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Carrier Global (CARR - Free Report) reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which came in line with the Zacks Consensus Estimate. The figure decreased by 9.1% year over year.
Net sales of $5.1 billion surpassed the Zacks Consensus Estimate of $5.08 billion. However, the figure decreased by 1% year over year.
Softness in the Refrigeration and Fire & Security segments led to a year-over-year decline in the top line.
Nevertheless, the company witnessed strong momentum across the HVAC segment.
Product sales (88.7% of net sales) of $4.53 billion increased 6.4% year over year. Service sales (11.3% of net sales) of $578 million were down 34.1% year over year.
Carrier Global Corporation Price, Consensus and EPS Surprise
HVAC revenues (65% of net sales) increased 21% year over year to $3.32 billion. Residential sector strength in North America drove growth. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $943 million (18.5% of net sales) were down 14% from the year-ago quarter’s level. The slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in European truck/trailer sales was a positive.
Fire & Security revenues (18.8% of net sales) of $960 million were down 33% year over year.
Nevertheless, growing momentum among access solutions and strength in the commercial fire business in the Americas remained positive.
Operating Results
Research & development (R&D) expenses increased 11.2% year over year to $149 million. Selling, general & administrative (SG&A) expenses fell 17.5% from the year-ago quarter’s level to $673 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level, but SG&A expenses contracted 270 bps year over year.
The adjusted operating margin contracted 10 bps on a year-over-year basis to 10.1%.
The adjusted operating margin of the HVAC segment expanded 60 bps year over year to 9.6%. The Refrigeration segment reported an adjusted operating margin of 12.1%, expanding 60 bps. Adjusted operating margin of Fire & Security was 14.5%, expanding by 60 bps year over year.
Balance Sheet
As of Dec 31, 2022, Carrier had cash and cash equivalents of $3.52 billion compared with $2.98 billion on Sep 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.8 billion compared with $8.9 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $1.1 million in cash from operations, up from $790 million in the prior quarter.
Capital expenditure was $140 million in the fourth quarter of 2022. Free cash flow was $983 million for the reported quarter.
2023 Guidance
For 2023, Carrier expects sales of $22 billion. The Zacks Consensus Estimate for sales is pegged at $21.64 billion.
Carrier anticipates adjusted earnings per share within the range of $2.50-$2.60. The Zacks Consensus Estimate for the same is pegged at $2.53 per share.
Carrier expects an adjusted operating margin of 14%. CARR expects free cash flow of $1.9 billion.
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Carrier's (CARR) Q4 Earnings In-Line, Revenues Beat Estimates
Carrier Global (CARR - Free Report) reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which came in line with the Zacks Consensus Estimate. The figure decreased by 9.1% year over year.
Net sales of $5.1 billion surpassed the Zacks Consensus Estimate of $5.08 billion. However, the figure decreased by 1% year over year.
Softness in the Refrigeration and Fire & Security segments led to a year-over-year decline in the top line.
Nevertheless, the company witnessed strong momentum across the HVAC segment.
Product sales (88.7% of net sales) of $4.53 billion increased 6.4% year over year. Service sales (11.3% of net sales) of $578 million were down 34.1% year over year.
Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote
Segment Details
HVAC revenues (65% of net sales) increased 21% year over year to $3.32 billion. Residential sector strength in North America drove growth. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $943 million (18.5% of net sales) were down 14% from the year-ago quarter’s level. The slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in European truck/trailer sales was a positive.
Fire & Security revenues (18.8% of net sales) of $960 million were down 33% year over year.
Nevertheless, growing momentum among access solutions and strength in the commercial fire business in the Americas remained positive.
Operating Results
Research & development (R&D) expenses increased 11.2% year over year to $149 million. Selling, general & administrative (SG&A) expenses fell 17.5% from the year-ago quarter’s level to $673 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level, but SG&A expenses contracted 270 bps year over year.
The adjusted operating margin contracted 10 bps on a year-over-year basis to 10.1%.
The adjusted operating margin of the HVAC segment expanded 60 bps year over year to 9.6%. The Refrigeration segment reported an adjusted operating margin of 12.1%, expanding 60 bps. Adjusted operating margin of Fire & Security was 14.5%, expanding by 60 bps year over year.
Balance Sheet
As of Dec 31, 2022, Carrier had cash and cash equivalents of $3.52 billion compared with $2.98 billion on Sep 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.8 billion compared with $8.9 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $1.1 million in cash from operations, up from $790 million in the prior quarter.
Capital expenditure was $140 million in the fourth quarter of 2022. Free cash flow was $983 million for the reported quarter.
2023 Guidance
For 2023, Carrier expects sales of $22 billion. The Zacks Consensus Estimate for sales is pegged at $21.64 billion.
Carrier anticipates adjusted earnings per share within the range of $2.50-$2.60. The Zacks Consensus Estimate for the same is pegged at $2.53 per share.
Carrier expects an adjusted operating margin of 14%. CARR expects free cash flow of $1.9 billion.
Zacks Rank & Stocks to Consider
Currently, Carrier has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is currently projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is currently projected at 17.5%.
Asure Software has gained 51.9% in the past year. The long-term earnings growth rate for ASUR is currently projected at 23%.