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Carrier (CARR) Q1 Earnings Beat Estimates, Revenues Up Y/Y

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Carrier Global CARR reported first-quarter 2021 adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate by 26.3%. Moreover, the figure increased 37.1% year over year.

Net sales of $4.70 billion beat the consensus mark by 6.9%. Moreover, the top line increased 20.9% year over year.

Product sales (82.2% of net sales) increased 22.8% year over year to $3.86 billion. Service sales (17.8% of net sales) increased 12.7% year over year to $835 million.

Quarterly Details

HVAC revenues (52.9% of net sales) increased 26.9% year over year to $2.49 billion. The year-over-year growth was driven by record demand in North America residential HVAC, which was up 48% year over year.

HVAC operating profit surged 52.5% from the year-ago quarter to $369 million.

Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation Price, Consensus and EPS Surprise

Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote

Refrigeration revenues (21.4% of net sales) increased 24.4% from the year-ago quarter to $1 billion. Operating profit increased 30.3% to $129 million.

Fire & Safety revenues (26.5% of net sales) slid 5.6% from the year-ago quarter to $1.32 billion. Operating profit was $164 million, up 30.2% year over year.

Cost of products sold was $2.72 billion, up 21.8% year over year. Moreover, cost of services sold increased 12.7% to $835 million.

Selling, general & administrative (SG&A) as a percentage of revenues decreased 20 basis points (bps) on a year-over-year basis in the reported quarter. Research & development (R&D) expenses, as a percentage of revenues, increased 10 bps on a year-over-year basis.

Segmental operating profit in the first quarter surged 41.8% year over year to $662 million.

Adjusted operating profit soared 39.4% year over year to $608 million. Operating margin expanded 170 bps on a year-over-year basis to 12.9%.

Balance Sheet

As of Mar 31, 2021, Carrier had cash and cash equivalents worth $2.60 billion compared with $3.11 billion as of Dec 31, 2020.

Total debt (including current portion), as of Mar 31, 2021, was $9.73 billion compared with $10.23 billion as of Dec 31, 2020.

Guidance

For 2021, Carrier now expects sales to grow between 7% and 10%, up from the previous guidance of 6-8%. Organic sales growth is expected to be between 5% and 8%, up from 4-6%. Favorable forex is expected to add roughly 2%.

Adjusted operating margin is expected to be roughly 13.5%. Adjusted earnings are expected between $1.95 and $2.05 per share, up from $1.85-1.95.

Free cash flow is expected to be roughly $1.7 billion.

Zacks Rank & Stocks to Consider

Carrier currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector are AMETEK AME, Cognex CGNX and CDW Corporation CDW. All three carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMETEK, CDW and Cognex are scheduled to report their quarterly earnings on May 4, 5 and 6, respectively.

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