBAL Corp [ CARR ] - 10-K - Feb. 11, 2025