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Carrier's (CARR) Earnings and Revenues Beat Estimates in Q3
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Carrier Global (CARR - Free Report) reported third-quarter 2022 adjusted earnings of 70 cents per share, which beat the Zacks Consensus Estimate by 7.7%. The figure decreased 1.4% year over year.
Net sales of $5.45 billion improved 2% year over year and surpassed the Zacks Consensus Estimate of $5.44 billion.
Strength in the HVAC segment drove the top line. Further, CARR’s acquisition of Toshiba’s ownership stake in the joint venture Toshiba Carrier Corporation (TCC) contributed well.
However, Carrier witnessed weakness in its Refrigeration and Fire & Security segments, which remained a major concern.
Product sales (89.7% of net sales) of $4.9 billion increased 8.4% year over year. Service sales (10.3% of net sales) of $560 million were down 32.6% year over year.
Carrier Global Corporation Price, Consensus and EPS Surprise
HVAC revenues (65% of net sales) increased 22% year over year to $3.73 billion. Growth was driven by strength in North America residential. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $923 million (20% of net sales) were down 9% from the year-ago quarter’s level. Slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in Sensitech sales was a positive.
Fire & Security revenues (17% of net sales) of $905 million were down 34% year over year. Constraints in electronics supply were major concerns.
Nevertheless, growing momentum among the residential and industrial customers, and strength in the commercial fire business in the Americas contributed well.
Operating Results
Research & development (R&D) expenses increased 16.3% year over year to $143 million. Selling, general & administrative (SG&A) expenses fell 16.6% from the year-ago quarter’s level to $624 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level but SG&A expenses contracted 260 bps year over year.
Adjusted operating margin contracted 40 bps on a year-over-year basis to 15.8%.
Adjusted operating margin of the HVAC segment contracted 260 bps year over year to 16.7%. The Refrigeration segment reported an adjusted operating margin of 12.8%, expanding 80 bps. Adjusted operating margin of Fire & Security was 16.6%, expanding 220 bps year over year.
Balance Sheet
As of Sep 30, 2022, Carrier had cash and cash equivalents of $2.98 billion compared with $3.02 billion on Jun 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.9 billion compared with $8.6 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $790 million of cash from operations, up from $32 million in the prior quarter. CARR used $202 million cash in operations in the previous quarter.
Capital expenditure was $91 million in the third quarter of 2022. Free cash flow was $699 million for the reported quarter.
2022 Guidance
For 2022, Carrier reduced its expected sales from $20.8 billion to $20.4 billion. The Zacks Consensus Estimate for sales is pegged at $20.56 billion.
Carrier increased the lower end of the guidance for adjusted earnings per share from $2.25-$2.35 to $2.30-$2.35. The Zacks Consensus Estimate for the same is pegged at $2.32 per share.
Carrier now expects its adjusted operating margin to expand 60 bps from the year-ago reported number. CARR reduced its guidance for free cash flow from $1.65 billion to $1.4 billion.
Fortinet is set to report third-quarter 2022 results on Nov 2. The Zacks Consensus Estimate for FTNT’s earnings is pegged at 27 cents per share, suggesting an increase of 35% from the prior-year period’s reported figure. FTNT has lost 22.8% in the year-to-date period. FTNT’s long-term earnings growth rate is currently projected at 18%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 14. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 39.6% in the year-to-date period. The Trade Desk’s long-term earnings growth rate is currently projected at 24%.
ZoomInfo Technologies is scheduled to release third-quarter 2022 results on Nov 1. The Zacks Consensus Estimate for ZI’s earnings is pegged at 20 cents per share, suggesting an increase of 53.9% from the prior-year quarter’s reported figure. ZI has lost 28.8% in the year-to-date period. ZI’s long-term earnings growth rate is currently projected at 34.7%.
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Carrier's (CARR) Earnings and Revenues Beat Estimates in Q3
Carrier Global (CARR - Free Report) reported third-quarter 2022 adjusted earnings of 70 cents per share, which beat the Zacks Consensus Estimate by 7.7%. The figure decreased 1.4% year over year.
Net sales of $5.45 billion improved 2% year over year and surpassed the Zacks Consensus Estimate of $5.44 billion.
Strength in the HVAC segment drove the top line. Further, CARR’s acquisition of Toshiba’s ownership stake in the joint venture Toshiba Carrier Corporation (TCC) contributed well.
However, Carrier witnessed weakness in its Refrigeration and Fire & Security segments, which remained a major concern.
Product sales (89.7% of net sales) of $4.9 billion increased 8.4% year over year. Service sales (10.3% of net sales) of $560 million were down 32.6% year over year.
Carrier Global Corporation Price, Consensus and EPS Surprise
Carrier Global Corporation price-consensus-eps-surprise-chart | Carrier Global Corporation Quote
Segment Details
HVAC revenues (65% of net sales) increased 22% year over year to $3.73 billion. Growth was driven by strength in North America residential. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $923 million (20% of net sales) were down 9% from the year-ago quarter’s level. Slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in Sensitech sales was a positive.
Fire & Security revenues (17% of net sales) of $905 million were down 34% year over year. Constraints in electronics supply were major concerns.
Nevertheless, growing momentum among the residential and industrial customers, and strength in the commercial fire business in the Americas contributed well.
Operating Results
Research & development (R&D) expenses increased 16.3% year over year to $143 million. Selling, general & administrative (SG&A) expenses fell 16.6% from the year-ago quarter’s level to $624 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level but SG&A expenses contracted 260 bps year over year.
Adjusted operating margin contracted 40 bps on a year-over-year basis to 15.8%.
Adjusted operating margin of the HVAC segment contracted 260 bps year over year to 16.7%. The Refrigeration segment reported an adjusted operating margin of 12.8%, expanding 80 bps. Adjusted operating margin of Fire & Security was 16.6%, expanding 220 bps year over year.
Balance Sheet
As of Sep 30, 2022, Carrier had cash and cash equivalents of $2.98 billion compared with $3.02 billion on Jun 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.9 billion compared with $8.6 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $790 million of cash from operations, up from $32 million in the prior quarter. CARR used $202 million cash in operations in the previous quarter.
Capital expenditure was $91 million in the third quarter of 2022. Free cash flow was $699 million for the reported quarter.
2022 Guidance
For 2022, Carrier reduced its expected sales from $20.8 billion to $20.4 billion. The Zacks Consensus Estimate for sales is pegged at $20.56 billion.
Carrier increased the lower end of the guidance for adjusted earnings per share from $2.25-$2.35 to $2.30-$2.35. The Zacks Consensus Estimate for the same is pegged at $2.32 per share.
Carrier now expects its adjusted operating margin to expand 60 bps from the year-ago reported number. CARR reduced its guidance for free cash flow from $1.65 billion to $1.4 billion.
Zacks Rank & Stocks to Consider
Currently, Carrier has a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Fortinet (FTNT - Free Report) , The Trade Desk (TTD - Free Report) and ZoomInfo Technologies (ZI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fortinet is set to report third-quarter 2022 results on Nov 2. The Zacks Consensus Estimate for FTNT’s earnings is pegged at 27 cents per share, suggesting an increase of 35% from the prior-year period’s reported figure. FTNT has lost 22.8% in the year-to-date period. FTNT’s long-term earnings growth rate is currently projected at 18%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 14. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 39.6% in the year-to-date period. The Trade Desk’s long-term earnings growth rate is currently projected at 24%.
ZoomInfo Technologies is scheduled to release third-quarter 2022 results on Nov 1. The Zacks Consensus Estimate for ZI’s earnings is pegged at 20 cents per share, suggesting an increase of 53.9% from the prior-year quarter’s reported figure. ZI has lost 28.8% in the year-to-date period. ZI’s long-term earnings growth rate is currently projected at 34.7%.