Carrier Global Corporation 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 Authorization
On 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 Results
Carrier'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 Results
Carrier'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*
*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.