Carrier Global Corporation (NYSE:CARR) is a global leader in intelligent climate and energy solutions, committed to creating innovative products and services that make the world safer, more sustainable, and more comfortable. With a rich history spanning over a century, Carrier has consistently pushed the boundaries of technological advancement, transforming the way we approach heating, ventilation, air conditioning (HVAC), refrigeration, and beyond.
In 2020, Carrier embarked on a new era as an independent public company following its spin-off from United Technologies Corporation. This strategic move has allowed the company to sharpen its focus, streamline operations, and invest heavily in its core competencies. The results have been nothing short of impressive, as Carrier has systematically executed on its vision to become a pure-play leader in intelligent climate and energy solutions.
Carrier's Journey of Transformation and Growth
Carrier's story is one of relentless innovation and adaptation. The company was founded in 1902 by Willis Carrier, the inventor of the modern air conditioning system. Over the decades, Carrier has pioneered numerous industry-defining technologies, from the first centrifugal chiller to the development of eco-friendly refrigerants.
Carrier Global Corporation was officially incorporated in Delaware in March 2019 in preparation for its separation from United Technologies Corporation (UTC). The spin-off was completed on April 3, 2020, when UTC distributed Carrier shares to its shareholders, establishing Carrier as an independent publicly traded company.
Prior to the separation, Carrier operated as a business segment within UTC, growing and diversifying to become a global leader in HVAC, refrigeration, and building services. However, the company faced challenges in the years leading up to the spin-off. In 2018, Carrier encountered supply chain disruptions and cost inflation pressures that impacted its financial performance. There were also concerns about its ability to operate effectively as a standalone public company.
To address these challenges and prepare for independence, Carrier took several strategic steps. The company promoted and added key talent, launched a new culture and operating system called "Carrier Excellence," and invested in its product portfolio and aftermarket services. Additionally, Carrier simplified its back office operations and focused on debt reduction in the years prior to the spin-off.
The separation from UTC in 2020 marked a significant milestone for Carrier, allowing it to operate independently and focus on its core HVAC and refrigeration businesses. However, the company faced immediate challenges as a standalone entity, having to navigate the COVID-19 pandemic in its first year of independence. Despite these headwinds, Carrier maintained profitability and continued to execute on its strategic priorities.
Following the spin-off, Carrier embarked on a strategic transformation, divesting non-core businesses and doubling down on its HVAC and refrigeration segments. This portfolio optimization has streamlined the company's operations, enhanced its financial flexibility, and positioned it for sustainable growth.
In 2024, Carrier made a transformative move by acquiring Viessmann Climate Solutions, a leading provider of intelligent, integrated, and sustainable technologies, including heat pumps, boilers, photovoltaic systems, and digital solutions. This acquisition has significantly expanded Carrier's addressable market, particularly in the fast-growing European residential and light commercial HVAC market.
Carrier's Financial Strength and Resilience
Carrier's financial performance has been a testament to its strategic execution and operational excellence. In 2024, the company reported revenue of $22.49 billion, a 19% increase from the previous year, driven by strong organic growth and the contribution of the Viessmann acquisition.
The company's HVAC segment, which accounts for the majority of its revenue, delivered a 26% year-over-year increase in net sales, highlighting the strength of its commercial and residential product lines. The Refrigeration segment also performed well, with organic sales growth of 5% for the full year.
Carrier's profitability has been equally impressive, with adjusted operating margins expanding by 180 basis points in 2024 to 13.4%. This margin expansion was driven by the benefits of organic growth, productivity initiatives, and the synergies realized from the Viessmann acquisition.
Financials
Carrier's financial performance demonstrates its ability to drive growth and profitability. The company's revenue growth of 19% in 2024 reflects its strong market position and successful execution of strategic initiatives. The HVAC segment's 26% year-over-year increase in net sales underscores the robust demand for Carrier's products and services in this critical market.
For the fiscal year 2024, Carrier reported annual revenue of $22.49 billion, annual net income of $5.60 billion, annual operating cash flow of $1.57 billion, and annual free cash flow of $30 million. The company's focus on operational efficiency is evident in its adjusted operating margin expansion of 180 basis points to 13.4% in 2024. This improvement in profitability showcases Carrier's ability to leverage its scale, realize synergies from acquisitions, and implement productivity initiatives effectively.
In the fourth quarter of 2024, Carrier reported revenue of $5.15 billion and net income of $1.42 billion. The company achieved 6% organic sales growth in Q4 2024, driven by continued strength in global commercial HVAC and North America residential HVAC, partially offset by weakness across residential and light commercial HVAC in Europe and China.
Carrier's international operations, including U.S. export sales, represented approximately 50% of its net sales for 2024. The Americas region accounted for 52% of net sales, EMEA 31%, and Asia-Pacific 17%. This geographic diversification helps to mitigate regional economic fluctuations and provides multiple avenues for growth.
Liquidity
Carrier's balance sheet remains solid, with a net debt-to-EBITDA ratio of approximately 2.0x as of the end of 2024. The company's debt-to-equity ratio stood at 0.80, indicating a balanced capital structure. Carrier reported cash and cash equivalents of $3.97 billion as of December 31, 2024, providing ample liquidity to fund operations and strategic initiatives.
The company's current ratio of 1.25 and quick ratio of 0.96 as of December 31, 2024, demonstrate its ability to meet short-term obligations. Additionally, Carrier maintains a $2.5 billion revolving credit facility that matures in December 2029, which can be used to support its commercial paper program and for general corporate purposes. As of December 31, 2024, there were no borrowings outstanding under this facility, further enhancing the company's financial flexibility.
This strong liquidity position provides Carrier with the financial flexibility to pursue growth opportunities, weather economic uncertainties, and continue investing in innovation and sustainability initiatives.
Innovative Solutions for a Sustainable Future
Carrier's commitment to innovation and sustainability is at the core of its business strategy. The company's product portfolio is continuously evolving to meet the ever-changing needs of its customers and address global challenges, such as climate change and energy efficiency.
In the HVAC segment, Carrier has been at the forefront of developing high-efficiency, low-emission heating and cooling solutions. The company's recent introduction of its Carrier-branded air conditioning units and cascadable heat pumps for the European market, as well as its investments in home energy management systems, demonstrate its ability to provide integrated, intelligent, and environmentally-friendly solutions.
Within the Refrigeration segment, Carrier's Lynx digital platform and Sensitech technologies are transforming the cold chain industry by enhancing visibility, resilience, and efficiency. The company's focus on electrification and low-emission refrigerants further underscores its dedication to sustainable innovation.
Carrier's strategic focus on digitally-enabled lifecycle solutions has also been a key driver of growth. By seamlessly integrating its products, services, and data analytics, the company is able to provide customers with a comprehensive and differentiated suite of offerings that increase customer intimacy and drive aftermarket revenue.
Navigating Headwinds and Positioning for the Future
Like many industrial companies, Carrier has faced its fair share of challenges in recent years, including supply chain disruptions, inflationary pressures, and geopolitical uncertainties. However, the company's diversified global footprint, strong customer relationships, and operational agility have allowed it to navigate these headwinds effectively.
In 2025, Carrier expects to deliver mid-single-digit organic growth, driven by continued strength in its commercial HVAC and aftermarket businesses. The company's recently completed portfolio transformation, coupled with its focus on digitalization, sustainability, and innovative product development, position it well to capitalize on the growing demand for intelligent climate and energy solutions.
For 2025, Carrier has provided guidance that reflects its confidence in continued strong performance. The company expects:
- Mid-single-digit organic sales growth, with reported sales between $22.5 billion and $23 billion. - About 1 point of price and the remaining organic growth to come from volume and mix. - Currency translation to be a 1 point headwind. - Adjusted operating margin to be up about 100 basis points compared to 2024, with half of the increase from volume, price and net productivity, and half from the absence of commercial refrigeration. - Core earnings conversion (excluding acquisitions, divestitures and FX) to be about 30%. - Free cash flow between $2.4 billion and $2.6 billion, reflecting roughly 100% conversion. - Adjusted EPS between $2.95 and $3.05, up 17% at the midpoint. - $3 billion in share repurchases.
This guidance underscores Carrier's expectation of continued revenue growth, margin expansion, and strong cash flow generation, reflecting the company's confidence in its strategic initiatives and market positioning.
Furthermore, Carrier's strategic partnership with Google Cloud to enhance grid flexibility and support smarter energy management through its Home Energy Management System (HEMS) solutions underscores the company's commitment to being at the forefront of the evolving energy landscape.
Business Overview A Storied Brand with a Refocused Strategy
Carrier Global Corporation operates through two reportable business segments: HVAC and Refrigeration. These segments leverage the company's century-long expertise to deliver innovative solutions across various markets.
The HVAC segment provides a comprehensive range of products, controls, services, and solutions to meet the heating, cooling, and ventilation needs of residential and commercial customers. This segment's offerings are designed to enhance building performance, health, energy efficiency, and sustainability. The product portfolio includes air conditioners, heating systems, heat pumps, building automation systems, aftermarket components, repair and maintenance services, and modernization and upgrade services across the product lifecycle.
Carrier's established brands in the HVAC segment include Carrier, Viessmann, Toshiba, Automated Logic, Bryant, CIAT, Day & Night, Heil, NORESCO, and Riello. These products and solutions serve a wide range of customers, including residential, commercial, education, healthcare, technology, retail, hospitality, data center, and infrastructure markets. The HVAC segment's products, in addition to the markets they serve, provide future service opportunities including replacement components, preventative and on-demand contractual maintenance and repair, digital monitoring, and modification/upgrades.
The Refrigeration segment focuses on providing products, services, and monitoring solutions for the reliable transport and preservation of food, medicine, and other perishable cargo. This segment's offerings include trucks, trailers, shipping containers, and intermodal applications to meet customer needs for both ground transport and ocean freight. The segment's services include maintenance, repair, and monitoring. Carrier's established brands in this segment include Carrier Transicold and Sensitech.
The Refrigeration segment provides customers with flexibility to select solutions from a range of technologies, including fossil fuel applications and electric solutions, to best align with their objectives, preferences, and regulatory requirements. The focus on digitalization and innovation is expanding the segment's service and aftermarket solutions, including on-demand and subscription-based monitoring of customer cargo. Through the product lifecycle, the segment also offers modifications and upgrades to the current installed base to improve energy efficiency, noise, or other customer requirements.
For the year ended December 31, 2024, the HVAC segment reported net sales of $19.08 billion, representing 85% of Carrier's total net sales. The Refrigeration segment reported net sales of $3.48 billion, or 15% of total net sales. The HVAC segment's operating profit was $2.31 billion, while the Refrigeration segment's operating profit was $715 million.
Carrier's success is underpinned by favorable secular trends in its business, including urbanization, population growth and demographic shifts, food security and safety, digitalization, global connectivity, and energy efficiency. The company expects these trends to continue benefiting its business segments, driving long-term growth and value creation.
Conclusion
Carrier Global Corporation has established itself as a formidable player in the intelligent climate and energy solutions market. With a rich heritage, a relentless focus on innovation, and a disciplined approach to capital allocation, the company has successfully navigated industry challenges and positioned itself for long-term growth.
As the world grapples with the pressing issues of sustainability and energy efficiency, Carrier's portfolio of cutting-edge products and services, coupled with its strategic partnerships and continuous investment in R&D, make it well-equipped to lead the charge towards a more sustainable future. The company's strong financial performance, robust liquidity position, and positive outlook for 2025 further reinforce its status as a leader in the industry.
Investors would be wise to closely monitor Carrier's progress as it continues to transform the industry and create value for its shareholders. With its strategic focus on digitally-enabled lifecycle solutions, commitment to sustainability, and strong market positioning, Carrier Global Corporation is well-positioned to capitalize on the growing demand for intelligent climate and energy solutions in the years to come.