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Carrier (CARR) Q3 Earnings Beat Estimates, Revenues Up Y/Y
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Carrier Global (CARR - Free Report) reported third-quarter 2020 adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 39.6%. However, the figure decreased 9.5% year over year.
Net sales of $5 billion beat the consensus mark by 15%. Moreover, the top line increased 3.7% year over year.
Product sales (83.8% of net sales) increased 4.9% year over year to $4.19 billion. Service sales (16.2% of net sales) dipped 1.8% year over year to $809 million.
Quarterly Details
HVAC revenues (57.8% of net sales) increased 11.1% year over year to $2.89 billion. The year-over-year growth was driven by record demand in North America residential HVAC, which was up 46% year over year, and an improved economic climate.
HVAC operating profit increased 14.1% from the year-ago quarter to $598 million.
Carrier Global Corporation Price, Consensus and EPS Surprise
Refrigeration revenues (17.5% of net sales) fell 5% from the year-ago quarter to $876 million. Operating profit plunged 22.7% to $102 million.
Fire & Safety revenues (26.5% of net sales) slid 5.6% from the year-ago quarter to $1.32 billion. Operating profit was $204 million, down 6.8% year over year.
Cost of products sold was $2.88 billion, up 3.6% year over year. However, cost of services sold slipped 5.9% to $557 million.
Selling, general & administrative (SG&A) and research & development (R&D) expenses, as a percentage of revenues, decreased 90 basis points (bps) and 10 bps on a year-over-year basis, respectively.
Aggressive cost control helped in driving profitability. Carrier now targets to save $700 million under its three-year run-rate savings scheme, which has been renamed the Carrier 700 program.
Segmental operating profit in the third quarter increased 3.3% year over year to $904 million.
Adjusted operating profit increased 6% year over year to $867 million. Operating margin expanded 40 bps on a year-over-year basis to 17.3%.
Balance Sheet & Other Details
As of Sep 30, 2020, Carrier had cash and cash equivalents worth $3.85 billion compared with $2.70 billion as of Jun 30, 2020.
Total debt (including current portion) as of Sep 30, 2020, was $11.97 billion with no debt maturities until 2023.
In the third quarter, Carrier generated $937 million of cash from operating activities, up 51.6% year over year. The company’s quarterly free cash flow came in at $880 million, up 54.9% year over year.
Guidance
For 2020, Carrier now expects sales to be roughly $17.3 billion, up from previous guidance range of $15.5-$17 billion. Adjusted operating profit is expected to be $2.2 billion, up from previous guidance range of $1.8-$2 billion.
Moreover, free cash flow is expected to be at least $1.5 billion, up from previous guidance of at least $1.1 billion.
Further, stronger-than-expected free cash flow is expected to support Carrier’s plan to reduce debt by $1.5 billion in the fourth quarter of 2020.
CDW, Qorvo and Himax are scheduled to report their quarterly earnings on Nov 2, 4 and 12, respectively.
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Carrier (CARR) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Carrier Global (CARR - Free Report) reported third-quarter 2020 adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 39.6%. However, the figure decreased 9.5% year over year.
Net sales of $5 billion beat the consensus mark by 15%. Moreover, the top line increased 3.7% year over year.
Product sales (83.8% of net sales) increased 4.9% year over year to $4.19 billion. Service sales (16.2% of net sales) dipped 1.8% year over year to $809 million.
Quarterly Details
HVAC revenues (57.8% of net sales) increased 11.1% year over year to $2.89 billion. The year-over-year growth was driven by record demand in North America residential HVAC, which was up 46% year over year, and an improved economic climate.
HVAC operating profit increased 14.1% from the year-ago quarter to $598 million.
Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote
Refrigeration revenues (17.5% of net sales) fell 5% from the year-ago quarter to $876 million. Operating profit plunged 22.7% to $102 million.
Fire & Safety revenues (26.5% of net sales) slid 5.6% from the year-ago quarter to $1.32 billion. Operating profit was $204 million, down 6.8% year over year.
Cost of products sold was $2.88 billion, up 3.6% year over year. However, cost of services sold slipped 5.9% to $557 million.
Selling, general & administrative (SG&A) and research & development (R&D) expenses, as a percentage of revenues, decreased 90 basis points (bps) and 10 bps on a year-over-year basis, respectively.
Aggressive cost control helped in driving profitability. Carrier now targets to save $700 million under its three-year run-rate savings scheme, which has been renamed the Carrier 700 program.
Segmental operating profit in the third quarter increased 3.3% year over year to $904 million.
Adjusted operating profit increased 6% year over year to $867 million. Operating margin expanded 40 bps on a year-over-year basis to 17.3%.
Balance Sheet & Other Details
As of Sep 30, 2020, Carrier had cash and cash equivalents worth $3.85 billion compared with $2.70 billion as of Jun 30, 2020.
Total debt (including current portion) as of Sep 30, 2020, was $11.97 billion with no debt maturities until 2023.
In the third quarter, Carrier generated $937 million of cash from operating activities, up 51.6% year over year. The company’s quarterly free cash flow came in at $880 million, up 54.9% year over year.
Guidance
For 2020, Carrier now expects sales to be roughly $17.3 billion, up from previous guidance range of $15.5-$17 billion. Adjusted operating profit is expected to be $2.2 billion, up from previous guidance range of $1.8-$2 billion.
Moreover, free cash flow is expected to be at least $1.5 billion, up from previous guidance of at least $1.1 billion.
Further, stronger-than-expected free cash flow is expected to support Carrier’s plan to reduce debt by $1.5 billion in the fourth quarter of 2020.
Zacks Rank & Stocks to Consider
Carrier currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Qorvo (QRVO - Free Report) and Himax Technologies (HIMX - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CDW, Qorvo and Himax are scheduled to report their quarterly earnings on Nov 2, 4 and 12, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>