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Carrier (CARR) Q4 Earnings Miss Estimates, Revenues Up Y/Y

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Carrier Global (CARR - Free Report) reported fourth-quarter 2020 adjusted earnings of 31 cents per share, which missed the Zacks Consensus Estimate by 16.2%. Moreover, the figure decreased 41.5% year over year.

Net sales of $4.6 billion beat the consensus mark by 0.3%. Moreover, the top line increased 2.1% year over year.

Product sales (81.2% of net sales) increased 2.1% year over year to $3.73 billion. Service sales (18.8% of net sales) climbed 2.1% year over year to $862 million.


Carrier Global Corporation Price, Consensus and EPS Surprise Carrier Global Corporation Price, Consensus and EPS Surprise

Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote

Quarterly Details

HVAC revenues (50.8% of net sales) increased 5.8% year over year to $2.34 billion. The year-over-year growth was driven by continued momentum in North America residential HVAC, which was up 25% year over year, and an improved economic climate.

However, HVAC operating profit slid 24.8% from the year-ago quarter to $231 million.

Refrigeration revenues (20.7% of net sales) fell 0.4% from the year-ago quarter to $949 million. Operating profit plunged 19.7% to $110 million.

Fire & Security revenues (30.4% of net sales) slid 1.7% from the year-ago quarter to $1.4 billion. Operating profit was $186 million, down 12.3% year over year.

Cost of products sold was $2.72 billion, up 3.3% year over year. However, cost of services sold slipped 0.8% to $588 million.

Selling, general & administrative (SG&A) and research & development (R&D) expenses, as a percentage of revenues, increased 220 basis points (bps) and 60 bps on a year-over-year basis, respectively.

Segmental operating profit in the fourth quarter slipped 19.7% year over year to $527 million.

Adjusted operating profit decreased 23.7% year over year to $453 million, due to planned investment spending on growth initiatives, along with incremental legal and related costs. Operating margin contracted 330 bps on a year-over-year basis to 9.9%.

Balance Sheet & Other Details

As of Dec 31, 2020, Carrier had cash and cash equivalents worth $3.12 billion compared with $3.85 billion as of Sep 30, 2020.

Total debt (including current portion) as of Dec 31, 2020, was $10.23 billion compared with $11.97 billion as of Sep 30, 2020.

In the fourth quarter, Carrier generated $199 million of cash from operating activities, down 81.5% year over year. The company’s quarterly free cash flow came in at $161 million, up 54.8% year over year.


For 2021, Carrier expects sales to be grow between 6-8%. Adjusted operating profit is expected to be nearly 13.5%, expanding 70 bps.

Further, adjusted earnings are expected to be in the range of $1.85-$1.95 per share, indicating growth of 14% at midpoint.

Moreover, free cash flow is projected to be $1.6 billion.

Zacks Rank & Stocks to Consider

Carrier currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector are TechTarget (TTGT - Free Report) , Baidu (BIDU - Free Report) and Shopify (SHOP - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TechTarget is scheduled to report its quarterly earnings on Feb 10 while Baidu and Shopify will report the same on Feb 17.

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