Carrier Global Corp (CARR) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 27, 2023 7:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Carrier's Second Quarter 2023 Earnings Conference Call.

I would like to introduce your host for today's conference, Sam Pearlstein, Vice President of Investor Relations. Please go ahead, sir.

Sam Pearlstein

Thank you, and good morning, and welcome to Carrier's second quarter 2023 earnings conference call.

With me here today are David Gitlin, Chairman and Chief Executive Officer; and Patrick Goris, Chief Financial Officer.

We will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in our earnings presentation, which is available to download from Carrier's website at ir.carrier.com.

The company reminds listeners that the sales, earnings and cash flow expectations and any other forward-looking statements provided during the call are subject to risks and uncertainties. Carrier's SEC filings, including Forms 10-K, 10-Q and 8-K, provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

Once the call is open for questions, we ask that you limit yourself to one question and one follow-up to give everyone the opportunity to participate.

With that, I'd like to turn the call over to our Chairman and CEO, Dave Gitlin.

David Gitlin

Thank you, Sam, and good morning, everyone.

Our theme at Carrier remains "performing while transforming," and I am proud of our team as we are progressing well with both. You see that strong performance in our Q2 results on Slide 2.

Organic sales growth grew 6% with both HVAC and Fire & Security up 9%. We drove strong double-digit growth in light commercial and commercial HVAC, global truck and trailer, controls and aftermarket. Within Fire & Security, growth was broad based across security, residential, commercial and industrial fire.

Total company backlog remains well above historical levels, up 30% on a two-year stack. Adjusted operating profit and adjusted EPS were up 12% and 13%, respectively, and free cash flow was strong at over $300 million. Price/cost was increasingly positive in Q2, Toshiba Carrier performance came in stronger than expected, and we are on track to deliver $300 million of gross productivity this year.

As a result of our strong first half performance, we are raising our full year guidance for organic growth, adjusted operating margins and adjusted EPS.