Carrier Global Corporation (CARR) Earnings & Analysis

Latest quarter

Carrier reported third-quarter revenue of $6.3 billion, above the $6.1 billion consensus, and adjusted EPS of $0.87, above the $0.81 consensus. Revenue rose from $5.6 billion a year earlier, while diluted EPS fell to −$3.09 from $0.50.

The filing attributed a 15% increase in organic sales primarily to higher volumes in Climate Solutions Americas, with demand in Europe and Asia also contributing. Transportation sales declined as lower truck and trailer volumes outweighed growth in container equipment.

Carrier’s gross margin rose to 26.9% from 26.0%, while its operating margin fell to −36.3% from 9.66%. The filing said a $3.1 billion goodwill impairment in Climate Solutions Europe was driven primarily by lower projected operating results and a higher discount rate. The reported operating margin was below Carrier’s 16.5% quarterly guide; the reported figure includes the impairment.

Carrier reported free cash flow of $674.0 million, compared with $224.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO David Gitlin said global orders rose 35% in the quarter, including a 300% increase in data center orders. He said data center sales exceeded $550 million and backlog topped $8.5 billion, excluding minimum volume commitments under long-term agreements. Carrier also signed an agreement worth more than $3 billion with a hyperscaler, with a significant portion covered by a minimum volume commitment, he said.

Beyond data centers, Gitlin said non-data-center commercial orders rose 20%. CFO Patrick Goris said Americas commercial sales rose over 25%, driven by data center deliveries, while European heat pump and air conditioning sales each rose approximately 35%. He said transportation’s container growth was more than offset by a decline in truck and trailer sales.

Goris said positive but lower-than-expected pricing, higher input costs and supply-chain challenges pressured Americas margins. He said an approximately $130 million IEEPA refund benefit helped quarterly adjusted operating margin. Asked about fourth-quarter margins, Goris said Carrier expected organic growth but would no longer have the refund benefit to offset input costs and lower-than-expected pricing.

Asked about residential pricing, Gitlin said Carrier had realized low-single-digit pricing after expecting mid-single digits. He said the company had announced price increases of up to 10% across the Americas portfolio, including an 8% residential increase effective later in the quarter, and had introduced pricing tools.

Gitlin said Carrier’s planned Fort Worth facility would add approximately 1,500 jobs and that customer deliveries were expected to begin in late summer next year. Asked about capacity, he said the site would more than double Americas capacity and also serve demand outside data centers. On next year’s outlook, Goris said Carrier was targeting double-digit EPS growth but would not discuss margins at that point.

Guidance

Carrier raised its FY2026 sales outlook to nearly $24 billion, with organic growth of about 10%, from a prior outlook of a little over $23 billion in sales. Its earlier outlook called for mid- to high-single-digit organic growth.

Carrier now expects adjusted EPS of $2.85–$2.90, compared with its previous guide of about $2.90. Goris also said Carrier reduced its Climate Solutions Americas operating margin outlook to about 19%, citing pricing, input costs and supply-chain challenges.