Carrier Global Corporation
CARR · NYSE
Next quarter
Reports Oct 27, 2026.
Consensus is $0.81 EPS for Sep 2026 across 5 estimates, ranging $0.70 to $0.95.
CARR Jun 2026
- 3.61%
- -5.13%
- $0.83
- $0.86
- —
- —
Highlights
- Sales recovery: Second-quarter net sales rose 4% year over year to $6.351 billion, with organic sales up 3% after first-quarter revenue of $5.34 billion and first-half organic growth of 1%.
- Earnings beat: Adjusted EPS was $0.86 versus consensus of $0.83, a 3.61% surprise; GAAP EPS was $0.60, compared with $0.70 a year earlier and $0.28 in Q1 2026.
- Orders strengthened: Total company orders increased approximately 40%, Commercial HVAC orders rose approximately 65%, and data-center orders increased more than 300%, excluding NORESCO and Riello.
- Outlook raised: Carrier now expects roughly $23 billion of 2026 sales, $3.5 billion of adjusted operating profit and $2.90 of adjusted EPS, up from prior guidance of approximately $22 billion, $3.4 billion and $2.80, respectively.
- Margins remained under pressure: Adjusted operating profit declined 6% to $1.095 billion and adjusted margin fell 190 basis points to 17.2%, as input costs and unfavorable mix more than offset volume and productivity.
- CSA led the growth: Climate Solutions Americas sales increased 4% to $3.372 billion, driven by 9% residential and 10% light-commercial growth, although segment margin declined 260 basis points to 24.4%.
- International profitability weakened: CSAME operating profit fell 20% to $108 million and margin dropped 350 basis points to 11.8%, while CSE profit declined 4% to $95 million; Middle East conflict reduced CSAME joint-venture income.
- Cash returns were substantial: Operating cash flow was $927 million and free cash flow was $810 million; Carrier returned approximately $640 million through dividends and repurchases during the quarter.
- Portfolio transition continued: Riello was sold on July 1 for expected gross proceeds of approximately $430 million after a $46 million impairment, while the planned NORESCO exit is expected to close in Q3.
Analysis
Carrier’s second quarter was a better-than-expected return to organic growth, but not yet a margin recovery. Sales of $6.351 billion increased 4% year over year, including 3% organic growth and a 1% foreign-exchange benefit, versus $6.113 billion a year earlier and $5.34 billion in Q1 2026. Adjusted EPS of $0.86 exceeded the $0.83 consensus estimate by 3.61%, although it fell 7% from $0.92 a year ago; GAAP EPS was $0.60 versus $0.70. Adjusted operating profit declined 6% to $1.095 billion, with adjusted margin down 190 basis points to 17.2%.\n\nThe defining positives were a roughly 40% increase in orders, particularly Commercial HVAC and data centers, improving residential and light-commercial demand, and strong cash generation. CSA provided most of the organic growth, while CSE, CSAME and CST all experienced profit declines from mix, costs or weaker end markets. Carrier raised its full-year outlook to approximately $23 billion of sales, $3.5 billion of adjusted operating profit and $2.90 of adjusted EPS, despite including an estimated $0.05 EPS drag from the NORESCO exit and new U.S. factory costs. Second-quarter free cash flow of $810 million supported roughly $640 million of shareholder returns.
Orders and outlook
Demand indicators improved sharply in the quarter and were central to Carrier’s decision to raise guidance. Orders exclude NORESCO and Riello, consistent with the company’s portfolio transition. Management also pointed to record backlog levels and improving residential and light-commercial markets in the Americas and Europe.
- Orders: Total company orders increased approximately 40% year over year, while Commercial HVAC orders rose approximately 65%.
- Data centers: Data-center orders increased more than 300%, providing the strongest stated growth vector in the quarter.
- Guidance: Full-year sales guidance increased to approximately $23 billion from $22 billion, organic sales guidance moved to mid- to high-single-digit growth from flat to low-single-digit growth, adjusted operating profit rose to approximately $3.5 billion from $3.4 billion, and adjusted EPS rose to approximately $2.90 from $2.80.
- Guidance exclusions: The outlook includes approximately $0.05 of adjusted EPS impact from the NORESCO exit and new U.S. factory costs, plus approximately $225 million and $125 million of year-over-year revenue headwinds from the Riello and NORESCO exits.
Segment performance
The sales recovery was broad, but profitability deteriorated across every segment. Volume and productivity helped sales, while input costs, tariffs and unfavorable product mix absorbed the benefit. CSA was the main growth engine, but its commercial business was affected by delivery timing.
- Climate Solutions Americas: Sales rose 4% to $3.372 billion on 4% organic growth. Residential sales increased 9% and light commercial 10%, partly offset by a 6% decline in commercial sales. Operating profit fell 6% to $823 million and margin declined to 24.4% from 27.0%.
- Climate Solutions Europe: Sales increased 6% to $1.324 billion, including 3% organic growth and a 3% foreign-exchange benefit. Residential and light-commercial sales rose 7%, while commercial sales fell 6%. Operating profit declined 4% to $95 million and margin fell to 7.2%.
- Climate Solutions Asia Pacific, Middle East & Africa: Sales increased 4% to $917 million on 4% organic growth, with double-digit growth in India, the Middle East, Southeast Asia and Australia offsetting continued pressure in China. Operating profit fell 20% to $108 million and margin declined to 11.8%.
- Climate Solutions Transportation: Sales increased 2% to $738 million, with container sales up approximately 40% offsetting low-teens declines in global truck and trailer. Organic sales were flat, operating profit fell 8% to $118 million and margin declined to 16.0%.
Margins and earnings
Carrier converted modest sales growth into lower operating earnings. GAAP operating profit declined 9% to $825 million from $903 million, while adjusted operating profit fell 6% from $1.166 billion. Higher input costs, including tariffs, unfavorable mix and a higher tax rate outweighed volume, pricing and productivity benefits.
- Adjusted profitability: Adjusted operating margin was 17.2%, down from 19.1% a year earlier; GAAP operating margin was 13.0%, down 180 basis points.
- Net income: Earnings attributable to common shareholders from continuing operations were $501 million, down from $608 million, while adjusted net earnings were $721 million versus $796 million.
- Taxes and interest: The effective tax rate increased to 25.0% from 20.0%, partly reflecting the nondeductible Riello impairment and higher German taxes. Net interest expense rose to $105 million from $91 million due to commercial-paper borrowings.
- Six-month context: First-half revenue increased 3% to $11.692 billion, but adjusted operating profit declined to $1.689 billion from $2.014 billion, with adjusted margin falling to 14.4% from 17.8%.
Cash and capital allocation
Cash generation was a major strength of the quarter despite lower reported earnings. Working-capital movements supported operating cash flow, allowing Carrier to continue repurchases and dividends while funding capital expenditure and portfolio actions.
- Cash flow: Operating cash flow was $927 million, up from $649 million a year earlier, and free cash flow was $810 million versus $568 million.
- Shareholder returns: Carrier returned approximately $640 million in the quarter through $439 million of share repurchases and $199 million of common dividends.
- First-half returns: Through June, the company repurchased 12.0 million shares for approximately $748 million and paid $400 million of common dividends; approximately $4.6 billion remained under the repurchase authorization.
- Debt: Net debt was $10.608 billion at June 30, up from $10.278 billion at year-end, while cash was $1.344 billion and total debt was $11.952 billion.
Portfolio exits
Carrier continued to simplify the portfolio, with the Riello divestiture completed immediately after quarter-end and NORESCO classified as held for sale. The exits reduce reported revenue but are intended to improve the shape of the continuing business over time.
- Riello: The sale to Ariston Group closed July 1, 2026, for expected gross proceeds of approximately $430 million. Carrier recorded a $46 million impairment in the quarter.
- NORESCO: Carrier agreed to sell the business to Opterra Energy Services, with closing expected in the third quarter of 2026. The transaction represents an expected year-over-year revenue headwind of approximately $125 million.
- Reported impact: Riello and NORESCO were excluded from the order comparisons, and the full-year outlook includes their combined revenue headwinds as well as the NORESCO-related EPS impact.
