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CG

CARRIER GLOBAL Corp (CARR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 sales rose 19% year over year to $5.15B (6% organic), with adjusted EPS from continuing operations up 50% to $0.54 and adjusted operating margin +370bps YoY to 13.2% .
  • HVAC delivered 11% organic sales growth; Refrigeration declined 6% organically as North America truck & trailer softened; reported Refrigeration margin reflects CCR divestiture gain; adjusted margins improved .
  • 2025 outlook: mid-single-digit organic growth; reported sales $22.5–$23.0B; adjusted operating margin 16.5%–17.0%; adjusted EPS $2.95–$3.05; FCF $2.4–$2.6B; ~$3B share repurchases; Q1 2025 adjusted EPS $0.55–$0.60 with ~100bps margin expansion .
  • Strategic catalysts: data center revenue expected to double to ~$1B in 2025, expanding commercial HVAC backlog; aftermarket attachment approaching 50%; seamless 454B refrigerant transition with ~10% price uplift; continued Viessmann cost synergies .

What Went Well and What Went Wrong

What Went Well

  • Robust top-line and earnings growth: Sales $5.15B (+19% YoY, +6% organic), adjusted EPS $0.54 (+50% YoY), adjusted operating margin +370bps YoY to 13.2% .
  • HVAC momentum: 11% organic growth; Americas up high-teens organically with commercial and North America residential both up double-digits; EMEA commercial up double-digits offsetting residential weakness .
  • Strategic execution: Portfolio transformation completed with >$10B divestiture proceeds; “We are well-positioned to deliver strong results in 2025… growing global commercial HVAC backlog supported by the acceleration in data centers…” — David Gitlin .

What Went Wrong

  • Refrigeration softness: -6% organic sales, driven by declines in North America truck & trailer; container only slightly down .
  • GAAP tax impact: GAAP net loss from continuing operations of $48M in Q4 due to ~$650M tax charge from internal reorganization; offset by tax benefit in discontinued operations; GAAP EPS (cont. ops) -$0.05 .
  • Europe/China residential & light commercial weakness persisted, weighing on EMEA and APAC HVAC segments .

Financial Results

Consolidated Results vs Prior Quarters and Prior Year

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$6.689 $5.984 $5.148
GAAP EPS (Diluted)$2.55 $0.49 $2.82 (total)
Adjusted EPS (Diluted)$0.87 $0.77 $0.54
Operating Margin (Reported)55.2% 12.8% 15.0%
Operating Margin (Adjusted)18.1% 17.4% 13.2%

Note: Q2 reported margin includes Access Solutions gain; Q4 reported Refrigeration margin includes CCR gain .

Year-over-Year (Quarterly) Comparison

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$4.316 $5.148
GAAP EPS (Cont. Ops, Diluted)$0.49 -$0.05
Adjusted EPS (Cont. Ops)$0.36 $0.54
Operating Margin (Reported)12.5% 15.0%
Operating Margin (Adjusted)9.5% 13.2%

Segment Breakdown (Q4 2024 vs Q4 2023)

SegmentNet Sales ($MM) Q4’23Net Sales ($MM) Q4’24Op Profit ($MM) Q4’23 ReportedOp Profit ($MM) Q4’24 ReportedOp Margin Q4’23 ReportedOp Margin Q4’24 ReportedOp Profit ($MM) Q4’23 AdjustedOp Profit ($MM) Q4’24 AdjustedOp Margin Q4’23 AdjustedOp Margin Q4’24 Adjusted
HVAC$3,293 $4,509 $335 $451 10.2% 10.0% $397 $658 12.1% 14.6%
Refrigeration$1,024 $680 $101 $396 9.9% 58.2% $108 $82 10.5% 12.1%
Total Carrier$4,316 $5,148 $539 $774 12.5% 15.0% $411 $678 9.5% 13.2%

KPIs and Operating Drivers

KPIQ2 2024Q3 2024Q4 2024
Organic Orders Growth (Total Co.)~30% ~20% Low-teens
Commercial HVAC Backlog—Up mid-teens YoY Up mid-teens YoY
Americas HVAC Orders——~10%
Refrigeration Orders——~+55% (easy comps)
Data Center Sales~$0.5B FY 2024 —~$0.5B FY 2024; targeting ~$1.0B FY 2025
Aftermarket Attachment Rate—~44% prior, targeting higher ~50%; connected chillers +45k in 2024; coverage ~80k

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesFY 2025—$22.5–$23.0B; MSD organic; FX ~(-1%); Divestitures ~(-3%) (CCR ~$750M headwind) New
Adjusted Operating MarginFY 2025—16.5%–17.0% (~+100bps YoY) New
Adjusted EPSFY 2025—$2.95–$3.05 New
Free Cash FlowFY 2025—$2.4–$2.6B New
Share RepurchasesFY 2025—~$3B; 2025 diluted shares ~5% lower YoY New
Tax RateFY 2025—~22% New
Net InterestFY 2025—Tailwind $0.05–$0.10 New
CurrencyFY 2025—Headwind ~$0.05 New
Q1 Revenue / EPS / MarginQ1 2025—Revenue >$5B, organic flat to LSD; adjusted EPS $0.55–$0.60; ~+100bps margin New
Segment Guidance (HVAC)FY 2025—Americas HSD; Europe LSD (commercial DD, resi/LC flat); Asia LSD (China flat; ex-China MSD) New
Segment Guidance (Refrigeration)FY 2025—Truck & Trailer MSD (NA returns to growth in H2); Container mid-to-high SD; Sensitech DD New
Dividend2025Prior quarterly $0.19Quarterly $0.225 (+18%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Data centers (Quantum Leap)Orders up >3x YTD; OEM solutions; aftermarket 5–10x multiplier potential ~$0.5B 2024, targeted ~$1.0B 2025; integrated liquid/traditional cooling, CDUs, BMS; hyperscaler wins scaling globally Accelerating
Home energy management (Carrier Energy)Utility pilots in North America; lifecycle solutions strategy Integrated battery + heat pump + controls; expanding European HEMS; U.S. initiatives underway Scaling
Refrigerant transition (R‑454B)Preparing inventory/algorithms; residential resilient ~10% realized price on 454B; mix drives ~7% resi sales growth; ~90% of affected volume to 454B in 2025 Supportive pricing/mix
Europe resi/LC + Viessmann (VCS)VCS down high-teens; subsidy dynamics; cost synergies ramp 2025 VCS revenue flat to down MSD; mid-teens EBITDA ROS targeted; ~$150M cost synergies Stabilizing with efficiency gains
Tariffs & supply chainNot expecting large prebuy; balanced inventories China/materials mitigated; Mexico risk under review; heavy U.S. footprint and steel blockings ~80% Managed; watch Mexico
AftermarketCoverage ~75k chillers; digital platforms Abound/Lynx Attachment ~50%; +45k chillers connected in 2024; double-digit aftermarket growth targeted Improving penetration

Management Commentary

  • “We capped a transformational year for Carrier… adjusted operating profit margin expansion of 370 basis points and 50% adjusted EPS growth… completion of our portfolio transformation, which resulted in total divestiture proceeds of over $10 billion.” — David Gitlin, Chairman & CEO .
  • “Q4 adjusted operating profit was up 65%… adjusted operating margin expanded by 370bps… adjusted EPS of $0.54 was up 50% YoY.” — Patrick Goris, CFO .
  • “Last year [data centers] was about $0.5 billion… this year we think it will double.” — David Gitlin .
  • “We expect adjusted EPS between $2.95 and $3.05, up 17% at the midpoint… intend to repurchase about $3 billion in shares.” — Patrick Goris .

Q&A Highlights

  • Residential dynamics and prebuy: Movement up ~15% in Q4, modest prebuy $75–$100M of 410A; Q1 flush of 410A expected; underlying demand strong with share gains (~100bps in 2024) .
  • 454B pricing: Realized ~10% price uplift; mix drives ~7% sales growth in affected volumes; base price LSD increase .
  • Tariffs: China/material tariffs mitigated; monitoring potential Mexico tariffs; operational and pricing actions planned to protect ~$3 EPS target .
  • Light commercial outlook: K‑12 remains strong; funding transitioning from ESSER to state bond frameworks; LC growth guided low-to-mid single-digit driven by 454B mix .
  • Viessmann margins: Low-teens EBITDA ROS in 2024; targeting mid-teens in 2025 with ~$150M cost synergies .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to a data access limitation at the time of this analysis; therefore, we cannot quantify beats/misses versus Wall Street consensus for the quarter (Values retrieved from S&P Global — unavailable).
  • Internal drivers suggest potential upward estimate revisions for FY 2025 on commercial HVAC/data center strength, aftermarket growth, stranded cost elimination, share repurchases, and 454B pricing mix benefits .

Key Takeaways for Investors

  • Operational resilience: Strong Q4 execution with 6% organic growth and 50% adjusted EPS growth; adjusted margin expansion +370bps YoY; sequential adjusted margin compression reflects CCR exit noise and seasonal mix .
  • Commercial HVAC/data centers as multi‑year growth engine: $1B 2025 target, expanding backlog, high‑value aftermarket (multi‑year annuity profile) .
  • Pricing/mix tailwinds from refrigerant transition: ~10% 454B price realization and favorable mix underpin residential and light commercial growth despite flattish volumes .
  • Europe stabilization via cost and synergies: VCS 2025 revenue tempered by macro, but margin trajectory improved by ~$150M cost synergies and product/portfolio initiatives .
  • Capital deployment catalysts: ~$3B buyback in 2025 (share count ~5% lower), dividend up 18% to $0.225 quarterly, net interest tailwind $0.05–$0.10 .
  • Near-term setup: Q1 2025 EPS $0.55–$0.60 with ~100bps margin expansion; revenue >$5B, organic flat to LSD; watch refrigeration NA truck/trailer cadence .
  • Risk watchlist: Potential Mexico tariffs, EMEA policy uncertainty; company plans mitigations via pricing, supply actions, U.S. capacity ramp (Charlotte and new facilities) .