PR Newswire | Feb 9, 2021 06:31AM EST

02/09 05:30 CST

Carrier Reports 2020 Results and Announces 2021 OutlookAnticipates growth in sales, adjusted EPS, adjusted operating margin and free cash flow in 2021Board authorizes $350 million share repurchase programFull Year 2020 Highlights- Sales and adjusted operating profit exceeded outlook- GAAP EPS of $2.25 and adjusted EPS of $1.66- Reduced long-term debt by $1.0 billion and net debt by more than $2.8 billion since spin-offFourth Quarter 2020 Highlights- Sales of $4.6 billion driven by strong demand in North America residential HVAC- GAAP EPS of $1.00 and adjusted EPS of $0.31- Results included $50 million in vendor contract termination, legal and related costs- Prepaid $1.75 billion term loan credit facilityOutlook for 2021- Sales growth of 6% to 8%, organic sales up 4% to 6%, currency translation to add approximately 2%- Adjusted operating margin of approximately 13.5%, up 70bps- Adjusted EPS of $1.85 to $1.95, up 14% at midpoint- Free cash flow of approximately $1.6 billion PALM BEACH GARDENS, Fla., Feb. 9, 2021

PALM BEACH GARDENS, Fla., Feb. 9, 2021 /PRNewswire/ -- Carrier Global Corporation (NYSE: CARR) today reported financial results for the fourth quarter and full year 2020, and announced its 2021 outlook. Carrier is the leading global provider of healthy, safe and sustainable building and cold chain solutions.

"I'm proud of the Carrier team's performance in 2020. We overachieved on our key operational and financial goals, supported our customers and exited the year with strong momentum. I want to thank our 56,000 employees for their tireless efforts in a challenging year. Our strategy was reinforced by fourth quarter results, which surpassed our expectations because of continued strength in North American residential HVAC and continued traction on our growth and cost containment initiatives," said Carrier President & CEO Dave Gitlin. "Looking to 2021, we will continue to execute on our strategy to drive growth and profitability and expect mid-single digit organic sales growth, margin expansion, double-digit adjusted EPS growth, and strong cash conversion. Carrier is well-positioned as the world leader in healthy, safe and sustainable building and cold chain solutions."

Share Repurchase AuthorizationOn February 4, 2021 Carrier's Board of Directors authorized the repurchase of up to $350 million of the company's outstanding common stock. Share repurchases may take place from time to time, subject to market conditions and at the company's discretion in the open market or through one or more other public or private transactions.

Full-Year 2020 ResultsCarrier's 2020 sales of $17.5 billion were down 6% compared to the prior year. The sales decline was largely driven by the impact of the COVID-19 pandemic, but partly offset by strong demand in North America residential HVAC in the second half of 2020. GAAP operating profit of $3.1 billion was up 24% and adjusted operating profit of $2.23 billion was down 19%. GAAP operating profit benefited from the gain on the sale of the company's shares in Beijer Ref AB ("Beijer") in the second half of the year. Adjusted operating profit was impacted by investments in growth initiatives, lower sales and unfavorable productivity due to factory disruptions related to the COVID-19 pandemic. These negative effects were partly offset by cost-containment measures and accelerated savings under Carrier 700.

GAAP EPS of $2.25 benefited from the gain on the sale of the shares in Beijer in the second half of the year and adjusted EPS was $1.66. Net income was $2.0 billion, and adjusted net income was $1.5 billion. Net cash flows provided by operating activities were $1.69 billion and capital expenditures were $312 million, resulting in free cash flow of $1.38 billion. Free cash flow included $272 million in tax payments related to the gain on the sale of the shares in Beijer.

Fourth Quarter 2020 ResultsCarrier's fourth quarter sales of $4.6 billion were up 2% compared to the prior year due to currency translation and organic sales were flat to the prior year. The sales performance was largely driven by continued strong demand in North America residential HVAC, which was up 25% compared to the prior year, an improved economic climate, and other businesses continue to improve sequentially, but were still down compared to last year. GAAP operating profit in the quarter of $1.25 billion was up 124% and adjusted operating profit of $453 million was down 24%. These results were impacted by planned investment spending on growth initiatives in the quarter, incremental public company, vendor contract termination, legal and related costs.

GAAP EPS of $1.00 included the sale of Carrier's stake in Beijer and adjusted EPS was $0.31. Net income was $884 million, and adjusted net income was $280 million. Net cash flows provided by operating activities were $199 million and capital expenditures were $161 million, resulting in free cash flow of $38 million. Free cash flow included $272 million in tax payments related to the gain on the sale of the shares in Beijer.

Full-Year 2021 Outlook*

* Carrier is announcing the following outlook for 2021: * Sales growth of 6% to 8% * organic sales up 4% to 6%

* currency translation to add approximately 2% * Adjusted operating margin of approximately 13.5%, up 70 bps * Adjusted EPS of $1.85 to $1.95, up 14% at midpoint * Free cash flow of approximately $1.6 billion

*Note: When the company provides expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

Conference CallCarrier will host a webcast of its earnings conference call today, Tuesday, February 9, 2021, at 9:00 a.m. ET. To access the webcast, visit the Events & Presentations section of the Carrier Investor Relations site at ir.carrier.com/news-and-events/events-and-presentations or to listen to the earnings call by phone, dial (877) 742-9091.

About CarrierAs the leading global provider of healthy, safe and sustainable building and cold chain solutions, Carrier Global Corporation is committed to making the world safer, more sustainable and comfortable for generations to come. From the beginning, we've led in inventing new technologies and entirely new industries. Today, we continue to lead because we have a world-class, diverse workforce that puts the customer at the center of everything we do. For more information, visit www.corporate.carrier.com or follow Carrier on social media at @Carrier.

CARR-IR

Use and Definitions of Non-GAAP Financial MeasuresCarrier Global Corporation ("Carrier") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").

We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

Organic sales, adjusted operating profit, adjusted operating margin, earnings before interest, taxes and depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share ("EPS"), the adjusted effective tax rate, and net debt are non-GAAP financial measures. Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as "other significant items").

Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs and other significant items. Adjusted operating margin represents adjusted operating profit as a percentage of net sales (a GAAP measure). EBITDA represents net income attributable to common shareholders (a GAAP measure), adjusted for interest expense, income tax expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, excluding non-service pension benefit, non-controlling interest in subsidiaries' earnings from operations, restructuring costs and other significant items. Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs and other significant items. Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs and other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs and other significant items. Net debt represents long-term debt (a GAAP measure) less cash and cash equivalents. For the business segments, when applicable, adjustments of operating profit and operating margins represent operating profit, excluding restructuring and other significant items.

Free cash flow is a non-GAAP financial measure that represents net cash flows provided by operating activities (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Carrier's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of Carrier's common stock and distribution of earnings to shareowners.

When we provide our expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS, and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected net sales, operating profit, operating margin, diluted EPS and net cash flows provided by operating activities) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, future restructuring costs, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance or the separation and distribution from United Technologies. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Carrier, the estimated costs associated with the Separation, Carrier's plans with respect to our indebtedness and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Carrier and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on production and on global supply, demand, and distribution as the outbreak continues and results in a prolonged period of travel, commercial and other restrictions and limitations), natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions and Carrier's capital structure and credit ratings; (5) the timing and scope of future repurchases of Carrier's common stock, including market conditions and the level of other investing activities and uses of cash; (6) delays and disruption in the delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) risks resulting from being a smaller, less diversified company than prior to the separation; (10) the outcome of legal proceedings, investigations and other contingencies; (11) the impact of pension plan assumptions on future cash contributions and earnings; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S. (including in connection with the new administration in Washington, DC) and other countries in which Carrier and our businesses operate, including the effect of changes in U.S. trade policies or the United Kingdom's withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes (including potentially as a result of the new administration in Washington, DC) in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate; (15) the ability of Carrier to retain and hire key personnel; (16) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the expected benefits of the Separation; (18) a determination by the U.S. Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness, including that incurred as a result of financing transactions undertaken in connection with the separation, as well as our ability to reduce indebtedness and the timing thereof; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the separation will exceed Carrier's estimates; and (21) the impact of the Separation on Carrier's business and Carrier's resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Carrier assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Contact: Media Inquiries

Danielle Canzanella

561-365-1101

Danielle.Canzanella@Carrier.com

Investor Relations

Sam Pearlstein

561-365-2251

Sam.Pearlstein@Carrier.com

Carrier Global Corporation

Condensed Consolidated Statement of Operations

(Unaudited)

For the Three Months Ended For the Year Ended December 31, December 31,

(dollars in millions, except per share amounts; shares in millions) 2020 2019 2020 2019

Net sales

Product sales $ 3,732 $ 3,657 $ 14,347 $ 15,360

Service sales 862 844 3,109 3,248

4,594 4,501 17,456 18,608

Costs and expenses

Cost of products sold 2,721 2,635 10,185 10,890

Cost of services sold 588 593 2,162 2,299

Research and development 127 99 419 401

Selling, general and administrative 810 695 2,820 2,761

4,246 4,022 15,586 16,351

Equity method investment net earnings 59 38 207 236

Other income (expense), net 838 40 1,006 (2)

Operating profit 1,245 557 3,083 2,491

Non-service pension benefit 13 30 60 154

Interest (expense) income, net (82) 4 (288) 27

Income from operations before income taxes 1,176 591 2,855 2,672

Income tax expense 289 137 849 517

Net income from operations 887 454 2,006 2,155

Less: Non-controlling interest in subsidiaries' earnings from 3 14 24 39operations

Income from operations attributable to common shareowners $ 884 $ 440 $ 1,982 $ 2,116

Earnings per share ^(1), (2)

Basic $ 1.02 $ 0.50 $ 2.29 $ 2.44

Diluted $ 1.00 $ 0.50 $ 2.25 $ 2.44

Weighted-average number of shares outstanding^ (2)

Basic 867.4 866.2 866.5 866.2

Diluted 888.4 866.2 880.2 866.2

^(1) On April 3, 2020, United Technologies Corporation, since renamed RaytheonTechnologies Corporation ("UTC") completed the spin-off of Carrier, one ofUTC's reportable segments, into a separate publicly traded company (the"Separation"). The Separation was completed through a pro-rata distribution(the "Distribution") of all of the outstanding common stock of Carrier to UTCshareowners who held shares of UTC common stock as of the close of business onMarch 19, 2020, the record date for the Distribution. Earnings per share forperiods presented prior to the Separation were calculated using the number ofshares that were distributed to UTC shareowners immediately following theSeparation. For periods prior to the Separation it was assumed that there wereno dilutive equity instruments as there were no equity awards in Carrier commonstock outstanding prior to the Separation.

^(2) Basic and diluted earnings per share for the three and twelve months endedDecember 31, 2020 are calculated using the weighted-average number of commonshares outstanding for the period beginning after the Distribution date.Diluted earnings per share is computed by giving effect to all potentiallydilutive stock awards that are outstanding.

Carrier Global Corporation

Segment Net Sales and Operating Profit

For the Three Months Ended December 31, For the Year Ended December 31,

(Unaudited) 2020 2019 2020 2019

(dollars in millions) Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted

Net sales

HVAC $ 2,336 $ 2,336 $ 2,207 $ 2,207 $ 9,478 $ 9,478 $ 9,712 $ 9,712

Refrigeration 949 949 953 953 3,333 3,333 3,792 3,792

Fire & Security 1,398 1,398 1,422 1,422 4,985 4,985 5,500 5,500

Segment sales 4,683 4,683 4,582 4,582 17,796 17,796 19,004 19,004

Eliminations and (89) (89) (81) (81) (340) (340) (396) (396)other

Net sales $ 4,594 $ 4,594 $ 4,501 $ 4,501 $ 17,456 $ 17,456 $ 18,608 $ 18,608

Operating profit

HVAC $ 1,098 $ 231 $ 321 $ 307 $ 2,462 $ 1,430 $ 1,563 $ 1,670

Refrigeration 94 110 159 137 357 375 532 524

Fire & Security 158 186 187 212 584 628 708 768

Segment operating 1,350 527 667 656 3,403 2,433 2,803 2,962profit

Eliminations and (62) (33) (61) (13) (184) (73) (156) (60)other

General corporate (43) (41) (49) (49) (136) (128) (156) (156)expenses

Operating profit $ 1,245 $ 453 $ 557 $ 594 $ 3,083 $ 2,232 $ 2,491 $ 2,746

Segment operating margin

HVAC 47.0 % 9.9 % 14.5 % 13.9 % 26.0 % 15.1 % 16.1 % 17.2 %

Refrigeration 9.9 % 11.6 % 16.7 % 14.4 % 10.7 % 11.3 % 14.0 % 13.8 %

Fire & Security 11.3 % 13.3 % 13.2 % 14.9 % 11.7 % 12.6 % 12.9 % 14.0 %

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)

Operating Profit & Operating Profit Margin

For the Three Months Ended For the Year Ended

(Unaudited) December 31, December 31,

(dollars in millions - Income (Expense)) 2020 2019 2020 2019

HVAC

Net sales $ 2,336 $ 2,207 $ 9,478 $ 9,712

Operating profit $ 1,098 $ 321 $ 2,462 $ 1,563

Restructuring (4) (9) (7) (56)

Impairment charge on equity method - - (71) (108) investment

Gain on sale of investment 871 23 1,123 57

Charge resulting from litigation matter - - (11) -

Separation costs - - (2) -

Adjusted operating profit $ 231 $ 307 $ 1,430 $ 1,670

Adjusted operating margin 9.9 % 13.9 % 15.1 % 17.2 %

Refrigeration

Net sales $ 949 $ 953 $ 3,333 $ 3,792

Operating profit $ 94 $ 159 $ 357 $ 532

Restructuring (10) - (12) (14)

Net gain on expropriated plant - 22 - 22

Separation costs (6) - (6) -

Adjusted operating profit $ 110 $ 137 $ 375 $ 524

Adjusted operating margin 11.6 % 14.4 % 11.3 % 13.8 %

Fire & Security

Net sales $ 1,398 $ 1,422 $ 4,985 $ 5,500

Operating profit $ 158 $ 187 $ 584 $ 708

Restructuring (15) (18) (28) (53)

Separation costs (13) - (16) -

Pension plan amendment - (7) - (7)

Adjusted operating profit $ 186 $ 212 $ 628 $ 768

Adjusted operating margin 13.3 % 14.9 % 12.6 % 14.0 %

General Corporate Expenses andEliminations and Other

Net sales $ (89) $ (81) $ (340) $ (396)

Operating profit $ (105) $ (110) $ (320) $ (312)

Restructuring (1) (2) (2) (3)

Consultant contract termination - - - (34)

Separation costs (30) (46) (117) (59)

Adjusted operating profit $ (74) $ (62) $ (201) $ (216)

Carrier

Net sales $ 4,594 $ 4,501 $ 17,456 $ 18,608

Operating profit $ 1,245 $ 557 $ 3,083 $ 2,491

Total restructuring costs (30) (29) (49) (126)

Total non-recurring and non-operational 822 (8) 900 (129) items

Adjusted operating profit $ 453 $ 594 $ 2,232 $ 2,746

Adjusted operating margin 9.9 % 13.2 % 12.8 % 14.8 %

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

Net Income, Earnings Per Share, and Effective Tax Rate

(Unaudited) For the Three Months Ended December 31, For the Year Ended December 31,

(dollars in millions - Income (Expense)) 2020 2019 2020 2019

Net income attributable to common $ 884 $ 440 $ 1,982 $ 2,116shareowners

Total restructuring costs (30) (29) (49) (126)

Total non-recurring and non-operational 822 (8) 900 (129)items included in operating profit

Non-recurring and non-operational itemsincluded in Interest expense, net:

Interest income associated with - - - 8participation in amnesty settlement

Interest income associated with IRS - - - 8settlement

Debt issuance costs relating to - - (5) -Carrier's separation from UTC

Non-recurring and non-operational items - - (5) 16included in Interest expense, net

Tax effect of restructuring and (188) 8 (217) 39non-recurring and non-operational items

Significant non-recurring andnon-operational items included in Incometax expense:

Favorable income tax adjustments related - - - 95to tax amnesty

Adjustments related to tax settlements - - - 54

Adjustment related to a valuationallowance recorded against a UnitedKingdom tax loss and credit carryforward - - (51) -as a result of separation relatedactivities

Adjustment resulting from Carrier'sdecision to no longer permanently - - (46) -reinvest certain pre-2018 unremittednon-U.S. earnings

Deferred tax adjustment resulting from - - - 19the UTC Separation

Deferred tax adjustment resulting from - - (12) -United Kingdom legislative change

Significant non-recurring andnon-operational items included in Income - - (109) 168tax expense

Total significant non-recurring and 604 (29) 520 (32)non-operational items

Adjusted net income attributable to $ 280 $ 469 $ 1,462 $ 2,148common shareowners

Diluted earnings per share $ 1.00 $ 0.50 $ 2.25 $ 2.44

Impact on diluted earnings per share 0.69 (0.03) 0.59 (0.04)

Adjusted diluted earnings per share $ 0.31 $ 0.53 $ 1.66 $ 2.48

Effective tax rate 24.5 % 23.2 % 29.7 % 19.4 %

Impact on effective tax rate 1.8 % (0.1) % (3.7) % 5.5 %

Adjusted effective tax rate 26.3 % 23.1 % 26.0 % 24.9 %

Carrier Global Corporation

Components of Changes in Net Sales

Three Months Ended December 31, 2020 Compared with Three Months Ended December31, 2019

Factors Contributing to Total % change in Net Sales

(Unaudited) Organic FX Acquisitions / Other Total Translation Divestitures, net

HVAC 4% 2% -% -% 6%

Refrigeration (3)% 3% -% -% -%

Fire & Security (5)% 3% -% -% (2)%

Consolidated -% 2% -% -% 2%

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

Factors Contributing to Total % change in Net Sales

(Unaudited) Organic FX Acquisitions / Other Total Translation Divestitures, net

HVAC (2)% -% -% -% (2)%

Refrigeration (12)% -% -% -% (12)%

Fire & Security (9)% -% -% -% (9)%

Consolidated (6)% -% -% -% (6)%

Net Debt

As of

December 31, 2020 March 31, 2020 ^(1)

Long-term debt $ 10,036 $ 11,029

Current portion of long-term debt 191 218

Less: Cash and cash equivalents 3,115 768

Net debt $ 7,112 $ 10,479

_______________

^(1) On April 1 and April 2, 2020, Carrier received cash contributions totaling$590 million from UTC related to the Separation, resulting in net debt ofapproximately $9.9 billion as of April 3, 2020.

Carrier Global Corporation

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions) December 31, 2020 December 31, 2019

Assets

Cash and cash equivalents $ 3,115 $ 952

Accounts receivable, net 2,781 2,726

Contract assets, current 656 622

Inventories, net 1,629 1,332

Other assets, current 343 327

Total current assets 8,524 5,959

Future income tax benefits 449 500

Fixed assets, net 1,810 1,663

Operating lease right-of-use assets 788 832

Intangible assets, net 1,037 1,083

Goodwill 10,139 9,884

Pension and post-retirement assets 554 490

Equity method investments 1,513 1,739

Other assets 279 256

Total Assets $ 25,093 $ 22,406

Liabilities and Equity

Accounts payable $ 1,936 $ 1,701

Accrued liabilities 2,471 2,088

Contract liabilities, current 512 443

Current portion of long-term debt 191 237

Total current liabilities 5,110 4,469

Long-term debt 10,036 82

Future pension and post-retirement 524 456obligations

Future income tax obligations 479 1,099

Operating lease liabilities 642 682

Other long-term liabilities 1,724 1,183

Total Liabilities 18,515 7,971

Equity

UTC Net investment - 15,355

Common stock, par value $0.01;4,000,000,000 shares authorized; 9 -867,829,119 shares issued and outstandingas of December 31, 2020

Additional paid-in capital 5,345 -

Retained earnings 1,643 -

Accumulated other comprehensive loss (745) (1,253)

Non-controlling interest 326 333

Total Equity 6,578 14,435

Total Liabilities and Equity $ 25,093 $ 22,406

Carrier Global Corporation

Condensed Consolidated Statement of Cash Flows

(Unaudited)

For the Year Ended December 31,

(dollars in millions) 2020 2019

Operating Activities

Net income from operations $ 2,006 $ 2,155

Adjustments to reconcile net income from operations to netcash flows provided by operating activities, net ofacquisitions and dispositions

Depreciation and amortization 336 335

Deferred income tax provision 97 (122)

Equity compensation cost 77 52

Equity method investment net earnings (207) (236)

Distributions from equity method investments 169 158

Impairment charge on minority-owned joint venture 72 108investments

Gains on sale of investments and businesses (1,123) -

Changes in operating assets and liabilities

Accounts receivable, net 49 (129)

Contract assets, current (9) 23

Inventories, net (240) (2)

Other assets, current 3 62

Accounts payable and accrued liabilities 237 (296)

Contract liabilities, current 46 (18)

Defined benefit plan contributions (41) (36)

Other operating activities, net 220 9

Net cash flows provided by operating activities 1,692 2,063

Investing Activities

Capital expenditures (312) (243)

Proceeds on sale of investments and businesses 1,377 6

Receipt from settlement of derivative contracts 40 -

Other investing activities, net 1 (22)

Net cash flows provided by (used in) investing activities 1,106 (259)

Financing Activities

(Decrease) increase in short-term borrowings, net (23) 25

Issuance of long-term debt 11,784 107

Repayment of long-term debt (1,911) (138)

Dividends paid on common stock (138) -

Dividends paid to non-controlling interest (48) (28)

Net transfers to UTC (10,359) (1,954)

Other financing activities, net 14 6

Net cash flows used in financing activities (681) (1,982)

Effect of foreign exchange rate changes on cash and cash 45 1equivalents

Net increase (decrease) in cash and cash equivalents and 2,162 (177)restricted cash

Cash, cash equivalents and restricted cash, beginning of 957 1,134period

Cash, cash equivalents and restricted cash, end of period 3,119 957

Less: restricted cash 4 5

Cash and cash equivalents, end of period $ 3,115 $ 952

Carrier Global Corporation

Free Cash Flow Reconciliation

(Unaudited)

For the Three Months Ended March 31,

(dollars in millions) 2020 2019

Net income attributable to common $ 96 $ 400shareowners

Net cash flows provided by operating $ 47 $ (183)activities

Less: Capital expenditures 48 41

Free cash flow $ (1) $ (224)

Free cash flow as a percentage of netincome attributable to common (1)% (56)%shareowners

(Unaudited)

For the Three Months Ended June 30,

(dollars in millions) 2020 2019

Net income attributable to common $ 261 $ 784shareowners

Net cash flows provided by operating $ 509 $ 554activities

Less: Capital expenditures 46 48

Free cash flow $ 463 $ 506

Free cash flow as a percentage of netincome attributable to common 177% 65%shareowners

(Unaudited)

For the Three Months Ended September 30,

(dollars in millions) 2020 2019

Net income attributable to common $ 741 $ 492shareowners

Net cash flows provided by operating $ 937 $ 618activities

Less: Capital expenditures 57 50

Free cash flow $ 880 $ 568

Free cash flow as a percentage of netincome attributable to common 119% 115%shareowners

(Unaudited)

For the Three Months Ended December 31,

(dollars in millions) 2020 2019

Net income attributable to common $ 884 $ 440shareowners

Net cash flows provided by operating $ 199 $ 1,074activities

Less: Capital expenditures 161 104

Free cash flow $ 38 $ 970

Free cash flow as a percentage of netincome attributable to common 4% 220%shareowners

(Unaudited)

For the Year Ended December 31,

(dollars in millions) 2020 2019

Net income attributable to common $ 1,982 $ 2,116shareowners

Net cash flows provided by operating $ 1,692 $ 2,063activities

Less: Capital expenditures 312 243

Free cash flow $ 1,380 $ 1,820

Free cash flow as a percentage of netincome attributable to common 70% 86%shareowners

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SOURCE Carrier Global Corporation