Carrier Reports 2020 Results and Announces 2021 Outlook

PALM BEACH GARDENS, Fla., Feb. 9, 2021 /PRNewswire/ -- Carrier Global Corporation (NYSE: CARR) today reported financial results for the fourth quarter and full year 2020, and announced its 2021 outlook. Carrier is the leading global provider of healthy, safe and sustainable building and cold chain solutions.

"I'm proud of the Carrier team's performance in 2020. We overachieved on our key operational and financial goals, supported our customers and exited the year with strong momentum. I want to thank our 56,000 employees for their tireless efforts in a challenging year. Our strategy was reinforced by fourth quarter results, which surpassed our expectations because of continued strength in North American residential HVAC and continued traction on our growth and cost containment initiatives," said Carrier President & CEO Dave Gitlin. "Looking to 2021, we will continue to execute on our strategy to drive growth and profitability and expect mid-single digit organic sales growth, margin expansion, double-digit adjusted EPS growth, and strong cash conversion. Carrier is well-positioned as the world leader in healthy, safe and sustainable building and cold chain solutions."

Share Repurchase Authorization
On February 4, 2021 Carrier's Board of Directors authorized the repurchase of up to $350 million of the company's outstanding common stock. Share repurchases may take place from time to time, subject to market conditions and at the company's discretion in the open market or through one or more other public or private transactions.

Full-Year 2020 Results
Carrier's 2020 sales of $17.5 billion were down 6% compared to the prior year. The sales decline was largely driven by the impact of the COVID-19 pandemic, but partly offset by strong demand in North America residential HVAC in the second half of 2020. GAAP operating profit of $3.1 billion was up 24% and adjusted operating profit of $2.23 billion was down 19%. GAAP operating profit benefited from the gain on the sale of the company's shares in Beijer Ref AB ("Beijer") in the second half of the year. Adjusted operating profit was impacted by investments in growth initiatives, lower sales and unfavorable productivity due to factory disruptions related to the COVID-19 pandemic. These negative effects were partly offset by cost-containment measures and accelerated savings under Carrier 700.

GAAP EPS of $2.25 benefited from the gain on the sale of the shares in Beijer in the second half of the year and adjusted EPS was $1.66. Net income was $2.0 billion, and adjusted net income was $1.5 billion. Net cash flows provided by operating activities were $1.69 billion and capital expenditures were $312 million, resulting in free cash flow of $1.38 billion. Free cash flow included $272 million in tax payments related to the gain on the sale of the shares in Beijer.

Fourth Quarter 2020 Results
Carrier's fourth quarter sales of $4.6 billion were up 2% compared to the prior year due to currency translation and organic sales were flat to the prior year. The sales performance was largely driven by continued strong demand in North America residential HVAC, which was up 25% compared to the prior year, an improved economic climate, and other businesses continue to improve sequentially, but were still down compared to last year. GAAP operating profit in the quarter of $1.25 billion was up 124% and adjusted operating profit of $453 million was down 24%. These results were impacted by planned investment spending on growth initiatives in the quarter, incremental public company, vendor contract termination, legal and related costs.

GAAP EPS of $1.00 included the sale of Carrier's stake in Beijer and adjusted EPS was $0.31. Net income was $884 million, and adjusted net income was $280 million. Net cash flows provided by operating activities were $199 million and capital expenditures were $161 million, resulting in free cash flow of $38 million. Free cash flow included $272 million in tax payments related to the gain on the sale of the shares in Beijer.

Full-Year 2021 Outlook*

    --  Carrier is announcing the following outlook for 2021:
        --  Sales growth of 6% to 8%
        --  organic sales up 4% to 6%
    --  currency translation to add approximately 2%
    --  Adjusted operating margin of approximately 13.5%, up 70 bps
    --  Adjusted EPS of $1.85 to $1.95, up 14% at midpoint
    --  Free cash flow of approximately $1.6 billion

*Note: When the company provides expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

Conference Call
Carrier will host a webcast of its earnings conference call today, Tuesday, February 9, 2021, at 9:00 a.m. ET. To access the webcast, visit the Events & Presentations section of the Carrier Investor Relations site at ir.carrier.com/news-and-events/events-and-presentations or to listen to the earnings call by phone, dial (877) 742-9091.

About Carrier
As the leading global provider of healthy, safe and sustainable building and cold chain solutions, Carrier Global Corporation is committed to making the world safer, more sustainable and comfortable for generations to come. From the beginning, we've led in inventing new technologies and entirely new industries. Today, we continue to lead because we have a world-class, diverse workforce that puts the customer at the center of everything we do. For more information, visit www.corporate.carrier.com or follow Carrier on social media at @Carrier.

CARR-IR

Use and Definitions of Non-GAAP Financial Measures
Carrier Global Corporation ("Carrier") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").

We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

Organic sales, adjusted operating profit, adjusted operating margin, earnings before interest, taxes and depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share ("EPS"), the adjusted effective tax rate, and net debt are non-GAAP financial measures. Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as "other significant items").

Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs and other significant items. Adjusted operating margin represents adjusted operating profit as a percentage of net sales (a GAAP measure). EBITDA represents net income attributable to common shareholders (a GAAP measure), adjusted for interest expense, income tax expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, excluding non-service pension benefit, non-controlling interest in subsidiaries' earnings from operations, restructuring costs and other significant items. Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs and other significant items. Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs and other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs and other significant items. Net debt represents long-term debt (a GAAP measure) less cash and cash equivalents. For the business segments, when applicable, adjustments of operating profit and operating margins represent operating profit, excluding restructuring and other significant items.

Free cash flow is a non-GAAP financial measure that represents net cash flows provided by operating activities (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Carrier's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of Carrier's common stock and distribution of earnings to shareowners.

When we provide our expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS, and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected net sales, operating profit, operating margin, diluted EPS and net cash flows provided by operating activities) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, future restructuring costs, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance or the separation and distribution from United Technologies. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Carrier, the estimated costs associated with the Separation, Carrier's plans with respect to our indebtedness and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Carrier and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on production and on global supply, demand, and distribution as the outbreak continues and results in a prolonged period of travel, commercial and other restrictions and limitations), natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions and Carrier's capital structure and credit ratings; (5) the timing and scope of future repurchases of Carrier's common stock, including market conditions and the level of other investing activities and uses of cash; (6) delays and disruption in the delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) risks resulting from being a smaller, less diversified company than prior to the separation; (10) the outcome of legal proceedings, investigations and other contingencies; (11) the impact of pension plan assumptions on future cash contributions and earnings; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S. (including in connection with the new administration in Washington, DC) and other countries in which Carrier and our businesses operate, including the effect of changes in U.S. trade policies or the United Kingdom's withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes (including potentially as a result of the new administration in Washington, DC) in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate; (15) the ability of Carrier to retain and hire key personnel; (16) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the expected benefits of the Separation; (18) a determination by the U.S. Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness, including that incurred as a result of financing transactions undertaken in connection with the separation, as well as our ability to reduce indebtedness and the timing thereof; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the separation will exceed Carrier's estimates; and (21) the impact of the Separation on Carrier's business and Carrier's resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Carrier assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.


     Contact: 
     Media Inquiries


              
     Danielle Canzanella


              
     561-365-1101


              
     
              Danielle.Canzanella@Carrier.com




              
     Investor Relations


              
     Sam Pearlstein


              
     561-365-2251


              
     
              Sam.Pearlstein@Carrier.com



       
                Carrier Global Corporation



       
                Condensed Consolidated Statement of Operations




                                                                                                                                                 
              
            (Unaudited)


                                                                                                                                  For the Three Months Ended
                                                                                                                                        December 31,                                  For the Year Ended December 31,

                                                                                                                                                                                                                  ---


       
                
                  
                    (dollars in millions, except per share amounts; shares in millions)  2020                            2019                2020                                        2019

    ---                                                                                                                                                                                                                 ---


       
                Net sales



       Product sales                                                                                                             $
              3,732                                        $
              3,657                      $
       14,347     $
       15,360



       Service sales                                                                                                      862                                   844                                              3,109                  3,248



                                                                                                                         4,594                                 4,501                                             17,456                 18,608




       
                Costs and expenses



       Cost of products sold                                                                                            2,721                                 2,635                                             10,185                 10,890



       Cost of services sold                                                                                              588                                   593                                              2,162                  2,299



       Research and development                                                                                           127                                    99                                                419                    401



       Selling, general and administrative                                                                                810                                   695                                              2,820                  2,761



                                                                                                                         4,246                                 4,022                                             15,586                 16,351



       Equity method investment net earnings                                                                               59                                    38                                                207                    236



       Other income (expense), net                                                                                        838                                    40                                              1,006                    (2)




       
                Operating profit                                                                                    1,245                                   557                                              3,083                  2,491



       Non-service pension benefit                                                                                         13                                    30                                                 60                    154



       Interest (expense) income, net                                                                                    (82)                                    4                                              (288)                    27




       
                Income from operations before income taxes                                                          1,176                                   591                                              2,855                  2,672



       Income tax expense                                                                                                 289                                   137                                                849                    517




       
                Net income from operations                                                                            887                                   454                                              2,006                  2,155



       Less: Non-controlling interest in subsidiaries' earnings from operations                                             3                                    14                                                 24                     39




       
                Income from operations attributable to common shareowners                                                 $
      
                884                                $
           
                440                   $
     
         1,982  $
     
         2,116






       
                Earnings per share (1), (2)



       Basic                                                                                                                      $
              1.02                                         $
              0.50                        $
       2.29       $
       2.44



       Diluted                                                                                                                    $
              1.00                                         $
              0.50                        $
       2.25       $
       2.44



       
                Weighted-average number of shares outstanding (2)



       Basic                                                                                                            867.4                           866.2               866.5                                       866.2



       Diluted                                                                                                          888.4                           866.2               880.2                                       866.2



                            (1) On April 3, 2020, United
                             Technologies Corporation, since
                             renamed Raytheon Technologies
                             Corporation ("UTC") completed the
                             spin-off of Carrier, one of
                             UTC's reportable segments, into a
                             separate publicly traded company
                             (the "Separation"). The
                             Separation was completed through
                             a pro-rata distribution (the
                             "Distribution") of all of the
                             outstanding common stock of
                             Carrier to UTC shareowners who
                             held shares of UTC common stock
                             as of the close of business on
                             March 19, 2020, the record date
                             for the Distribution. Earnings
                             per share for periods presented
                             prior to the Separation were
                             calculated using the number of
                             shares that were distributed to
                             UTC shareowners immediately
                             following the Separation. For
                             periods prior to the Separation
                             it was assumed that there were no
                             dilutive equity instruments as
                             there were no equity awards in
                             Carrier common stock outstanding
                             prior to the Separation.




                            (2) Basic and diluted earnings per
                             share for the three and twelve
                             months ended December 31, 2020
                             are calculated using the
                             weighted-average number of
                             common shares outstanding for the
                             period beginning after the
                             Distribution date. Diluted
                             earnings per share is computed by
                             giving effect to all potentially
                             dilutive stock awards that are
                             outstanding.



       
                Carrier Global Corporation



       
                Segment Net Sales and Operating Profit




                                                                                               For the Three Months Ended December 31,                                            
        
         For the Year Ended December 31,

                                                                                                                                                                                               ---

                     (Unaudited)                                                           2020                                                         2019                                                           2020                                            2019

    ---                                                                                                                                                                                                                                                            ---

                                                     (dollars in millions) Reported                                         Adjusted                   Reported   Adjusted                                              Reported                     Adjusted             Reported                       Adjusted

    ---




       
                Net sales



       HVAC                                                                            $
      2,336                                                 $
           2,336                     $
       2,207                                                 $
             2,207                               $
      9,478                              $
      9,478              $
      9,712              $
      9,712



       Refrigeration                                                           949                                               949                         953         953                                                  3,333                         3,333                 3,792                           3,792



       Fire & Security                                                       1,398                                             1,398                       1,422       1,422                                                  4,985                         4,985                 5,500                           5,500




       Segment sales                                                         4,683                                             4,683                       4,582       4,582                                                 17,796                        17,796                19,004                          19,004



       Eliminations and other                                                 (89)                                             (89)                       (81)       (81)                                                 (340)                        (340)                (396)                          (396)




       
                Net sales                                                      $
     
        4,594                                           $
       
             4,594              $
        
         4,501                                           $
       
               4,501                         $
      
        17,456                        $
      
        17,456        $
      
        18,608        $
      
        18,608






       
                Operating profit



       HVAC                                                                            $
      1,098                                                   $
           231                       $
       321                                                   $
             307                               $
      2,462                              $
      1,430              $
      1,563              $
      1,670



       Refrigeration                                                            94                                               110                         159         137                                                    357                           375                   532                             524



       Fire & Security                                                         158                                               186                         187         212                                                    584                           628                   708                             768



        Segment operating profit                                              1,350                                               527                         667         656                                                  3,403                         2,433                 2,803                           2,962



       Eliminations and other                                                 (62)                                             (33)                       (61)       (13)                                                 (184)                         (73)                (156)                           (60)


        General corporate expenses                                             (43)                                             (41)                       (49)       (49)                                                 (136)                        (128)                (156)                          (156)



                     Operating profit                                               $
     
        1,245                                             $
       
             453                $
        
         557                                             $
       
               594                          $
      
        3,083                         $
      
        2,232         $
      
        2,491         $
      
        2,746






       
                Segment operating margin



       HVAC                                                                   47.0                                                     9.9                             14.5                                                         13.9                                         26.0                                     15.1                   16.1                   17.2
                                                                                  %                                                      %                               %                                                           %                                           %                                       %                      %                      %



       Refrigeration                                                           9.9                                                    11.6                             16.7                                                         14.4                                         10.7                                     11.3                   14.0                   13.8
                                                                                  %                                                      %                               %                                                           %                                           %                                       %                      %                      %



       Fire & Security                                                        11.3                                                    13.3                             13.2                                                         14.9                                         11.7                                     12.6                   12.9                   14.0
                                                                                  %                                                      %                               %                                                           %                                           %                                       %                      %                      %



       
       Carrier Global Corporation



       
       Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)



       
       Operating Profit & Operating Profit Margin




                                                                                             For the Three Months Ended                             For the Year Ended



       
       (Unaudited)                                                                              December 31,                  
              
            December 31,

    ---                                                                                                                                         ---

                                            (dollars in millions -Income (Expense)) 2020                                2019         2020                                  2019

    ---                                                                                                                                                                ---


       
       HVAC


        
     Net sales                                                                             $
              2,336                                  $
              2,207                      $
         9,478              $
          9,712





        
     Operating profit                                                                      $
              1,098                                    $
              321                      $
         2,462              $
          1,563


        
     Restructuring                                                              (4)                                      (9)                                        (7)                    (56)


        
     Impairment charge on equity method investment                                                                                                                 (71)                   (108)


        
     Gain on sale of investment                                                 871                                        23                                       1,123                       57


        
     Charge resulting from litigation matter                                                                                                                       (11)


        
     Separation costs                                                                                                                                               (2)


        
     
                Adjusted operating profit                                          $
         
                231                           $
          
                307              $
         
           1,430     $
          
            1,670



        
     Adjusted operating margin                                                  9.9                                      13.9                                        15.1                     17.2
                                                                                       %                                        %                                          %                       %





       
       Refrigeration


        
     Net sales                                                                               $
              949                                    $
              953                      $
         3,333              $
          3,792





        
     Operating profit                                                                         $
              94                                    $
              159                        $
         357                $
          532


        
     Restructuring                                                             (10)                                                                                (12)                    (14)


        
     Net gain on expropriated plant                                                                                       22                                                                  22


        
     Separation costs                                                           (6)                                                                                 (6)


        
     
                Adjusted operating profit                                          $
         
                110                           $
          
                137                $
         
           375       $
          
            524



        
     Adjusted operating margin                                                 11.6                                      14.4                                        11.3                     13.8
                                                                                       %                                        %                                          %                       %





       
       Fire & Security


        
     Net sales                                                                             $
              1,398                                  $
              1,422                      $
         4,985              $
          5,500





        
     Operating profit                                                                        $
              158                                    $
              187                        $
         584                $
          708


        
     Restructuring                                                             (15)                                     (18)                                       (28)                    (53)


        
     Separation costs                                                          (13)                                                                                (16)


        
     Pension plan amendment                                                                                              (7)                                                                (7)


        
     
                Adjusted operating profit                                          $
         
                186                           $
          
                212                $
         
           628       $
          
            768



        
     Adjusted operating margin                                                 13.3                                      14.9                                        12.6                     14.0
                                                                                       %                                        %                                          %                       %





       
       General Corporate Expenses and Eliminations and Other


        
     Net sales                                                                              $
              (89)                                  $
              (81)                     $
         (340)             $
          (396)





        
     Operating profit                                                                      $
              (105)                                 $
              (110)                     $
         (320)             $
          (312)


        
     Restructuring                                                              (1)                                      (2)                                        (2)                     (3)


        
     Consultant contract termination                                                                                                                                                       (34)


        
     Separation costs                                                          (30)                                     (46)                                      (117)                    (59)


        
     
                Adjusted operating profit                                         $
         
                (74)                         $
          
                (62)             $
         
           (201)    $
          
            (216)






       
       Carrier


        
     Net sales                                                                             $
              4,594                                  $
              4,501                     $
         17,456             $
          18,608





        
     Operating profit                                                                      $
              1,245                                    $
              557                      $
         3,083              $
          2,491


        
     Total restructuring costs                                                 (30)                                     (29)                                       (49)                   (126)


        
     Total non-recurring and non-operational items                              822                                       (8)                                        900                    (129)



        
     
                Adjusted operating profit                                          $
         
                453                           $
          
                594              $
         
           2,232     $
          
            2,746



        
     Adjusted operating margin                                                  9.9                                      13.2                                        12.8                     14.8
                                                                                       %                                        %                                          %                       %



       
                Carrier Global Corporation



       
                Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results



       
                Net Income, Earnings Per Share, and Effective Tax Rate





       
                (Unaudited)                                                                                   For the Three Months Ended December 31,                       For the Year Ended December 31,

    ---                                                                                                                                                                      ---

                                                     (dollars in millions -Income (Expense))              2020                                      2019            2020                                        2019

    ---                                                                                                                                                                                                       ---


       
                Net income attributable to common shareowners                                              $
          
                884                                  $
           
                440                  $
      
        1,982      $
      
      2,116






       
                Total restructuring costs                                                            (30)                                                (29)                                           (49)           (126)





                     Total non-recurring and non-operational items included in operating profit            822                                                  (8)                                            900            (129)





                     Non-recurring and non-operational items included in Interest expense, net:


        Interest income associated with participation in amnesty settlement                                  -                                                                                                                  8



       Interest income associated with IRS settlement                                                       -                                                                                                                  8



       Debt issuance costs relating to Carrier's separation from UTC                                        -                                                                                                (5)



                     Non-recurring and non-operational items included in Interest expense, net               -                                                                                                (5)              16





                     Tax effect of restructuring and non-recurring and non-operational items             (188)                                                   8                                           (217)              39




                     Significant non-recurring and non-operational items included in Income tax expense:



       Favorable income tax adjustments related to tax amnesty                                              -                                                                                                                 95



       Adjustments related to tax settlements                                                               -                                                                                                                 54


        Adjustment related to a valuation allowance recorded against a United Kingdom
         tax loss and credit carryforward as a result of separation related
         activities                                                                                          -                                                                                               (51)


        Adjustment resulting from Carrier's decision to no longer permanently
         reinvest certain pre-2018 unremitted non-U.S. earnings                                              -                                                                                               (46)



       Deferred tax adjustment resulting from the UTC Separation                                            -                                                                                                                 19


        Deferred tax adjustment resulting from United Kingdom legislative change                             -                                                                                               (12)



                     Significant non-recurring and non-operational items included in Income tax
                      expense                                                                                -                                                                                              (109)             168




                     Total significant non-recurring and non-operational items                             604                                                 (29)                                            520             (32)




                     Adjusted net income attributable to common shareowners                                     $
          
                280                                  $
           
                469                  $
      
        1,462      $
      
      2,148






       
                Diluted earnings per share                                                                $
          
                1.00                                 $
           
                0.50                   $
      
        2.25       $
      
      2.44



       Impact on diluted earnings per share                                                              0.69                                               (0.03)                                           0.59           (0.04)




       
                Adjusted diluted earnings per share                                                       $
          
                0.31                                 $
           
                0.53                   $
      
        1.66       $
      
      2.48






       
                Effective tax rate                                                                   24.5                                                 23.2                                            29.7             19.4
                                                                                                      
          %                                             
         %
                                                                                                                                                                                                                %               %



       Impact on effective tax rate                                                               1.8
          %                                               (0.1)                                          (3.7)             5.5
                                                                                                                                                                 %                                              %               %

                                                                                                                                                                                                                                     ---


       
                Adjusted effective tax rate                                                          26.3                                                 23.1                                            26.0             24.9
                                                                                                      
          %                                             
         %
                                                                                                                                                                                                                %               %

                                                                                                                                                                                                                                     ===



       
                Carrier Global Corporation



       
                Components of Changes in Net Sales





       
                
                  
                    Three Months Ended December 31, 2020 Compared with Three Months Ended December 31, 2019

    ---



                                                               Factors Contributing to Total % change in Net Sales



                     (Unaudited)                               Organic                   
              
                FX                    
           
                Acquisitions /   Other  Total
                                                                                              Translation                                    Divestitures, net

    ---                                                                                                                                                                               ---


       HVAC                                                        4%                                             2%                                                     -%   -%    6%


        Refrigeration                                             (3)%                                             3%                                                     -%   -%    -%


        Fire & Security                                           (5)%                                             3%                                                     -%   -%  (2)%


                     Consolidated                                   -%                                            2%                                                     -%   -%    2%



       
                
                
     Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

    ---



                                              Factors Contributing to Total % change in Net Sales



                     (Unaudited)              Organic                   
              
                FX          
       
                Acquisitions /  Other    Total
                                                                             Translation                      Divestitures, net

    ---                                                                                                                                                 ---


       HVAC                                     (2)%                                             -%                                      -%  -%    (2)%


        Refrigeration                           (12)%                                             -%                                      -%  -%   (12)%


        Fire & Security                          (9)%                                             -%                                      -%  -%    (9)%


                     Consolidated                (6)%                                             -%                                      -%  -%    (6)%



     
                Net Debt




                                  
              
        As of



                            December 31, 2020                      March 31, 2020
                                                                    (1)



      Long-
       term
       debt                                         $
      10,036                     $
     11,029


       Current
       portion
       of
       long-
       term
       debt                               191                  218


      Less:
       Cash
       and
       cash
       equivalents                      3,115                  768



                   Net
                    debt                       $
       
        7,112                $
      
       10,479


              _______________


                            (1) On April 1 and April 2, 2020, Carrier
                             received cash contributions totaling $590
                             million from UTC related to the Separation,
                             resulting in net debt of approximately $9.9
                             billion as of April 3, 2020.



       
                Carrier Global Corporation



       
                Condensed Consolidated Balance Sheet




                                                                                
              
        (Unaudited)



                                                     (dollars in millions) December 31, 2020                                December 31, 2019

    ---                                                                                                              ---


       
                
                  Assets

    ---

        Cash and cash equivalents                                                                    $
          3,115                                $
        952


        Accounts receivable, net                                                       2,781                          2,726


        Contract assets, current                                                         656                            622


        Inventories, net                                                               1,629                          1,332


        Other assets, current                                                            343                            327



        Total current assets                                                           8,524                          5,959




        Future income tax benefits                                                       449                            500


        Fixed assets, net                                                              1,810                          1,663


        Operating lease right-of-
         use assets                                                                      788                            832


        Intangible assets, net                                                         1,037                          1,083



       Goodwill                                                                      10,139                          9,884


        Pension and post-
         retirement assets                                                               554                            490


        Equity method investments                                                      1,513                          1,739



       Other assets                                                                     279                            256



                     Total Assets                                                            $
        
            25,093                        $
      
          22,406





                                    Liabilities and Equity

    ---

        Accounts payable                                                                             $
          1,936                              $
        1,701


        Accrued liabilities                                                            2,471                          2,088


        Contract liabilities,
         current                                                                         512                            443


        Current portion of long-
         term debt                                                                       191                            237



        Total current liabilities                                                      5,110                          4,469



       Long-term debt                                                                10,036                             82


        Future pension and post-
         retirement obligations                                                          524                            456


        Future income tax
         obligations                                                                     479                          1,099


        Operating lease
         liabilities                                                                     642                            682


        Other long-term
         liabilities                                                                   1,724                          1,183



                     Total Liabilities                                                18,515                          7,971






       Equity


        UTC Net investment                                                                 -                        15,355


        Common stock, par value
         $0.01; 4,000,000,000
         shares authorized;
         867,829,119 shares issued
         and outstanding as of
         December 31, 2020                                                                 9


        Additional paid-in
         capital                                                                       5,345


        Retained earnings                                                              1,643


        Accumulated other
         comprehensive loss                                                            (745)                       (1,253)


        Non-controlling interest                                                         326                            333



                     Total Equity                                                      6,578                         14,435



                     Total Liabilities and
                      Equity                                                                 $
        
            25,093                        $
      
          22,406



       
                Carrier Global Corporation



       
                Condensed Consolidated Statement of Cash Flows




                                                                                    
           
                (Unaudited)



                                                                                                  For the Year Ended
                                                                                         December 31,



                                                     (dollars in millions)     2020                                  2019

    ---

                     Operating Activities



       Net income from operations                                                              $
              2,006                     $
     2,155


        Adjustments to reconcile net income
         from operations to net cash flows
         provided by operating activities, net
         of acquisitions and dispositions


        Depreciation and amortization                                           336                                            335


        Deferred income tax provision                                            97                                          (122)



       Equity compensation cost                                                 77                                             52


        Equity method investment net earnings                                 (207)                                         (236)


        Distributions from equity method
         investments                                                            169                                            158


        Impairment charge on minority-owned
         joint venture investments                                               72                                            108


        Gains on sale of investments and
         businesses                                                         (1,123)


        Changes in operating assets and
         liabilities



       Accounts receivable, net                                                 49                                          (129)



       Contract assets, current                                                (9)                                            23



       Inventories, net                                                      (240)                                           (2)



       Other assets, current                                                     3                                             62


        Accounts payable and accrued
         liabilities                                                            237                                          (296)


        Contract liabilities, current                                            46                                           (18)


        Defined benefit plan contributions                                     (41)                                          (36)


        Other operating activities, net                                         220                                              9



        Net cash flows provided by operating
         activities                                                           1,692                                          2,063



                     Investing Activities



       Capital expenditures                                                  (312)                                         (243)


        Proceeds on sale of investments and
         businesses                                                           1,377                                              6


        Receipt from settlement of derivative
         contracts                                                               40


        Other investing activities, net                                           1                                           (22)



        Net cash flows provided by (used in)
         investing activities                                                 1,106                                          (259)



                     Financing Activities


        (Decrease) increase in short-term
         borrowings, net                                                       (23)                                            25



       Issuance of long-term debt                                           11,784                                            107



       Repayment of long-term debt                                         (1,911)                                         (138)


        Dividends paid on common stock                                        (138)


        Dividends paid to non-controlling
         interest                                                              (48)                                          (28)



       Net transfers to UTC                                               (10,359)                                       (1,954)


        Other financing activities, net                                          14                                              6



        Net cash flows used in financing
         activities                                                           (681)                                       (1,982)



        Effect of foreign exchange rate
         changes on cash and cash equivalents                                    45                                              1



        Net increase (decrease) in cash and
         cash equivalents and restricted cash                                 2,162                                          (177)


        Cash, cash equivalents and restricted
         cash, beginning of period                                              957                                          1,134



        Cash, cash equivalents and restricted
         cash, end of period                                                  3,119                                            957



       Less: restricted cash                                                     4                                              5



                     Cash and cash equivalents, end of
                      period                                                          $
           
                3,115                  $
      
       952



       
                Carrier Global Corporation



       
                Free Cash Flow Reconciliation




                                                                         
          
                (Unaudited)



                                                               
           
            For the Three Months Ended March 31,



                                                   (dollars in
                                                    millions)               2020                                       2019

    ---

        Net income
         attributable to
         common shareowners                                             $
          96                                                       $
        400



        Net cash flows
         provided by
         operating
         activities                                                     $
          47                                                     $
        (183)


        Less: Capital
         expenditures                                             48                                                         41



        Free cash flow                                                 $
          (1)                                                    $
        (224)



        Free cash flow as a percentage of net
         income attributable to common
         shareowners                                                                     (1)%                                   (56)%





                                                                         
          
                (Unaudited)



                                                               
           
            For the Three Months Ended June 30,



                                                   (dollars in
                                                    millions)               2020                                       2019

    ---

        Net income
         attributable to
         common shareowners                                            $
          261                                                       $
        784



        Net cash flows
         provided by
         operating
         activities                                                    $
          509                                                       $
        554


        Less: Capital
         expenditures                                             46                                                         48



        Free cash flow                                                 $
          463                                                       $
        506



        Free cash flow as a percentage of net
         income attributable to common
         shareowners                                                                     177%                                     65%





                                                                         
          
                (Unaudited)



                                                                              For the Three Months Ended September 30,



                                                   (dollars in
                                                    millions)               2020                                       2019

    ---

        Net income
         attributable to
         common shareowners                                            $
          741                                                       $
        492



        Net cash flows
         provided by
         operating
         activities                                                    $
          937                                                       $
        618


        Less: Capital
         expenditures                                             57                                                         50



        Free cash flow                                                 $
          880                                                       $
        568



        Free cash flow as a percentage of net
         income attributable to common
         shareowners                                                                     119%                                    115%





                                                                         
          
                (Unaudited)


                                                                              For the Three Months Ended December 31,



                                                   (dollars in
                                                    millions)               2020                                       2019

    ---

        Net income
         attributable to
         common shareowners                                            $
          884                                                       $
        440



        Net cash flows
         provided by
         operating
         activities                                                    $
          199                                                     $
        1,074


        Less: Capital
         expenditures                                            161                                                        104



        Free cash flow                                                  $
          38                                                       $
        970



        Free cash flow as a percentage of net
         income attributable to common
         shareowners                                                                       4%                                    220%





                                                                         
          
                (Unaudited)



                                                                 
            
            For the Year Ended December 31,



                                                   (dollars in
                                                    millions)               2020                                       2019

    ---

        Net income
         attributable to
         common shareowners                                          $
          1,982                                                     $
        2,116



        Net cash flows
         provided by
         operating
         activities                                                  $
          1,692                                                     $
        2,063


        Less: Capital
         expenditures                                            312                                                        243



        Free cash flow                                               $
          1,380                                                     $
        1,820



        Free cash flow as a percentage of net
         income attributable to common
         shareowners                                                                      70%                                     86%

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SOURCE Carrier Global Corporation