Carrier (CARR) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Carrier Global CARR reported third-quarter 2023 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate by 14.1%. The figure increased 27.1% year over year.
Net sales of $5.73 billion missed the Zacks Consensus Estimate by 2.03%. The figure increased 5.1% year over year, driven by 7.3% growth in HVAC sales.
Product sales (88.7% of net sales) of $5.08 billion increased 3.9% year over year. Service sales (11.3% of net sales) of $650 million were up 16.1% year over year.
Carrier shares were up 6.71% in after-hours trading. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While CARR shares have gained 14%, the Computer & Technology sector has increased 30%.
Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote
Quarter Details
HVAC revenues of $4 billion accounted for 69.9% of net sales. The figure beat the Zacks Consensus Estimate of $3.95 billion. Our model estimate was pegged at $3.96 billion.
Refrigeration revenues of $924 million were up 0.1% year over year and accounted for 16.1% of net sales. The figure missed the consensus mark of 993 million. Our model estimate was pegged at $954.6 million.
Fire & Security revenues of $923 million were up 2% year over year and contributed 16.1% of net sales. The reported figure came ahead of the Zacks Consensus Estimate of $918 million. Our model estimate was pegged at $922.9 million.
Research & development (R&D) expenses increased 9.8% year over year to $157 million. As a percentage of revenues, R&D expenses declined 140 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses grew 33.2% year over year to $831 million. As a percentage of revenues, SG&A expenses increased 310 bps year over year.
Adjusted operating margin expanded 240 bps on a year-over-year basis to 18.2%.
Adjusted operating margin of the HVAC segment expanded 410 bps year over year to 20.8%.
The Refrigeration segment reported an adjusted operating margin of 12%, which contracted 80 bps year over year.
Fire & Security’s adjusted operating margin was 18.3%, which expanded 170 bps year over year.
Balance Sheet
As of Sep 30, 2023, Carrier had cash and cash equivalents of $3.9 billion compared with $3.21 billion as of Jun 30, 2023.
Total debt (including the current portion) as of Sep 30, 2023, was $8.79 billion compared with $8.8 billion as of Jun 30, 2023.
In the reported quarter, Carrier generated $1.04 million in cash from operations, up from $384 million in the prior quarter.
Capital expenditure was $92 million in the second quarter of 2023. Free cash flow was $949 million for the reported quarter.
2023 Guidance
For 2023, Carrier expects sales of more than $22 billion. The Zacks Consensus Estimate for sales is pegged at $22.15 billion.
Adjusted operating margin is expected to be roughly 14.5%.
CARR anticipates adjusted earnings of roughly $2.70 per share. The Zacks Consensus Estimate for the same is pegged at $2.57 per share.
The company expects a free cash flow of more than $1.9 billion.
Zacks Rank & Stocks to Consider
Currently, Carrier has a Zacks Rank #3 (Hold).
eGain EGAN, GoDaddy GDDY and Itron ITRI are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
eGain shares have declined 34.3% year to date. EGAN is set to report its first-quarter fiscal 2024 results on Nov 2.
GoDaddy shares have declined 2.6% year to date. GDDY is set to report its third-quarter 2023 results on Nov 2.
Itron shares have returned 13.9% year to date. ITRI is set to report its third-quarter 2023 results on Nov 2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Itron, Inc. (ITRI) : Free Stock Analysis Report
eGain Corporation (EGAN) : Free Stock Analysis Report
GoDaddy Inc. (GDDY) : Free Stock Analysis Report
Carrier Global Corporation (CARR) : Free Stock Analysis Report
