Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 16, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39220 | |
Entity Registrant Name | CARRIER GLOBAL CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-4051582 | |
Entity Address, Address Line One | 13995 Pasteur Boulevard | |
Entity Address, City or Town | Palm Beach Gardens | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33418 | |
City Area Code | (561) | |
Local Phone Number | 365-2000 | |
Title of each class | Common Stock ($0.01 par value) | |
Trading Symbol(s) | CARR | |
Name of each exchange on which registered | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 839,046,579 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001783180 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net sales | ||||
Total Net sales | $ 5,731 | $ 5,451 | $ 16,996 | $ 15,316 |
Costs and expenses | ||||
Research and development | (157) | (143) | (447) | (390) |
Selling, general and administrative | (831) | (624) | (2,336) | (1,839) |
Total Costs and expenses | (4,903) | (4,741) | (14,830) | (13,328) |
Equity method investment net earnings | 75 | 63 | 171 | 222 |
Other income (expense), net | (258) | 753 | (648) | 1,872 |
Operating profit | 645 | 1,526 | 1,689 | 4,082 |
Non-service pension (expense) benefit | 0 | 0 | 0 | (2) |
Interest (expense) income, net | (51) | (56) | (164) | (165) |
Income from operations before income taxes | 594 | 1,470 | 1,525 | 3,915 |
Income tax (expense) benefit | (213) | (138) | (524) | (609) |
Net income from operations | 381 | 1,332 | 1,001 | 3,306 |
Less: Non-controlling interest in subsidiaries' earnings from operations | 24 | 20 | 72 | 42 |
Net income attributable to common shareowners | $ 357 | $ 1,312 | $ 929 | $ 3,264 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.43 | $ 1.56 | $ 1.11 | $ 3.86 |
Diluted (in dollars per share) | $ 0.42 | $ 1.53 | $ 1.09 | $ 3.78 |
Weighted-average number of shares outstanding | ||||
Basic (in shares) | 838.7 | 839.6 | 836.6 | 846.1 |
Diluted (in shares) | 854.7 | 856.5 | 852.7 | 864.3 |
Product | ||||
Net sales | ||||
Total Net sales | $ 5,081 | $ 4,891 | $ 15,122 | $ 13,723 |
Costs and expenses | ||||
Cost of products and services sold | (3,428) | (3,569) | (10,655) | (9,930) |
Service | ||||
Net sales | ||||
Total Net sales | 650 | 560 | 1,874 | 1,593 |
Costs and expenses | ||||
Cost of products and services sold | $ (487) | $ (405) | $ (1,392) | $ (1,169) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income from operations | $ 381 | $ 1,332 | $ 1,001 | $ 3,306 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments arising during period | (246) | (645) | (255) | (1,195) |
Pension and post-retirement benefit plan adjustments | 0 | 2 | 0 | 2 |
Unrealized cash flow hedging gain (loss) arising during period | 80 | 0 | 80 | 0 |
Chubb divestiture | 0 | 0 | 0 | (245) |
Other comprehensive income (loss), net of tax | (166) | (643) | (175) | (1,438) |
Comprehensive income (loss) | 215 | 689 | 826 | 1,868 |
Less: Comprehensive income (loss) attributable to non-controlling interest | 23 | 7 | 65 | 20 |
Comprehensive income (loss) attributable to common shareowners | $ 192 | $ 682 | $ 761 | $ 1,848 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 3,902 | $ 3,520 |
Accounts receivable, net | 3,030 | 2,833 |
Contract assets, current | 605 | 537 |
Inventories, net | 2,562 | 2,640 |
Other assets, current | 412 | 349 |
Total current assets | 10,511 | 9,879 |
Future income tax benefits | 712 | 612 |
Fixed assets, net | 2,210 | 2,241 |
Operating lease right-of-use assets | 577 | 642 |
Intangible assets, net | 1,100 | 1,342 |
Goodwill | 9,825 | 9,977 |
Pension and post-retirement assets | 29 | 26 |
Equity method investments | 1,166 | 1,148 |
Other assets | 414 | 219 |
Total Assets | 26,544 | 26,086 |
Liabilities and Equity | ||
Accounts payable | 2,887 | 2,833 |
Accrued liabilities | 2,832 | 2,610 |
Contract liabilities, current | 496 | 449 |
Current portion of long-term debt | 134 | 140 |
Total current liabilities | 6,349 | 6,032 |
Long-term debt | 8,651 | 8,702 |
Future pension and post-retirement obligations | 337 | 349 |
Future income tax obligations | 553 | 568 |
Operating lease liabilities | 465 | 529 |
Other long-term liabilities | 1,687 | 1,830 |
Total Liabilities | 18,042 | 18,010 |
Commitments and contingent liabilities (Note 19) | ||
Equity | ||
Common stock | 9 | 9 |
Treasury stock | (1,972) | (1,910) |
Additional paid-in capital | 5,517 | 5,481 |
Retained earnings | 6,486 | 5,866 |
Accumulated other comprehensive loss | (1,856) | (1,688) |
Non-controlling interest | 318 | 318 |
Total Equity | 8,502 | 8,076 |
Total Liabilities and Equity | $ 26,544 | $ 26,086 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Millions | Total | Accumulated Other Comprehensive Income (Loss) | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Non-Controlling Interest | |
Balance as of beginning of period at Dec. 31, 2021 | $ 7,094 | $ (989) | $ 9 | $ (529) | $ 5,411 | $ 2,865 | $ 327 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,387 | 1,379 | 8 | |||||
Other comprehensive income (loss), net of tax | (308) | (308) | ||||||
Shares issued under incentive plans, net | (17) | (17) | ||||||
Stock-based compensation | 21 | 21 | ||||||
Dividends attributable to non-controlling interest | (1) | (1) | ||||||
Sale of non-controlling interest | (5) | (5) | ||||||
Treasury stock repurchase | (741) | (741) | ||||||
Balance as of end of period at Mar. 31, 2022 | 7,430 | (1,297) | 9 | (1,270) | 5,415 | 4,244 | 329 | |
Balance as of beginning of period at Dec. 31, 2021 | 7,094 | (989) | 9 | (529) | 5,411 | 2,865 | 327 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 3,306 | |||||||
Other comprehensive income (loss), net of tax | (1,438) | |||||||
Balance as of end of period at Sep. 30, 2022 | 7,463 | (2,405) | 9 | (1,791) | 5,463 | 5,876 | 311 | |
Balance as of beginning of period at Dec. 31, 2021 | 7,094 | (989) | 9 | (529) | 5,411 | 2,865 | 327 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Treasury stock repurchase | (1,900) | |||||||
Balance as of end of period at Dec. 31, 2022 | 8,076 | (1,688) | 9 | (1,910) | 5,481 | 5,866 | 318 | |
Balance as of beginning of period at Mar. 31, 2022 | 7,430 | (1,297) | 9 | (1,270) | 5,415 | 4,244 | 329 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 587 | 573 | 14 | |||||
Other comprehensive income (loss), net of tax | (487) | (478) | (9) | |||||
Dividends declared on common stock | [1] | (253) | (253) | |||||
Conversion of cash settled awards | 6 | 6 | ||||||
Stock-based compensation | 20 | 20 | ||||||
Dividends attributable to non-controlling interest | (38) | (38) | ||||||
Treasury stock repurchase | (273) | (273) | ||||||
Balance as of end of period at Jun. 30, 2022 | 6,992 | (1,775) | 9 | (1,543) | 5,441 | 4,564 | 296 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,332 | 1,312 | 20 | |||||
Other comprehensive income (loss), net of tax | (643) | (630) | (13) | |||||
Stock-based compensation | 17 | 17 | ||||||
Dividends attributable to non-controlling interest | (1) | (1) | ||||||
Acquisition of non-controlling interest | 27 | 5 | 22 | |||||
Sale of non-controlling interest | (13) | (13) | ||||||
Treasury stock repurchase | (248) | (248) | ||||||
Balance as of end of period at Sep. 30, 2022 | 7,463 | (2,405) | 9 | (1,791) | 5,463 | 5,876 | 311 | |
Balance as of beginning of period at Dec. 31, 2022 | 8,076 | (1,688) | 9 | (1,910) | 5,481 | 5,866 | 318 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 387 | 373 | 14 | |||||
Other comprehensive income (loss), net of tax | 54 | 52 | 2 | |||||
Shares issued under incentive plans, net | (9) | (9) | ||||||
Stock-based compensation | 22 | 22 | ||||||
Treasury stock repurchase | (62) | (62) | ||||||
Balance as of end of period at Mar. 31, 2023 | 8,468 | (1,636) | 9 | (1,972) | 5,494 | 6,239 | 334 | |
Balance as of beginning of period at Dec. 31, 2022 | 8,076 | (1,688) | 9 | (1,910) | 5,481 | 5,866 | 318 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,001 | |||||||
Other comprehensive income (loss), net of tax | (175) | |||||||
Treasury stock repurchase | (62) | |||||||
Balance as of end of period at Sep. 30, 2023 | 8,502 | (1,856) | 9 | (1,972) | 5,517 | 6,486 | 318 | |
Balance as of beginning of period at Mar. 31, 2023 | 8,468 | (1,636) | 9 | (1,972) | 5,494 | 6,239 | 334 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 233 | 199 | 34 | |||||
Other comprehensive income (loss), net of tax | (63) | (55) | (8) | |||||
Shares issued under incentive plans, net | (18) | (18) | ||||||
Dividends declared on common stock | [2] | (309) | (309) | |||||
Stock-based compensation | 18 | 18 | ||||||
Dividends attributable to non-controlling interest | (41) | (41) | ||||||
Balance as of end of period at Jun. 30, 2023 | 8,288 | (1,691) | 9 | (1,972) | 5,494 | 6,129 | 319 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 381 | 357 | 24 | |||||
Other comprehensive income (loss), net of tax | (166) | (165) | (1) | |||||
Stock-based compensation | 23 | 23 | ||||||
Dividends attributable to non-controlling interest | (2) | (2) | ||||||
Sale of non-controlling interest | (22) | (22) | ||||||
Balance as of end of period at Sep. 30, 2023 | $ 8,502 | $ (1,856) | $ 9 | $ (1,972) | $ 5,517 | $ 6,486 | $ 318 | |
[1] (1) Cash dividends declared were $0.30 per share for the three months ended June 30, 2022. (1) Cash dividends declared were $0.37 per share for the three months ended June 30, 2023. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Common stock dividends, declared (in dollars per share) | $ 0.37 | $ 0.30 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities | ||
Net income from operations | $ 1,001 | $ 3,306 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||
Depreciation and amortization | 407 | 257 |
Deferred income tax provision | (151) | (107) |
Stock-based compensation costs | 63 | 58 |
Equity method investment net earnings | (171) | (222) |
(Gain) loss on extinguishment of debt | 0 | (36) |
(Gain) loss on sale of investments / deconsolidation | 278 | (1,844) |
Changes in operating assets and liabilities | ||
Accounts receivable, net | (297) | (433) |
Contract assets, current | (74) | (201) |
Inventories, net | 7 | (492) |
Other assets, current | (75) | (3) |
Accounts payable and accrued liabilities | 491 | 180 |
Contract liabilities, current | 55 | 34 |
Defined benefit plan contributions | (17) | (10) |
Distributions from equity method investments | 45 | 55 |
Other operating activities, net | (17) | 78 |
Net cash flows provided by (used in) operating activities | 1,545 | 620 |
Investing Activities | ||
Capital expenditures | (236) | (213) |
Investment in businesses, net of cash acquired | (69) | (472) |
Dispositions of businesses | 54 | 2,944 |
Settlement of derivative contracts, net | (66) | (202) |
Kidde-Fenwal, Inc. deconsolidation | (134) | 0 |
Other investing activities, net | 20 | (12) |
Net cash flows provided by (used in) investing activities | (431) | 2,045 |
Financing Activities | ||
Increase (decrease) in short-term borrowings, net | (35) | (125) |
Issuance of long-term debt | 14 | 421 |
Repayment of long-term debt | (15) | (1,185) |
Repurchases of common stock | (62) | (1,261) |
Dividends paid on common stock | (465) | (384) |
Dividends paid to non-controlling interest | (46) | (22) |
Other financing activities, net | (79) | (28) |
Net cash flows provided by (used in) financing activities | (688) | (2,584) |
Effect of foreign exchange rate changes on cash and cash equivalents | (45) | (115) |
Net increase (decrease) in cash and cash equivalents and restricted cash | 381 | (34) |
Cash, cash equivalents and restricted cash, beginning of period | 3,527 | 3,025 |
Cash, cash equivalents and restricted cash, end of period | 3,908 | 2,991 |
Less: restricted cash | 6 | 6 |
Cash and cash equivalents, end of period | $ 3,902 | $ 2,985 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS Carrier Global Corporation (the "Company") is a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to its customers. The Company's portfolio includes industry-leading brands such as Carrier, Toshiba, Automated Logic, Carrier Transicold, Kidde, Edwards and LenelS2 that offer innovative heating, ventilating, air conditioning ("HVAC"), refrigeration, fire, security and building automation technologies to help make the world safer and more comfortable. The Company also provides a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. The Company's operations are classified into three segments: HVAC, Refrigeration and Fire & Security. In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for 2022 filed with the SEC on February 7, 2023 (the "2022 Form 10-K"). |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The Unaudited Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and majority-owned subsidiaries in which it has control. Inter-company accounts and transactions have been eliminated. Related party transactions between the Company and its equity method investees have not been eliminated. Non-controlling interest represents a non-controlling investor's interests in the results of subsidiaries that the Company controls and consolidates. Planned Portfolio Transformation On April 25, 2023, the Company announced that it entered into a Share Purchase Agreement (the “Agreement”) to acquire the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (“Viessmann”), a privately-held company, for approximately €12 billion. The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe. The transaction is expected to close around the end of 2023, subject to customary closing conditions and regulatory approvals. In addition, the Company also announced plans to exit its Fire & Security and Commercial Refrigeration businesses over the course of 2024. See Note 15 – Acquisitions and Note 16 - Divestitures for additional information. Deconsolidation of Kidde-Fenwal, Inc. On May 14, 2023, Kidde-Fenwal, Inc. ("KFI"), an indirect wholly-owned subsidiary of the Company, filed a petition for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court for the District of Delaware. KFI, an industrial fire detection and suppression business historically reported in the Company's Fire & Security segment, has indicated that it intends to use the bankruptcy process to explore strategic alternatives, including the sale of KFI as a going concern. KFI has further stated that, during the Chapter 11 process, KFI expects that there will be no significant interruptions to its business operations. As of the petition date, KFI was deconsolidated and its respective assets and liabilities were derecognized from the Company's Unaudited Condensed Consolidated Financial Statements. See Note 19 - Commitments and Contingent Liabilities for additional information. Acquisition of Toshiba Carrier Corporation On February 6, 2022, the Company entered into a binding agreement to acquire a majority ownership interest in Toshiba Carrier Corporation (“TCC”), a variable refrigerant flow ("VRF") and light commercial HVAC joint venture between Carrier and Toshiba Corporation. The acquisition was completed on August 1, 2022. As a result, the assets, liabilities and results of operations of TCC are consolidated in the accompanying Unaudited Condensed Consolidated Financial Statements as of the date of acquisition and reported within the Company’s HVAC segment. Upon closing, Toshiba Corporation retained a 5% ownership interest in TCC. See Note 15 – Acquisitions for additional information. Sale of Chubb Fire & Security Business On July 26, 2021, the Company entered into a stock purchase agreement to sell its Chubb Fire and Security business ("Chubb") to APi Group Corporation ("APi"). Chubb, which was reported within the Company’s Fire & Security segment, delivered essential fire safety and security solutions from design and installation to monitoring, service and maintenance across more than 17 countries around the globe. The sale of Chubb was completed on January 3, 2022 (the "Chubb Sale"). See Note 16 - Divestitures for additional information. Separation from United Technologies On April 3, 2020 (the Distribution Date"), United Technologies Corporation ("UTC"), since renamed RTX Corporation ("Raytheon Technologies Corporation" or "RTX"), completed the spin-off of Carrier into an independent, publicly traded company (the "Separation") through a pro-rata distribution (the "Distribution") on a one-for-one basis of all of the outstanding shares of common stock of Carrier to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution. In connection with the Separation, the Company issued an aggregate principal balance of $11.0 billion of debt and transferred approximately $10.9 billion of cash to UTC on February 27, 2020 and March 27, 2020. On April 1, 2020 and April 2, 2020, the Company received cash contributions totaling $590 million from UTC related to the Separation. Recently Issued and Adopted Accounting Pronouncements The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the sole source of authoritative U.S. GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. ASUs pending adoption were assessed and determined to be either not applicable or are not expected to have a material impact on the accompanying Unaudited Condensed Consolidated Financial Statements. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET Inventories are stated at the lower of cost or estimated net realizable value. Cost is primarily determined based on the first-in, first-out inventory method ("FIFO") or average cost methods, which approximates current replacement cost. However, certain subsidiaries use the last-in, first-out inventory method ("LIFO"). Inventories, net consisted of the following: (In millions) September 30, December 31, Raw materials $ 782 $ 884 Work-in-process 260 230 Finished goods 1,520 1,526 Inventories, net $ 2,562 $ 2,640 The Company performs periodic assessments utilizing customer demand, production requirements and historical usage rates to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to the lower of cost or estimated net realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of $230 million and $190 million as of September 30, 2023 and December 31, 2022, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETSThe Company records goodwill as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is tested and reviewed annually for impairment on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the reporting unit may be less than its carrying value. The changes in the carrying amount of goodwill were as follows: (In millions) HVAC Refrigeration Fire & Security Total Balance as of December 31, 2022 $ 6,392 $ 1,197 $ 2,388 $ 9,977 Acquisitions / divestitures — (4) — (4) Foreign currency translation (91) (16) (41) (148) Balance as of September 30, 2023 $ 6,301 $ 1,177 $ 2,347 $ 9,825 Indefinite-lived intangible assets are tested and reviewed annually for impairment on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite useful lives are amortized over their estimated useful lives. Identifiable intangible assets consisted of the following: September 30, 2023 December 31, 2022 (In millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Amortized: Customer relationships $ 1,387 $ (766) $ 621 $ 1,431 $ (720) $ 711 Patents and trademarks 375 (201) 174 401 (191) 210 Service portfolios and other 915 (674) 241 953 (595) 358 2,677 (1,641) 1,036 2,785 (1,506) 1,279 Unamortized: Trademarks and other 64 — 64 63 — 63 Intangible assets, net $ 2,741 $ (1,641) $ 1,100 $ 2,848 $ (1,506) $ 1,342 Amortization of intangible assets was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Amortization expense of Intangible assets $ 60 $ 38 $ 185 $ 79 Annual Impairment Test The Company tested its goodwill and indefinite-lived intangible assets for impairment on July 1 as part of its annual assessment. For each test, the Company qualitatively assessed all relevant events or circumstances that could impact the estimate of fair value and determined it was more likely than not that the fair value of each reporting unit and indefinite-lived intangible assets exceeded their carrying amount. |
BORROWINGS AND LINES OF CREDIT
BORROWINGS AND LINES OF CREDIT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
BORROWINGS AND LINES OF CREDIT | BORROWINGS AND LINES OF CREDIT Long-term debt consisted of the following: (In millions) September 30, December 31, 2.242% Notes due February 15, 2025 $ 1,200 $ 1,200 2.493% Notes due February 15, 2027 900 900 2.722% Notes due February 15, 2030 2,000 2,000 2.700% Notes due February 15, 2031 750 750 3.377% Notes due April 5, 2040 1,500 1,500 3.577% Notes due April 5, 2050 2,000 2,000 Total long-term notes 8,350 8,350 Japanese Term Loan Facility 362 404 Other debt (including project financing obligations and finance leases) 154 149 Discounts and debt issuance costs (81) (61) Total debt 8,785 8,842 Less: current portion of long-term debt 134 140 Long-term debt, net of current portion $ 8,651 $ 8,702 Japanese Term Loan Facility On July 15, 2022, the Company entered into a five-year, JPY 54 billion (approximately $400 million) senior unsecured term loan facility with MUFG Bank Ltd., as administrative agent and lender, and certain other lenders (the "Japanese Term Loan Facility"). Borrowings under the Japanese Term Loan Facility bear interest at a rate equal to the Tokyo Term Risk Free Rate plus 0.75%. In addition, the Japanese Term Loan Facility is subject to customary covenants including a covenant to maintain a maximum consolidated leverage ratio. The Company capitalized $2 million of deferred financing costs which are being amortized over its term. On July 25, 2022, the Company borrowed JPY 54 billion under the Japanese Term Loan Facility and used the proceeds to fund a portion of the TCC acquisition and to pay related fees and expenses. Revolving Credit Facility On May 19, 2023, the Company entered into a revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders, permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures in May 2028 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and can be used for other general corporate purposes. Borrowings are available in U.S. Dollars and Euros. U.S. Dollar borrowings can bear interest at either a Term SOFR Rate plus 0.10% and a ratings-based margin or, alternatively, at an alternate base rate plus a ratings-based margin. Euro borrowings bear interest at an adjusted EURIBOR rate plus a ratings-based margin. A ratings-based commitment fee is charged on unused commitments. Upon entering into the agreement, the Company terminated its existing revolving credit facility that was set to mature in April 2025. In addition, the Company capitalized $2 million of deferred financing costs which are being amortized over its term. As of September 30, 2023, there were no borrowings outstanding under the Revolving Credit Facility. Commercial Paper Program The Company has a $2.0 billion unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes, including the funding of working capital and potential acquisitions. As of September 30, 2023, there were no borrowings outstanding under the commercial paper program. Project Financing Arrangements The Company is involved in long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued $14 million and $27 million of debt during the nine months ended September 30, 2023 and 2022, respectively. Long-term debt repayments associated with these financing arrangements during the nine months ended September 30, 2023 and 2022 were $15 million and $70 million, respectively. Debt Covenants The Revolving Credit Facility, the indenture for the long-term notes and the Japanese Term Loan Facility contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of September 30, 2023, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness. Tender Offers On March 15, 2022, the Company commenced tender offers to purchase up to $1.15 billion ("Aggregate Tender Cap") aggregate principal of the Company's 2.242% Notes due 2025 and 2.493% Notes due 2027 (together, the "Senior Notes"). The tender offers included payment of applicable accrued and unpaid interest up to the settlement date, along with a fixed spread for early repayment. Based on participation, the Company elected to settle the tender offers on March 30, 2022. The aggregate principal amount of Senior Notes validly tendered and accepted was approximately $1.15 billion, which included $800 million of Notes due 2025 and $350 million of Notes due 2027. As a result, the Company recognized a net gain of $33 million and wrote off $5 million of unamortized deferred financing costs within Interest (expense) income, net on the accompanying Unaudited Condensed Consolidated Statement of Operations during the three months ended March 31, 2022. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement ("ASC 820"), defines fair value as the price that would be received if an asset is sold or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: • Level 1: Observable inputs such as quoted prices in active markets; • Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal models based on observable market inputs, such as forward, interest, contract and discount rates with changes in fair value reported in Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations. In connection with the TCC acquisition, the Company funded a portion of the Yen-denominated purchase price with cash on hand by entering into cross currency swaps with SMBC Capital Markets, Inc., as syndication swap arranger, and certain other financial institutions. The cross currency swaps are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates as well as credit default swap spreads. The Company designated the cross currency swaps as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the fair value of the swaps are recorded in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. The remaining portion of the Yen-denominated purchase price was funded by the Japanese Term Loan Facility. The carrying value of the facility is translated on a recurring basis using the exchange rate at the end of the applicable period and approximates its fair value. The Company designated the Japanese Term Loan Facility as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the carrying value of the Japanese Term Loan Facility associated with foreign exchange rate movements are recorded in Equity in the Unaudited Condensed Consolidated Balance Sheet. In connection with the proposed acquisition of the VCS Business, the Company entered into window forward contracts with Bank of America N.A. and JPMorgan Chase Bank N.A. to mitigate the foreign currency risk of the expected cash outflows associated with the Euro-denominated purchase price. The instruments have an aggregate notional amount of €7 billion and a settlement window between November 28, 2023 and February 27, 2024. The window forward contracts are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates with changes in fair value reported in Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations. During the three and nine months ended September 30, 2023, the Company recognized a $257 million and $368 million loss on the mark-to-market valuation of its window forward contracts, respectively. During the three months ended September 30, 2023, the Company entered into several floating-to-fixed interest rate swap contracts to mitigate interest rate exposure on the forecasted issuance of long-term debt. The contracts have an aggregate notional amount of $1.275 billion and were designated as cash flow hedges. The interest rate swap contracts are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates with changes in fair value reported in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. During the three months ended September 30, 2023 , the Company recorded an $80 million unrealized gain on the mark-to-market valuation of its interest rate swap contracts. The following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the accompanying Unaudited Condensed Consolidated Balance Sheet: (In millions) Total Level 1 Level 2 Level 3 September 30, 2023 Derivative assets (1)(3) $ 116 $ — $ 116 $ — Derivative liabilities (2)(3) $ (408) $ — $ (408) $ — December 31, 2022 Derivative assets (1) (3) $ 28 $ — $ 28 $ — Derivative liabilities (2) (3) $ (48) $ — $ (48) $ — (1) Included in Other assets, current and Other assets on the accompanying Unaudited Condensed Consolidated Balance Sheet. (2) Included in Accrued liabilities and Other long-term liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet. (3) Includes cross currency swaps, window forward contracts and interest rate swap contracts. The following table provides the carrying amounts and fair values of the Company's long-term notes that are not recorded at fair value in the accompanying Unaudited Condensed Consolidated Balance Sheet: September 30, 2023 December 31, 2022 (In millions) Carrying Fair Carrying Fair Total long-term Notes (1) $ 8,350 $ 6,653 $ 8,350 $ 6,832 (1) Excludes debt discount and issuance costs. The fair value of the Company's long-term debt is measured based on observable market inputs which are considered Level 1 within the fair value hierarchy. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value due to the short-term nature of these accounts and would be classified as Level 1 in the fair value hierarchy. The Company's financing leases and project financing obligations, included in Long-term debt and Current portion of long-term debt on the accompanying Unaudited Condensed Consolidated Balance Sheet , approximate fair value and are classified as Level 3 in the fair value hierarchy. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANSThe Company sponsors both funded and unfunded domestic and international defined benefit pension and defined contribution plans. In addition, the Company contributes to various domestic and international multi-employer pension plans. Contributions to the plans were as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Defined benefit plans $ 6 $ 4 $ 17 $ 10 Defined contribution plans $ 30 $ 29 $ 96 $ 95 Multi-employer pension plans $ 3 $ 5 $ 11 $ 11 The components of net periodic pension expense (benefit) for the defined benefit pension plans are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Service cost $ 4 $ 5 $ 12 $ 14 Interest cost 8 5 24 13 Expected return on plan assets (8) (7) (24) (20) Amortization of prior service credit 1 1 2 2 Recognized actuarial net (gain) loss (1) 2 (2) 7 Net periodic pension expense (benefit) $ 4 $ 6 $ 12 $ 16 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation - Stock Compensation , which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured at the date of grant and is generally not adjusted for subsequent changes. The Company's stock-based compensation plans include programs for stock appreciation rights, restricted stock units and performance share units. Stock-based compensation expense, net of estimated forfeitures, is included in Cost of products sold , Selling, general and administrative and Research and development in the accompanying Unaudited Condensed Consolidated Statements of Operations. Stock-based compensation cost by award type was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Equity compensation costs - equity settled $ 23 $ 17 $ 63 $ 58 Equity compensation costs - cash settled (1) 1 1 3 (16) Total stock-based compensation expense $ 24 $ 18 $ 66 $ 42 (1) The cash settled awards are classified as liability awards and are measured at fair value at each balance sheet date. |
PRODUCT WARRANTIES
PRODUCT WARRANTIES | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees [Abstract] | |
PRODUCT WARRANTIES | PRODUCT WARRANTIES In the ordinary course of business, the Company provides standard warranty coverage on its products. Provisions for these amounts are established at the time of sale and estimated primarily based on product warranty terms and historical claims experience. In addition, the Company incurs discretionary costs to service its products in connection with specific product performance issues. Provisions for these amounts are established when they are known and estimable. The Company assesses the adequacy of its initial provisions and will make adjustments as necessary based on known or anticipated claims or as new information becomes available that suggests it is probable that future costs will be different than estimated amounts. Amounts associated with these provisions are classified on the accompanying Unaudited Condensed Consolidated Balance Sheet as Accrued liabilities or Other long-term liabilities based on their anticipated settlement date. The changes in the carrying amount of warranty related provisions are as follows: Nine Months Ended September 30, (In millions) 2023 2022 Balance as of January 1, $ 552 $ 524 Warranties, performance guarantees issued and changes in estimated liability 186 120 Settlements made (146) (116) Other (15) 9 Balance as of September 30, $ 577 $ 537 |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
EQUITY | EQUITY The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of September 30, 2023 and December 31, 2022, 882,497,944 and 876,487,480 shares of common stock were issued, respectively, which includes 43,490,981 and 42,103,995 shares of treasury stock, respectively. Share Repurchase Program The Company may repurchase its outstanding common stock from time to time subject to market conditions and at the Company's discretion. Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act. Shares acquired are recognized at cost and presented separately on the balance sheet as a reduction to Equity . Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $4.1 billion of the Company's outstanding common stock. As of December 31, 2022, the Company repurchased 42.1 million shares of common stock for an aggregate purchase price of $1.9 billion, including shares repurchased under an accelerated share repurchase agreement. As a result, the Company had approximately $2.2 billion remaining under the current authorization at December 31, 2022. During the nine months ended September 30, 2023, the Company repurchased 1.4 million shares of common stock for an aggregate purchase price of $62 million. As a result, the Company has approximately $2.1 billion remaining under the current authorization at September 30, 2023. Accumulated Other Comprehensive Income (Loss) A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 is as follows: (In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2022 $ (1,604) $ (84) $ — $ (1,688) Other comprehensive income (loss) before reclassifications, net 52 — — 52 Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of March 31, 2023 $ (1,552) $ (84) $ — $ (1,636) Other comprehensive income (loss) before reclassifications, net (55) — — (55) Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of June 30, 2023 $ (1,607) $ (84) $ — $ (1,691) Other comprehensive income (loss) before reclassifications, net (245) — 80 (165) Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of September 30, 2023 $ (1,852) $ (84) $ 80 $ (1,856) A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2022 is as follows: (In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2021 $ (505) $ (484) $ (989) Other comprehensive income (loss) before reclassifications, net (61) (4) (65) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Chubb divestiture (574) 329 (245) Balance as of March 31, 2022 $ (1,140) $ (157) $ (1,297) Other comprehensive income (loss) before reclassifications, net (480) — (480) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Balance as of June 30, 2022 $ (1,620) $ (155) $ (1,775) Other comprehensive income (loss) before reclassifications, net (632) — (632) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Balance as of September 30, 2022 $ (2,252) $ (153) $ (2,405) |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers . Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment. Sales disaggregated by product and service are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Sales Type Product $ 3,533 $ 3,330 $ 10,488 $ 8,974 Service 475 404 1,358 1,118 HVAC sales 4,008 3,734 11,846 10,092 Product 808 811 2,453 2,603 Service 116 112 341 337 Refrigeration sales 924 923 2,794 2,940 Product 864 859 2,546 2,468 Service 59 46 178 142 Fire & Security sales 923 905 2,724 2,610 Total segment sales 5,855 5,562 17,364 15,642 Eliminations and other (124) (111) (368) (326) Net sales $ 5,731 $ 5,451 $ 16,996 $ 15,316 Contract Balances Total contract assets and contract liabilities consisted of the following: (In millions) September 30, December 31, Contract assets, current $ 605 $ 537 Contract assets, non-current (included within Other assets ) 18 6 Total contract assets 623 543 Contract liabilities, current (496) (449) Contract liabilities, non-current (included within Other long-term liabilities ) (166) (174) Total contract liabilities (662) (623) Net contract assets (liabilities) $ (39) $ (80) The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under a contract or when the Company has a right to consideration that is conditioned upon transfer of a good or service to a customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. The Company recognized revenue of $325 million during the nine months ended September 30, 2023 that related to contract liabilities as of January 1, 2023. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months. |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS | RESTRUCTURING COSTSThe Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and working capital levels. Actions associated with these initiatives may include improving productivity, workforce reductions and the consolidation of facilities. Due to the size, nature and frequency of these discrete plans, they are fundamentally different from the Company's ongoing productivity actions. The Company recorded net pre-tax restructuring costs for new and ongoing restructuring initiatives as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 25 $ 2 $ 27 $ 8 Refrigeration 4 3 14 9 Fire & Security (1) 1 11 10 Total Segment 28 6 52 27 General corporate expenses — — 2 2 Total restructuring costs $ 28 $ 6 $ 54 $ 29 Cost of sales $ 3 $ 1 $ 12 $ 8 Selling, general and administrative 25 5 42 21 Total restructuring costs $ 28 $ 6 $ 54 $ 29 The following table summarizes changes in the restructuring reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet: Nine Months Ended September 30, (In millions) 2023 2022 Balance as of January 1, $ 24 $ 54 Net pre-tax restructuring costs 54 29 Utilization, foreign exchange and other (34) (50) Balance as of September 30, $ 44 $ 33 During the nine months ended September 30, 2023 and 2022, charges associated with restructuring initiatives related to cost reduction efforts. Amounts recognized primarily related to severance due to workforce reductions and exit costs due to the consolidation of field operations. As of September 30, 2023, the Company had $44 million accrued for costs associated with its announced restructuring initiatives, all of which is expected to be paid within one year. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company accounts for income tax expense in accordance with ASC 740, Income Taxes ("ASC 740"), which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. The effective tax rate was 35.9% for the three months ended September 30, 2023 compared with 9.4% for the three months ended September 30, 2022. The year-over-year increase was primarily driven by the non-deductible loss of $257 million on the mark-to-market valuation of the Company's window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price of the VCS Business and a tax charge of $33 million related to the Company's intention to no longer permanently reinvest historical earnings from certain jurisdictions. In addition, the three months ended September 30, 2022 included a lower effective tax rate on a $732 million non-cash gain resulting from the recognition of the Company's previously held TCC equity investments at fair value upon acquisition of TCC compared to the Company's U.S. statutory tax rate. The effective tax rate was 34.4% for the nine months ended September 30, 2023 compared with 15.6% for the nine months ended September 30, 2022. The year-over-year increase was primarily driven by the non-deductible loss of $297 million on the deconsolidation of KFI due to its Chapter 11 filing and the $368 million loss on the mark-to-market valuation of the Company's window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price of the VCS Business. In addition, the nine months ended September 30, 2022 included a lower effective tax rate on a $732 million non-cash gain resulting from the recognition of the Company's previously held TCC equity investments at fair value upon acquisition of TCC and the $1.1 billion Chubb gain compared with the Company's U.S. statutory rate and a favorable tax adjustment of $32 million associated with foreign tax credits generated and utilized in the prior year. The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income that may be available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine whether valuation allowances against deferred tax assets are required. The Company maintains valuation allowances against certain deferred tax assets. The Company conducts business globally and files income tax returns in U.S. federal, state and foreign jurisdictions. In certain jurisdictions, the Company's operations were included in UTC's combined tax returns for the periods through the Distribution. The U.S. Internal Revenue Service ("IRS") is currently auditing UTC's 2017 and 2018 tax years and this audit could conclude within the next twelve months. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including Australia, Belgium, Canada, China, Czech Republic, France, Germany, Hong Kong, India, Italy, Mexico, the Netherlands, Singapore, the United Kingdom and the United States. The Company is no longer subject to U.S. federal income tax examination for years prior to 2017 and, with few exceptions, is no longer subject to state, local and foreign income tax examinations for tax years prior to 2013. In the ordinary course of business, there is inherent uncertainty in quantifying the Company's income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. The Company believes that it is reasonably possible that a net decrease in unrecognized tax benefits of $70 million to $85 million may occur within 12 months as a result of additional uncertain tax positions, the Separation, the revaluation of uncertain tax positions arising from examinations, appeals, court decisions and/or the expiration of tax statutes. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Earnings per share is computed by dividing Net income attributable to common shareowners by the weighted-average number of shares of common stock outstanding during the period (excluding treasury stock). Diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, including stock appreciation rights and stock options, when the effect of the potential exercise would be anti-dilutive. The following table summarizes the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share amounts) 2023 2022 2023 2022 Net income attributable to common shareowners $ 357 $ 1,312 $ 929 $ 3,264 Basic weighted-average number of shares outstanding 838.7 839.6 836.6 846.1 Stock awards and equity units (share equivalent) 16.0 16.9 16.1 18.2 Diluted weighted-average number of shares outstanding 854.7 856.5 852.7 864.3 Antidilutive shares excluded from computation of diluted earnings per share 2.0 4.5 1.9 3.1 Earnings Per Share Basic $ 0.43 $ 1.56 $ 1.11 $ 3.86 Diluted $ 0.42 $ 1.53 $ 1.09 $ 3.78 |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, Business Combinations . As a result, the aggregate purchase price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. Toshiba Carrier Corporation On February 6, 2022, the Company entered into a binding agreement to acquire a majority ownership interest in TCC for $920 million. TCC, a VRF and light commercial HVAC joint venture between Carrier and Toshiba Corporation, designs and manufactures flexible, energy-efficient and high-performance VRF and light commercial HVAC systems as well as commercial products, compressors and heat pumps. The acquisition included all of TCC’s advanced research and development centers and global manufacturing operations, product pipeline and the long-term use of Toshiba’s iconic brand. The acquisition was completed on August 1, 2022 and funded through the Japanese Term Loan Facility and cash on hand. Upon closing, Toshiba Corporation retained a 5% ownership interest in TCC. The allocation of the purchase price is as follows: (In millions) August 1, 2022 Cash and cash equivalents $ 462 Accounts receivable 428 Inventories 373 Other assets, current 54 Fixed assets 330 Intangible assets 965 Goodwill 876 Other assets 299 Accounts payable (412) Accrued liabilities (445) Contract liabilities, current (21) Other long-term liabilities (569) Net assets acquired $ 2,340 Less: Fair value of non-controlling interests (22) Less: Fair value of previously held TCC equity investments (1,398) Total cash consideration $ 920 The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $876 million, which is not deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for inventory and fixed assets was based on an assessment of the acquired assets' condition as well as an evaluation of the current market value of such assets. The sale agreement included several customary provisions to settle working capital and other transaction-related items as of the date of sale. During 2022, the parties finalized these amounts in accordance with the terms of the sale agreement and the Company paid an additional $41 million to Toshiba Corporation in 2023. In addition, the parties finalized amounts related to pension funding levels during 2023 which resulted in the Company receiving $12 million from Toshiba Corporation. The Company recorded intangible assets based on its estimate of fair value which consisted of the following: (In millions) Estimated Useful Life (in years) Intangible Assets Acquired Customer relationships 23 $ 497 Technology 7 220 Trademark 26 180 Backlog 1 60 Land use rights 45 8 Total intangible assets acquired $ 965 The valuation of intangible assets was determined using an income approach methodology including the multi-period excess earnings method and the relief from royalty method. Key assumptions used in estimating future cash flows included projected revenue growth rates, EBIT margins, discount rates, customer attrition rates and royalty rates among others. The projected future cash flows are discounted to present value using an appropriate discount rate. As of September 30, 2023, the Company has finalized the process of allocating the purchase price and valuing the acquired assets and liabilities. The Company previously accounted for its minority ownership in TCC under the equity method of accounting. In connection with the transaction, the carrying value of the Company's previously held TCC equity investments were recognized at fair value at the date of acquisition using an income approach methodology. As a result, the Company recognized a $696 million non-cash gain within Other income (expense), net on the accompanying Unaudited Condensed Consolidated Statement of Operations. In addition, the assets, liabilities and results of operations of TCC are consolidated in the accompanying Unaudited Condensed C onsolidated Financial Statements as of the date of acquisition and reported within the Company's HVAC segment. The Company incurred $29 million of acquisition-related costs during 2022, of which $26 million was recognized during the nine months ended September 30, 2022 and included within Selling, general and administrative on the accompanying Unaudited Condensed Consolidated Statement of Operations. The Company has not included pro forma financial information required under ASC 805 as the pro forma impact was not significant. Announced Acquisition On April 25, 2023, the Company announced that it entered into an Agreement to acquire the VCS Business, a privately-held company, for approximately €12 billion. The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe. Under the terms of the Agreement, 20% of the purchase price will be paid in Carrier common stock, issued directly to Viessmann and subject to long-term lock-up provisions, and 80% will be paid in cash, subject to working capital and other adjustments. The Company intends to finance the acquisition with a combination of cash on hand and new debt financing and expects the transaction to close around the end of 2023, subject to customary closing conditions and regulatory approvals. On April 25, 2023, the Company entered into commitment letters with JPMorgan Chase Bank, N.A., BofA Securities, Inc. and Bank of America, N.A. to provide a €8.2 billion aggregate principal, senior unsecured bridge term loan facility (the "Bridge Loan"). Proceeds from the Bridge Loan are expected to be used to fund a portion of the Euro-denominated purchase price of the VCS Business if other debt financing is not secured by the acquisition date. The Company capitalized $48 million of deferred financing costs associated with the Bridge Loan which are being amortized over the commitment period. On May 19, 2023, the aggregate principal amount of the Bridge Loan was reduced by €2.3 billion upon entering into a senior unsecured delayed draw term loan credit agreement. As a result, the Company accelerated the amortization on $10 million of deferred financing costs in Interest expense . On May 19, 2023, the Company entered into a senior unsecured delayed draw term loan credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and certain other lenders that permits aggregate borrowings of up to €2.3 billion (the "Delayed Draw Facility"). Proceeds from the Delayed Draw Facility are expected to be used to fund a portion of the Euro-denominated purchase price of the VCS Business. The Company capitalized $4 million of deferred financing costs associated with the Delayed Draw Facility which will be amortized over the term once the facility is drawn upon. In addition, the Company entered into a 364-day, $500 million, senior unsecured revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and certain other lenders (the "Revolver") on May 19, 2023. Proceeds from the Revolver become available upon closing the purchase of the VCS Business. |
DIVESTITURES
DIVESTITURES | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURES | DIVESTITURES Sale of Chubb Fire & Security Business On January 3, 2022, the Company completed the Chubb Sale for net proceeds of $2.9 billion. Chubb, which was reported within the Company’s Fire & Security segment, delivered essential fire safety and security solutions from design and installation to monitoring, service and maintenance across more than 17 countries around the globe. The sale agreement included several customary provisions to settle working capital and other transaction-related items as of the date of sale. The parties finalized these amounts in accordance with the terms of the sale agreement during 2022. During the nine months ended September 30, 2022, the Company recognized a net gain on the sale of $1.1 billion, which is included in Other income (expense), net on the accompanying Unaudited Condensed Consolidated Statement of Operations. Planned Portfolio Transformation On April 25, 2023, the Company announced plans to exit its Fire & Security and Commercial Refrigeration businesses over the course of 2024. Carrier expects to use the proceeds from these transactions to reduce leverage, advance the Company’s capital allocation priorities and for general corporate purposes. The planned exit is not expected to impact UTEC, Fire & Security’s controls business for residential HVAC customers or the Sensitech monitoring businesses. |
SEGMENT FINANCIAL DATA
SEGMENT FINANCIAL DATA | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT FINANCIAL DATA | SEGMENT FINANCIAL DATA The Company conducts its operations through three reportable operating segments: HVAC, Refrigeration and Fire & Security. In accordance with ASC 280 - Segment Reporting , the Company's segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company's Chief Operating Decision Maker in deciding how to allocate resources and in assessing performance. • The HVAC segment provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers while enhancing building performance, health, energy efficiency and sustainability. • The Refrigeration segment includes transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail, as well as commercial refrigeration products. • The Fire & Security segment provides a wide range of residential, commercial and industrial technologies designed to help protect people and property. The Company's customers are in both the public and private sectors and its businesses reflect extensive geographic diversification. Inter-company sales between segments are immaterial. Net sales and Operating profit by segment are as follows: Net Sales Operating Profit Three Months Ended September 30, Three Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 4,008 $ 3,734 $ 763 $ 1,314 Refrigeration 924 923 107 116 Fire & Security 923 905 164 142 Total segment 5,855 5,562 1,034 1,572 Eliminations and other (124) (111) (298) (10) General corporate expenses — — (91) (36) Total Consolidated $ 5,731 $ 5,451 $ 645 $ 1,526 Net Sales Operating Profit Nine Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 11,846 $ 10,092 $ 1,940 $ 2,369 Refrigeration 2,794 2,940 327 370 Fire & Security 2,724 2,610 100 1,494 Total segment 17,364 15,642 2,367 4,233 Eliminations and other (368) (326) (482) (50) General corporate expenses — — (196) (101) Total Consolidated $ 16,996 $ 15,316 $ 1,689 $ 4,082 Geographic external sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the nine months ended September 30, 2023 and 2022. Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 United States $ 3,335 $ 3,154 $ 9,584 $ 9,109 International: Europe 1,124 1,024 3,525 3,188 Asia Pacific 1,061 1,071 3,288 2,436 Other 211 202 599 583 Net sales $ 5,731 $ 5,451 $ 16,996 $ 15,316 |
RELATED PARTIES
RELATED PARTIES | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES Equity Method Investments The Company sells products to and purchases products from unconsolidated entities accounted for under the equity method and, therefore, these entities are considered to be related parties. Amounts attributable to equity method investees are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Sales to equity method investees included in Product sales $ 730 $ 718 $ 2,371 $ 2,129 Purchases from equity method investees included in Cost of products sold $ 57 $ 60 $ 159 $ 261 The Company had receivables from and payables to equity method investees as follows: (In millions) September 30, December 31, Receivables from equity method investees included in Accounts receivable, net $ 289 $ 154 Payables to equity method investees included in Accounts payable $ 35 $ 44 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | COMMITMENTS AND CONTINGENT LIABILITIES The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters. In accordance with ASC 450, Contingencies , the Company records accruals for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals are generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In addition, these estimates are reviewed periodically and adjusted to reflect additional information when it becomes available. The Company is unable to predict the final outcome of the following matters based on the information currently available, except as otherwise noted. However, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon its results of operations, cash flows or financial condition. Environmental Matters The Company’s operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance guarantees. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to individual sites, including the technology required to remediate, current laws and regulations and prior remediation experience. The outstanding liabilities for environmental obligations are as follows: (In millions) September 30, December 31, Environmental reserves included in Accrued liabilities $ 12 $ 24 Environmental reserves included in Other long-term liabilities 208 211 Total Environmental reserves $ 220 $ 235 For sites with multiple responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of other parties to fulfill their obligations in establishing a provision for these costs. Accrued environmental liabilities are not reduced by potential insurance reimbursements and are undiscounted. Asbestos Matters The Company has been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos allegedly integrated into certain Carrier products or business premises. While the Company has never manufactured asbestos and no longer incorporates it into any currently-manufactured products, certain products that the Company no longer manufactures contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or have been covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos-related claims were not material individually or in the aggregate in any period. The Company's asbestos liabilities and related insurance recoveries are as follows: (In millions) September 30, December 31, Asbestos liabilities included in Accrued liabilities $ 16 $ 16 Asbestos liabilities included in Other long-term liabilities 207 212 Total Asbestos liabilities $ 223 $ 228 Asbestos-related recoveries included in Other assets, current $ 5 $ 5 Asbestos-related recoveries included in Other assets 89 90 Total Asbestos-related recoveries $ 94 $ 95 The amounts recorded for asbestos-related liabilities are based on currently available information and assumptions that the Company believes are reasonable and are made with input from outside actuarial experts. These amounts are undiscounted and exclude the Company’s legal fees to defend the asbestos claims, which are expensed as incurred. In addition, the Company has recorded insurance recovery receivables for probable asbestos-related recoveries. UTC Equity Awards Conversion Litigation On August 12, 2020, several former employees of UTC or its subsidiaries filed a putative class action complaint (the "Complaint") in the United States District Court for the District of Connecticut against Raytheon Technologies Corporation, Carrier, Otis Worldwide Corporation ("Otis"), the former members of the UTC Board of Directors and the members of the Carrier and Otis Boards of Directors ( Geraud Darnis, et al. v. Raytheon Technologies Corporation, et al .). The Complaint challenged the method by which UTC equity awards were converted to UTC, Carrier and Otis equity awards following the Separation and the Distribution. Defendants moved to dismiss the Complaint. Plaintiffs amended their Complaint on September 13, 2021 (the "Amended Complaint"). The Amended Complaint, with Raytheon Technologies Corporation, Carrier and Otis as the only defendants, asserted that the defendants are liable for breach of certain equity compensation plans and for breach of the implied covenant of good faith and fair dealing. The Amended Complaint also sought specific performance. The Company believes all plaintiffs' claims against it are without merit. Defendants moved to dismiss the Amended Complaint. On September 30, 2022, the court dismissed the case against all defendants, with prejudice. Plaintiffs appealed the dismissal to the United States Court of Appeals for the Second Circuit. On August 3, 2023, the Second Circuit Court of Appeals affirmed the district court’s ruling. Aqueous Film Forming Foam Litigation As of September 30, 2023, the Company, KFI and others have been named as defendants in more than 5,000 lawsuits filed by individuals in or removed to the federal courts of the United States alleging that the historic use of Aqueous Film Forming Foam ("AFFF") caused personal injuries and/or property damage. The Company, KFI and others have also been named as defendants in more than 600 lawsuits filed by several U.S. states, municipalities and water utilities in or removed to U.S. federal courts alleging that the historic use of AFFF caused contamination of property and water supplies. In December 2018, the U.S. Judicial Panel on Multidistrict Litigation transferred and consolidated all AFFF cases pending in the U.S. federal courts against the Company, KFI and others to the U.S. District Court for the District of South Carolina (the "MDL Proceedings"). The individual plaintiffs in the MDL Proceedings generally seek damages for alleged personal injuries, medical monitoring, diminution in property value and injunctive relief to remediate alleged contamination of water supplies. The U.S. state, municipal and water utility plaintiffs in the MDL Proceedings generally seek damages and costs related to the remediation of public property and water supplies. AFFF is a firefighting foam, developed beginning in the late 1960s pursuant to U.S. military specification, used to extinguish certain types of hydrocarbon-fueled fires. The lawsuits identified above relate to Kidde Fire Fighting, Inc., which owned the National Foam business. Kidde Fire Fighting, Inc. was acquired by a UTC subsidiary in 2005 and merged into KFI in 2007. The National Foam business manufactured AFFF for sale to government (including the U.S. federal government) and non-government customers in the U.S. at a single facility located in West Chester, Pennsylvania (the "Pennsylvania Site"). In 2013, KFI divested the AFFF businesses to an unrelated third party. The Company acquired KFI as part of the Separation in April 2020. The key components that contribute to AFFF's fire-extinguishing capabilities are known as fluorosurfactants. Neither the Company, nor KFI, nor any of the Company's subsidiaries involved in the AFFF litigation manufactured fluorosurfactants. Instead, the National Foam business purchased these substances from unrelated third parties for use in manufacturing AFFF. Plaintiffs in the MDL Proceedings allege that the fluorosurfactants used by various manufacturers in producing AFFF contained, or over time degraded into, compounds known as per- and polyfluoroalkyl substances (referred to collectively as "PFAS"), including perflourooctanesulfonic acid ("PFOS") and perflourooctanoic acid ("PFOA"). Plaintiffs further allege that, as a result of the use of AFFF, PFOS and PFOA were released into the environment and, in some instances, ultimately reached drinking water supplies. Plaintiffs in the MDL Proceedings allege that PFOS and PFOA contamination has resulted from the use of AFFF manufactured using a process known as ECF, and that this process was used exclusively by 3M. They also allege that PFOA contamination has resulted from the use of AFFF manufactured using a different process, known as telomerization, and that this process was used exclusively by the other AFFF manufacturers (including the National Foam business). Compounds containing PFOS and PFOA (as well as many other PFAS) have also been used for decades by many third parties in a number of different industries to manufacture firefighters’ protective outerwear, carpets, clothing, fabrics, cookware, food packaging, personal care products, cleaning products, paints, varnishes and other consumer and industrial products. Plaintiffs in the MDL Proceedings have named multiple defendants, including suppliers of chemicals and raw materials used to manufacture fluorosurfactants, fluorosurfactant manufacturers and AFFF manufacturers. The defendants in the MDL Proceedings moved for summary judgment on the government contractor defense, which potentially applies to AFFF sold to or used by the U.S. government. After full briefing and oral argument, on September 16, 2022, the MDL court declined to enter summary judgment for the defendants. The defense, however, remains available at any trial to which it applies. On September 23, 2022, after completion of discovery, the MDL court selected one water provider case, the City of Stuart, FL v. 3M, et al ., for a bellwether trial. That trial was scheduled to begin in early June 2023 but was postponed indefinitely. The MDL court ordered that the bellwether process for personal injury cases will begin in 2023. The court has not yet outlined details on that process or its timing. Outside of the MDL Proceedings, the Company and other defendants also are party to six lawsuits in U.S. state courts brought by oil refining companies alleging product liability claims related to legacy sales of AFFF and seeking damages for the costs to replace the product and for property damage. In addition, the Company and other defendants are party to two actions related to the Pennsylvania Site in which the plaintiff water utility company seeks remediation costs related to the alleged contamination of the local water supply. The Company, KFI and other defendants are also party to one action in Arizona state court brought by a firefighter claiming that occupational exposure to AFFF has caused certain personal injuries. The Company and KFI believe that they have meritorious defenses to the claims in the MDL Proceedings and the other AFFF lawsuits. Given the numerous factual, scientific and legal issues to be resolved relating to these claims, the Company is unable to assess the probability of liability or to reasonably estimate a range of possible loss at this time. There can be no assurance that any such future exposure will not be material in any period. On May 14, 2023, KFI filed a voluntary petition with the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 11 of the Bankruptcy Code after the Company determined that it would not provide financial support to KFI going forward, other than ensuring KFI has access to services necessary for the effective operation of its business. As a result, all litigation against KFI is automatically stayed. KFI filed an adversary complaint and motion in the Chapter 11 case seeking an order staying or enjoining all AFFF-related litigation against the Company, its other subsidiaries and RTX. That motion was resolved through an agreement that effectively stays the AFFF litigation against these parties. KFI has also indicated to the bankruptcy court that it intends to pursue insurance coverage for AFFF-related liabilities and contractual indemnification for AFFF-related liabilities from the third party to which KFI sold National Foam. Deconsolidation Due to Bankruptcy As of May 14, 2023, the Company no longer controlled KFI as their activities are subject to review and oversight by the bankruptcy court. Therefore, KFI was deconsolidated and their respective assets and liabilities were derecognized from the Company’s Unaudited Condensed Consolidated Financial Statements. Upon deconsolidation, the Company determined the fair value of its retained interest in KFI to be zero and will account for it prospectively using the cost method. As a result of these actions, the Company recognized a loss of $297 million in its Unaudited Condensed Consolidated Statements of Operations within Other income/(expense), net . In addition, the deconsolidation resulted in an investing cash outflow of $134 million in the Company's Unaudited Condensed Consolidated Statements of Cash Flows. In connection with the bankruptcy filing, KFI entered into several agreements with subsidiaries of the Company to ensure they have access to services necessary for the effective operation of their business. All post-deconsolidation activity between the Company and KFI are reported as third-party transactions recorded within the Company's Unaudited Condensed Consolidated Statements of Operations. Since the petition date, there were no material transactions between the Company and KFI. Income Taxes Under the Tax Matters Agreement relating to the Separation, the Company is responsible to UTC for its share of the Tax Cuts and Jobs Act transition tax associated with foreign undistributed earnings as of December 31, 2017. As a result, liabilities of $75 million and $293 million are included within the accompanying Unaudited Condensed Consolidated Balance Sheet within Accrued Liabilities and Other Long-Term Liabilities as of September 30, 2023, respectively. This obligation is expected to be settled in annual installments ending in April 2026 with the next installment of $75 million due in 2024. The Company believes that the likelihood of incurring losses materially in excess of this amount is remote. Other The Company has other commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising in the ordinary course of business. The Company accrues for contingencies generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In the ordinary course of business, the Company is also routinely a defendant in, party to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some of these proceedings, claims for substantial monetary damages are asserted against the Company and could result in fines, penalties, compensatory or treble damages or non-monetary relief. The Company does not believe that these matters will have a material adverse effect upon its results of operations, cash flows or financial condition. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The Unaudited Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and majority-owned subsidiaries in which it has control. Inter-company accounts and transactions have been eliminated. Related party transactions between the Company and its equity method investees have not been eliminated. Non-controlling interest represents a non-controlling investor's interests in the results of subsidiaries that the Company controls and consolidates. |
Recently Issued and Adopted Accounting Pronouncements | The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the sole source of authoritative U.S. GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. ASUs pending adoption were assessed and determined to be either not applicable or are not expected to have a material impact on the accompanying Unaudited Condensed Consolidated Financial Statements. |
Fair Value Measurements | ASC 820, Fair Value Measurement ("ASC 820"), defines fair value as the price that would be received if an asset is sold or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: • Level 1: Observable inputs such as quoted prices in active markets; • Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal models based on observable market inputs, such as forward, interest, contract and discount rates with changes in fair value reported in Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations. In connection with the TCC acquisition, the Company funded a portion of the Yen-denominated purchase price with cash on hand by entering into cross currency swaps with SMBC Capital Markets, Inc., as syndication swap arranger, and certain other financial institutions. The cross currency swaps are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates as well as credit default swap spreads. The Company designated the cross currency swaps as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the fair value of the swaps are recorded in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. The remaining portion of the Yen-denominated purchase price was funded by the Japanese Term Loan Facility. The carrying value of the facility is translated on a recurring basis using the exchange rate at the end of the applicable period and approximates its fair value. The Company designated the Japanese Term Loan Facility as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the carrying value of the Japanese Term Loan Facility associated with foreign exchange rate movements are recorded in Equity in the Unaudited Condensed Consolidated Balance Sheet. In connection with the proposed acquisition of the VCS Business, the Company entered into window forward contracts with Bank of America N.A. and JPMorgan Chase Bank N.A. to mitigate the foreign currency risk of the expected cash outflows associated with the Euro-denominated purchase price. The instruments have an aggregate notional amount of €7 billion and a settlement window between November 28, 2023 and February 27, 2024. The window forward contracts are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates with changes in fair value reported in Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations. During the three and nine months ended September 30, 2023, the Company recognized a $257 million and $368 million loss on the mark-to-market valuation of its window forward contracts, respectively. During the three months ended September 30, 2023, the Company entered into several floating-to-fixed interest rate swap contracts to mitigate interest rate exposure on the forecasted issuance of long-term debt. The contracts have an aggregate notional amount of $1.275 billion and were designated as cash flow hedges. The interest rate swap contracts are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates with changes in fair value reported in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. During the three months ended September 30, 2023 , the Company recorded an $80 million unrealized gain on the mark-to-market valuation of its interest rate swap contracts. The fair value of the Company's long-term debt is measured based on observable market inputs which are considered Level 1 within the fair value hierarchy. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value due to the short-term nature of these accounts and would be classified as Level 1 in the fair value hierarchy. The Company's financing leases and project financing obligations, included in Long-term debt and Current portion of long-term debt on the accompanying Unaudited Condensed Consolidated Balance Sheet , approximate fair value and are classified as Level 3 in the fair value hierarchy. |
Product Warranties | In the ordinary course of business, the Company provides standard warranty coverage on its products. Provisions for these amounts are established at the time of sale and estimated primarily based on product warranty terms and historical claims experience. In addition, the Company incurs discretionary costs to service its products in connection with specific product performance issues. Provisions for these amounts are established when they are known and estimable. The Company assesses the adequacy of its initial provisions and will make adjustments as necessary based on known or anticipated claims or as new information becomes available that suggests it is probable that future costs will be different than estimated amounts. Amounts associated with these provisions are classified on the accompanying Unaudited Condensed Consolidated Balance Sheet as Accrued liabilities or Other long-term liabilities based on their anticipated settlement date. |
Revenue Recognition | The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers . Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment. |
Commitments and Contingent Liabilities | The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters. In accordance with ASC 450, Contingencies , the Company records accruals for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals are generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In addition, these estimates are reviewed periodically and adjusted to reflect additional information when it becomes available. The Company is unable to predict the final outcome of the following matters based on the information currently available, except as otherwise noted. However, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon its results of operations, cash flows or financial condition. Environmental Matters The Company’s operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance guarantees. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to individual sites, including the technology required to remediate, current laws and regulations and prior remediation experience. For sites with multiple responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of other parties to fulfill their obligations in establishing a provision for these costs. Accrued environmental liabilities are not reduced by potential insurance reimbursements and are undiscounted. Asbestos Matters |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net consisted of the following: (In millions) September 30, December 31, Raw materials $ 782 $ 884 Work-in-process 260 230 Finished goods 1,520 1,526 Inventories, net $ 2,562 $ 2,640 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill were as follows: (In millions) HVAC Refrigeration Fire & Security Total Balance as of December 31, 2022 $ 6,392 $ 1,197 $ 2,388 $ 9,977 Acquisitions / divestitures — (4) — (4) Foreign currency translation (91) (16) (41) (148) Balance as of September 30, 2023 $ 6,301 $ 1,177 $ 2,347 $ 9,825 |
Schedule of Finite-Live Intangible Assets | Identifiable intangible assets consisted of the following: September 30, 2023 December 31, 2022 (In millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Amortized: Customer relationships $ 1,387 $ (766) $ 621 $ 1,431 $ (720) $ 711 Patents and trademarks 375 (201) 174 401 (191) 210 Service portfolios and other 915 (674) 241 953 (595) 358 2,677 (1,641) 1,036 2,785 (1,506) 1,279 Unamortized: Trademarks and other 64 — 64 63 — 63 Intangible assets, net $ 2,741 $ (1,641) $ 1,100 $ 2,848 $ (1,506) $ 1,342 |
Schedule of Indefinite-Lived Intangible Assets | Identifiable intangible assets consisted of the following: September 30, 2023 December 31, 2022 (In millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Amortized: Customer relationships $ 1,387 $ (766) $ 621 $ 1,431 $ (720) $ 711 Patents and trademarks 375 (201) 174 401 (191) 210 Service portfolios and other 915 (674) 241 953 (595) 358 2,677 (1,641) 1,036 2,785 (1,506) 1,279 Unamortized: Trademarks and other 64 — 64 63 — 63 Intangible assets, net $ 2,741 $ (1,641) $ 1,100 $ 2,848 $ (1,506) $ 1,342 |
Schedule of Amortization of Intangible Assets | Amortization of intangible assets was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Amortization expense of Intangible assets $ 60 $ 38 $ 185 $ 79 |
BORROWINGS AND LINES OF CREDIT
BORROWINGS AND LINES OF CREDIT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: (In millions) September 30, December 31, 2.242% Notes due February 15, 2025 $ 1,200 $ 1,200 2.493% Notes due February 15, 2027 900 900 2.722% Notes due February 15, 2030 2,000 2,000 2.700% Notes due February 15, 2031 750 750 3.377% Notes due April 5, 2040 1,500 1,500 3.577% Notes due April 5, 2050 2,000 2,000 Total long-term notes 8,350 8,350 Japanese Term Loan Facility 362 404 Other debt (including project financing obligations and finance leases) 154 149 Discounts and debt issuance costs (81) (61) Total debt 8,785 8,842 Less: current portion of long-term debt 134 140 Long-term debt, net of current portion $ 8,651 $ 8,702 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Recurring and Nonrecurring | The following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the accompanying Unaudited Condensed Consolidated Balance Sheet: (In millions) Total Level 1 Level 2 Level 3 September 30, 2023 Derivative assets (1)(3) $ 116 $ — $ 116 $ — Derivative liabilities (2)(3) $ (408) $ — $ (408) $ — December 31, 2022 Derivative assets (1) (3) $ 28 $ — $ 28 $ — Derivative liabilities (2) (3) $ (48) $ — $ (48) $ — (1) Included in Other assets, current and Other assets on the accompanying Unaudited Condensed Consolidated Balance Sheet. (2) Included in Accrued liabilities and Other long-term liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet. (3) Includes cross currency swaps, window forward contracts and interest rate swap contracts. The following table provides the carrying amounts and fair values of the Company's long-term notes that are not recorded at fair value in the accompanying Unaudited Condensed Consolidated Balance Sheet: September 30, 2023 December 31, 2022 (In millions) Carrying Fair Carrying Fair Total long-term Notes (1) $ 8,350 $ 6,653 $ 8,350 $ 6,832 (1) Excludes debt discount and issuance costs. |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Employer Contributions to Plans | Contributions to the plans were as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Defined benefit plans $ 6 $ 4 $ 17 $ 10 Defined contribution plans $ 30 $ 29 $ 96 $ 95 Multi-employer pension plans $ 3 $ 5 $ 11 $ 11 |
Schedule of Components of Net Periodic Pension Expense (Benefit) for the Defined Benefit Pension Plans | The components of net periodic pension expense (benefit) for the defined benefit pension plans are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Service cost $ 4 $ 5 $ 12 $ 14 Interest cost 8 5 24 13 Expected return on plan assets (8) (7) (24) (20) Amortization of prior service credit 1 1 2 2 Recognized actuarial net (gain) loss (1) 2 (2) 7 Net periodic pension expense (benefit) $ 4 $ 6 $ 12 $ 16 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation cost by award type was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Equity compensation costs - equity settled $ 23 $ 17 $ 63 $ 58 Equity compensation costs - cash settled (1) 1 1 3 (16) Total stock-based compensation expense $ 24 $ 18 $ 66 $ 42 (1) The cash settled awards are classified as liability awards and are measured at fair value at each balance sheet date. |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees [Abstract] | |
Schedule of Product Warranty Liability | The changes in the carrying amount of warranty related provisions are as follows: Nine Months Ended September 30, (In millions) 2023 2022 Balance as of January 1, $ 552 $ 524 Warranties, performance guarantees issued and changes in estimated liability 186 120 Settlements made (146) (116) Other (15) 9 Balance as of September 30, $ 577 $ 537 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 is as follows: (In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2022 $ (1,604) $ (84) $ — $ (1,688) Other comprehensive income (loss) before reclassifications, net 52 — — 52 Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of March 31, 2023 $ (1,552) $ (84) $ — $ (1,636) Other comprehensive income (loss) before reclassifications, net (55) — — (55) Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of June 30, 2023 $ (1,607) $ (84) $ — $ (1,691) Other comprehensive income (loss) before reclassifications, net (245) — 80 (165) Amounts reclassified, pre-tax — — — — Tax expense (benefit) reclassified — — — — Balance as of September 30, 2023 $ (1,852) $ (84) $ 80 $ (1,856) A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2022 is as follows: (In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2021 $ (505) $ (484) $ (989) Other comprehensive income (loss) before reclassifications, net (61) (4) (65) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Chubb divestiture (574) 329 (245) Balance as of March 31, 2022 $ (1,140) $ (157) $ (1,297) Other comprehensive income (loss) before reclassifications, net (480) — (480) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Balance as of June 30, 2022 $ (1,620) $ (155) $ (1,775) Other comprehensive income (loss) before reclassifications, net (632) — (632) Amounts reclassified, pre-tax — 3 3 Tax expense (benefit) reclassified — (1) (1) Balance as of September 30, 2022 $ (2,252) $ (153) $ (2,405) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Sales Disaggregated by Product and Service | Sales disaggregated by product and service are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Sales Type Product $ 3,533 $ 3,330 $ 10,488 $ 8,974 Service 475 404 1,358 1,118 HVAC sales 4,008 3,734 11,846 10,092 Product 808 811 2,453 2,603 Service 116 112 341 337 Refrigeration sales 924 923 2,794 2,940 Product 864 859 2,546 2,468 Service 59 46 178 142 Fire & Security sales 923 905 2,724 2,610 Total segment sales 5,855 5,562 17,364 15,642 Eliminations and other (124) (111) (368) (326) Net sales $ 5,731 $ 5,451 $ 16,996 $ 15,316 |
Schedule of Contract Assets and Liabilities | Total contract assets and contract liabilities consisted of the following: (In millions) September 30, December 31, Contract assets, current $ 605 $ 537 Contract assets, non-current (included within Other assets ) 18 6 Total contract assets 623 543 Contract liabilities, current (496) (449) Contract liabilities, non-current (included within Other long-term liabilities ) (166) (174) Total contract liabilities (662) (623) Net contract assets (liabilities) $ (39) $ (80) |
RESTRUCTURING COSTS (Tables)
RESTRUCTURING COSTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Net Pre-Tax Restructuring Costs | The Company recorded net pre-tax restructuring costs for new and ongoing restructuring initiatives as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 25 $ 2 $ 27 $ 8 Refrigeration 4 3 14 9 Fire & Security (1) 1 11 10 Total Segment 28 6 52 27 General corporate expenses — — 2 2 Total restructuring costs $ 28 $ 6 $ 54 $ 29 Cost of sales $ 3 $ 1 $ 12 $ 8 Selling, general and administrative 25 5 42 21 Total restructuring costs $ 28 $ 6 $ 54 $ 29 |
Schedule of Reserve and Charges Relating to Restructuring Reserve | The following table summarizes changes in the restructuring reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet: Nine Months Ended September 30, (In millions) 2023 2022 Balance as of January 1, $ 24 $ 54 Net pre-tax restructuring costs 54 29 Utilization, foreign exchange and other (34) (50) Balance as of September 30, $ 44 $ 33 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table summarizes the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share amounts) 2023 2022 2023 2022 Net income attributable to common shareowners $ 357 $ 1,312 $ 929 $ 3,264 Basic weighted-average number of shares outstanding 838.7 839.6 836.6 846.1 Stock awards and equity units (share equivalent) 16.0 16.9 16.1 18.2 Diluted weighted-average number of shares outstanding 854.7 856.5 852.7 864.3 Antidilutive shares excluded from computation of diluted earnings per share 2.0 4.5 1.9 3.1 Earnings Per Share Basic $ 0.43 $ 1.56 $ 1.11 $ 3.86 Diluted $ 0.42 $ 1.53 $ 1.09 $ 3.78 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Allocation of the Purchase Price | The allocation of the purchase price is as follows: (In millions) August 1, 2022 Cash and cash equivalents $ 462 Accounts receivable 428 Inventories 373 Other assets, current 54 Fixed assets 330 Intangible assets 965 Goodwill 876 Other assets 299 Accounts payable (412) Accrued liabilities (445) Contract liabilities, current (21) Other long-term liabilities (569) Net assets acquired $ 2,340 Less: Fair value of non-controlling interests (22) Less: Fair value of previously held TCC equity investments (1,398) Total cash consideration $ 920 |
Schedule of Intangible Assets Based on Estimate of Fair Value | The Company recorded intangible assets based on its estimate of fair value which consisted of the following: (In millions) Estimated Useful Life (in years) Intangible Assets Acquired Customer relationships 23 $ 497 Technology 7 220 Trademark 26 180 Backlog 1 60 Land use rights 45 8 Total intangible assets acquired $ 965 |
SEGMENT FINANCIAL DATA (Tables)
SEGMENT FINANCIAL DATA (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales and Operating Profit by Segment | Net sales and Operating profit by segment are as follows: Net Sales Operating Profit Three Months Ended September 30, Three Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 4,008 $ 3,734 $ 763 $ 1,314 Refrigeration 924 923 107 116 Fire & Security 923 905 164 142 Total segment 5,855 5,562 1,034 1,572 Eliminations and other (124) (111) (298) (10) General corporate expenses — — (91) (36) Total Consolidated $ 5,731 $ 5,451 $ 645 $ 1,526 Net Sales Operating Profit Nine Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 HVAC $ 11,846 $ 10,092 $ 1,940 $ 2,369 Refrigeration 2,794 2,940 327 370 Fire & Security 2,724 2,610 100 1,494 Total segment 17,364 15,642 2,367 4,233 Eliminations and other (368) (326) (482) (50) General corporate expenses — — (196) (101) Total Consolidated $ 16,996 $ 15,316 $ 1,689 $ 4,082 |
Schedule of Sale by Geographic Areas | Geographic external sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the nine months ended September 30, 2023 and 2022. Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 United States $ 3,335 $ 3,154 $ 9,584 $ 9,109 International: Europe 1,124 1,024 3,525 3,188 Asia Pacific 1,061 1,071 3,288 2,436 Other 211 202 599 583 Net sales $ 5,731 $ 5,451 $ 16,996 $ 15,316 |
RELATED PARTIES (Tables)
RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Equity Method Investments | Amounts attributable to equity method investees are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Sales to equity method investees included in Product sales $ 730 $ 718 $ 2,371 $ 2,129 Purchases from equity method investees included in Cost of products sold $ 57 $ 60 $ 159 $ 261 The Company had receivables from and payables to equity method investees as follows: (In millions) September 30, December 31, Receivables from equity method investees included in Accounts receivable, net $ 289 $ 154 Payables to equity method investees included in Accounts payable $ 35 $ 44 |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Outstanding Liabilities for Environmental Obligations | The outstanding liabilities for environmental obligations are as follows: (In millions) September 30, December 31, Environmental reserves included in Accrued liabilities $ 12 $ 24 Environmental reserves included in Other long-term liabilities 208 211 Total Environmental reserves $ 220 $ 235 |
Schedule of Asbestos Liabilities and Related Recoveries | The Company's asbestos liabilities and related insurance recoveries are as follows: (In millions) September 30, December 31, Asbestos liabilities included in Accrued liabilities $ 16 $ 16 Asbestos liabilities included in Other long-term liabilities 207 212 Total Asbestos liabilities $ 223 $ 228 Asbestos-related recoveries included in Other assets, current $ 5 $ 5 Asbestos-related recoveries included in Other assets 89 90 Total Asbestos-related recoveries $ 94 $ 95 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 3 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) $ in Millions, € in Billions | Apr. 25, 2023 EUR (€) | Feb. 06, 2022 USD ($) | Apr. 03, 2020 shares | Apr. 02, 2020 USD ($) | Mar. 27, 2020 USD ($) | Aug. 01, 2022 | Jan. 03, 2022 country | Feb. 27, 2020 USD ($) |
Restructuring Cost and Reserve [Line Items] | ||||||||
Shares converted in spinoff transaction (in shares) | shares | 1 | |||||||
Aggregate principal balance | $ 11,000 | |||||||
Net transfer to parent | $ 10,900 | |||||||
Capital contributions received from contributions from parent | $ 590 | |||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Chubb Fire and Security | Fire & Security | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Number of countries | country | 17 | |||||||
VCS Business | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Business combination, consideration transferred | € | € 12 | |||||||
Toshiba Carrier Corporation | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Business combination, consideration transferred | $ 920 | |||||||
Toshiba Carrier Corporation | Toshiba Carrier Corporation | Toshiba Corporation | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Ownership percentage | 5% | 5% |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 782 | $ 884 |
Work-in-process | 260 | 230 |
Finished goods | 1,520 | 1,526 |
Inventories, net | 2,562 | 2,640 |
Inventory valuation reserves | $ 230 | $ 190 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 9,977 |
Acquisitions / divestitures | (4) |
Foreign currency translation | (148) |
Ending balance | 9,825 |
HVAC | |
Goodwill [Roll Forward] | |
Beginning balance | 6,392 |
Acquisitions / divestitures | 0 |
Foreign currency translation | (91) |
Ending balance | 6,301 |
Refrigeration | |
Goodwill [Roll Forward] | |
Beginning balance | 1,197 |
Acquisitions / divestitures | (4) |
Foreign currency translation | (16) |
Ending balance | 1,177 |
Fire & Security | |
Goodwill [Roll Forward] | |
Beginning balance | 2,388 |
Acquisitions / divestitures | 0 |
Foreign currency translation | (41) |
Ending balance | $ 2,347 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Finite and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 2,677 | $ 2,785 |
Accumulated Amortization | (1,641) | (1,506) |
Net Amount | 1,036 | 1,279 |
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Amount | 2,741 | 2,848 |
Accumulated Amortization | (1,641) | (1,506) |
Net Amount | 1,100 | 1,342 |
Trademarks and other | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 64 | 63 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 1,387 | 1,431 |
Accumulated Amortization | (766) | (720) |
Net Amount | 621 | 711 |
Indefinite-lived Intangible Assets [Line Items] | ||
Accumulated Amortization | (766) | (720) |
Patents and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 375 | 401 |
Accumulated Amortization | (201) | (191) |
Net Amount | 174 | 210 |
Indefinite-lived Intangible Assets [Line Items] | ||
Accumulated Amortization | (201) | (191) |
Service portfolios and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 915 | 953 |
Accumulated Amortization | (674) | (595) |
Net Amount | 241 | 358 |
Indefinite-lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (674) | $ (595) |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Amortization of Intangible Asses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of Intangible assets | $ 60 | $ 38 | $ 185 | $ 79 |
BORROWINGS AND LINES OF CREDI_2
BORROWINGS AND LINES OF CREDIT - Long-term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Mar. 15, 2022 |
Debt Instrument [Line Items] | |||
Discounts and debt issuance costs | $ (81) | $ (61) | |
Total debt | 8,785 | 8,842 | |
Less: current portion of long-term debt | 134 | 140 | |
Long-term debt, net of current portion | 8,651 | 8,702 | |
Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 8,350 | 8,350 | |
Unsecured Debt | Japanese Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 362 | 404 | |
Other Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 154 | 149 | |
2.242% Notes due February 15, 2025 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 1,200 | 1,200 | |
Interest rate | 2.242% | 2.242% | |
2.493% Notes due February 15, 2027 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 900 | 900 | |
Interest rate | 2.493% | 2.493% | |
2.722% Notes due February 15, 2030 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 2,000 | 2,000 | |
Interest rate | 2.722% | ||
2.700% Notes due February 15, 2031 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 750 | 750 | |
Interest rate | 2.70% | ||
3.377% Notes due April 5, 2040 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 1,500 | 1,500 | |
Interest rate | 3.377% | ||
3.577% Notes due April 5, 2050 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 2,000 | $ 2,000 | |
Interest rate | 3.577% |
BORROWINGS AND LINES OF CREDI_3
BORROWINGS AND LINES OF CREDIT - Narrative (Details) ¥ in Billions | 3 Months Ended | 9 Months Ended | |||||||
May 19, 2023 USD ($) | Jul. 25, 2022 JPY (¥) | Jul. 15, 2022 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jul. 15, 2022 JPY (¥) | Mar. 15, 2022 USD ($) | Feb. 27, 2020 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Aggregate principal balance | $ 11,000,000,000 | ||||||||
Issuance of long-term debt | $ 14,000,000 | $ 421,000,000 | |||||||
Repayment of long-term debt | $ 15,000,000 | 1,185,000,000 | |||||||
Unsecured Debt | Senior Notes, 2.242%, Due 2025 And Senior Notes, 2.493% Due 2027 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal balance | $ 1,150,000,000 | ||||||||
Gain related to purchase debt | $ 33,000,000 | ||||||||
Write-off of remaining unamortized deferred financing costs | $ 5,000,000 | ||||||||
Unsecured Debt | 2.242% Notes due February 15, 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 2.242% | 2.242% | |||||||
Aggregate purchase cap | $ 800,000,000 | ||||||||
Unsecured Debt | 2.493% Notes due February 15, 2027 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal balance | $ 350,000,000 | ||||||||
Interest rate | 2.493% | 2.493% | |||||||
Other Debt | Project Financing Arrangements | |||||||||
Debt Instrument [Line Items] | |||||||||
Issuance of long-term debt | $ 14,000,000 | 27,000,000 | |||||||
Repayment of long-term debt | 15,000,000 | $ 70,000,000 | |||||||
Term Loan | Unsecured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, term | 5 years | ||||||||
Aggregate principal balance | $ 400,000,000 | ¥ 54 | |||||||
Capitalized deferred financing costs | $ 2,000,000 | ||||||||
Proceeds from issuance of debt | ¥ | ¥ 54 | ||||||||
Term Loan | Unsecured Debt | Tokyo Term Risk Free Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.75% | ||||||||
Revolving Credit Facility | Secured Overnight Financing Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.10% | ||||||||
Revolving Credit Facility | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Capitalized deferred financing costs | $ 2,000,000 | ||||||||
Revolving credit facility, maximum borrowing capacity | $ 2,000,000,000 | ||||||||
Long-term debt | 0 | ||||||||
Commercial Paper | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 2,000,000,000 | ||||||||
Short-term debt | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - VCS Business $ in Millions, € in Billions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Apr. 25, 2023 EUR (€) | |
Foreign Exchange Forward | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Notional amount | € | € 7 | ||
Loss on mark-to-market valuation | $ (257) | $ (368) | |
Interest Rate Swap | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Notional amount | 1,275 | $ 1,275 | |
Gain on mark-to-market valuation | $ 80 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value and Carrying Amounts Measured on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 116 | $ 28 |
Derivative liabilities | (408) | (48) |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 116 | 28 |
Derivative liabilities | (408) | (48) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | $ 0 | $ 0 |
FAIR VALUES MEASUREMENTS - Carr
FAIR VALUES MEASUREMENTS - Carrying Amounts and Fair Values of Financial Instruments (Details) - Unsecured Debt - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | $ 8,350 | $ 8,350 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 6,653 | $ 6,832 |
EMPLOYEE BENEFIT PLANS - Contri
EMPLOYEE BENEFIT PLANS - Contributions to Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | ||||
Defined benefit plans | $ 6 | $ 4 | $ 17 | $ 10 |
Defined contribution plans | 30 | 29 | 96 | 95 |
Multi-employer pension plans | $ 3 | $ 5 | $ 11 | $ 11 |
EMPLOYEE BENEFIT PLANS - Compon
EMPLOYEE BENEFIT PLANS - Components of Net Periodic Pension Expense (Benefit) for the Defined Benefit Pension Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 4 | $ 5 | $ 12 | $ 14 |
Interest cost | 8 | 5 | 24 | 13 |
Expected return on plan assets | (8) | (7) | (24) | (20) |
Amortization of prior service credit | 1 | 1 | 2 | 2 |
Recognized actuarial net (gain) loss | (1) | 2 | (2) | 7 |
Net periodic pension expense (benefit) | $ 4 | $ 6 | $ 12 | $ 16 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 24 | $ 18 | $ 66 | $ 42 |
Equity compensation costs - equity settled | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 23 | 17 | 63 | 58 |
Equity compensation costs - cash settled | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1 | $ 1 | $ 3 | $ (16) |
PRODUCT WARRANTIES (Details)
PRODUCT WARRANTIES (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $ 552 | $ 524 |
Warranties, performance guarantees issued and changes in estimated liability | 186 | 120 |
Settlements made | (146) | (116) |
Other | (15) | 9 |
Ending balance | $ 577 | $ 537 |
EQUITY - Narrative (Details)
EQUITY - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Feb. 28, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares authorized (in shares) | 4,000,000,000 | ||||||
Common stock, par or stated value per share (in dollars per share) | $ 0.01 | ||||||
Stock repurchase program, authorized amount | $ 4,100,000,000 | ||||||
Shares of common stock repurchased (in shares) | 1,400,000 | 42,100,000 | |||||
Treasury stock repurchase | $ 62,000,000 | $ 248,000,000 | $ 273,000,000 | $ 741,000,000 | $ 62,000,000 | $ 1,900,000,000 | |
Remaining authorized repurchase amount | $ 2,100,000,000 | $ 2,200,000,000 | |||||
Common Stock | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares, issued (in shares) | 882,497,944 | 876,487,480 | |||||
Treasury Stock | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares, issued (in shares) | 43,490,981 | 42,103,995 | |||||
Treasury stock repurchase | $ 62,000,000 | $ 248,000,000 | $ 273,000,000 | $ 741,000,000 |
EQUITY - Schedule of Changes in
EQUITY - Schedule of Changes in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance as of beginning of period | $ 8,288 | $ 8,468 | $ 8,076 | $ 6,992 | $ 7,430 | $ 7,094 | $ 8,076 | $ 7,094 |
Other comprehensive income (loss) before reclassifications, net | (165) | (55) | 52 | (632) | (480) | (65) | ||
Amounts reclassified, pre-tax | 0 | 0 | 0 | 3 | 3 | 3 | ||
Tax expense (benefit) reclassified | 0 | 0 | 0 | (1) | (1) | (1) | ||
Chubb divestiture | 0 | 0 | (245) | 0 | (245) | |||
Balance as of end of period | 8,502 | 8,288 | 8,468 | 7,463 | 6,992 | 7,430 | 8,502 | 7,463 |
Accumulated Other Comprehensive Income (Loss) | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance as of beginning of period | (1,691) | (1,636) | (1,688) | (1,775) | (1,297) | (989) | (1,688) | (989) |
Balance as of end of period | (1,856) | (1,691) | (1,636) | (2,405) | (1,775) | (1,297) | (1,856) | (2,405) |
Foreign Currency Translation | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance as of beginning of period | (1,607) | (1,552) | (1,604) | (1,620) | (1,140) | (505) | (1,604) | (505) |
Other comprehensive income (loss) before reclassifications, net | (245) | (55) | 52 | (632) | (480) | (61) | ||
Amounts reclassified, pre-tax | 0 | 0 | 0 | 0 | 0 | 0 | ||
Tax expense (benefit) reclassified | 0 | 0 | 0 | 0 | 0 | 0 | ||
Chubb divestiture | (574) | |||||||
Balance as of end of period | (1,852) | (1,607) | (1,552) | (2,252) | (1,620) | (1,140) | (1,852) | (2,252) |
Defined Benefit Pension and Post-retirement Plans | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance as of beginning of period | (84) | (84) | (84) | (155) | (157) | (484) | (84) | (484) |
Other comprehensive income (loss) before reclassifications, net | 0 | 0 | 0 | 0 | 0 | (4) | ||
Amounts reclassified, pre-tax | 0 | 0 | 0 | 3 | 3 | 3 | ||
Tax expense (benefit) reclassified | 0 | 0 | 0 | (1) | (1) | (1) | ||
Chubb divestiture | 329 | |||||||
Balance as of end of period | (84) | (84) | (84) | $ (153) | $ (155) | $ (157) | (84) | $ (153) |
Unrealized Hedging Gains (Losses) | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Balance as of beginning of period | 0 | 0 | 0 | 0 | ||||
Other comprehensive income (loss) before reclassifications, net | 80 | 0 | 0 | |||||
Amounts reclassified, pre-tax | 0 | 0 | 0 | |||||
Tax expense (benefit) reclassified | 0 | 0 | 0 | |||||
Balance as of end of period | $ 80 | $ 0 | $ 0 | $ 80 |
REVENUE RECOGNITION - Sales Dis
REVENUE RECOGNITION - Sales Disaggregated by Product and Service (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 5,731 | $ 5,451 | $ 16,996 | $ 15,316 |
Product | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 5,081 | 4,891 | 15,122 | 13,723 |
Service | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 650 | 560 | 1,874 | 1,593 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 5,855 | 5,562 | 17,364 | 15,642 |
Operating Segments | HVAC sales | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 4,008 | 3,734 | 11,846 | 10,092 |
Operating Segments | HVAC sales | Product | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 3,533 | 3,330 | 10,488 | 8,974 |
Operating Segments | HVAC sales | Service | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 475 | 404 | 1,358 | 1,118 |
Operating Segments | Refrigeration sales | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 924 | 923 | 2,794 | 2,940 |
Operating Segments | Refrigeration sales | Product | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 808 | 811 | 2,453 | 2,603 |
Operating Segments | Refrigeration sales | Service | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 116 | 112 | 341 | 337 |
Operating Segments | Fire & Security sales | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 923 | 905 | 2,724 | 2,610 |
Operating Segments | Fire & Security sales | Product | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 864 | 859 | 2,546 | 2,468 |
Operating Segments | Fire & Security sales | Service | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 59 | 46 | 178 | 142 |
Eliminations and other | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ (124) | $ (111) | $ (368) | $ (326) |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets, current | $ 605 | $ 537 |
Contract assets, non-current (included within Other assets) | 18 | 6 |
Total contract assets | 623 | 543 |
Contract liabilities, current | (496) | (449) |
Contract liabilities, non-current (included within Other long-term liabilities) | (166) | (174) |
Total contract liabilities | (662) | (623) |
Net contract assets (liabilities) | $ (39) | $ (80) |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Contract with customer, liability, revenue recognized | $ 325 |
REVENUE RECOGNITION - Remaining
REVENUE RECOGNITION - Remaining Performance Obligations (Details) | Sep. 30, 2023 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 12 months |
RESTRUCTURING COSTS (Details)
RESTRUCTURING COSTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 28 | $ 6 | $ 54 | $ 29 |
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 24 | 54 | ||
Net pre-tax restructuring costs | 28 | 6 | 54 | 29 |
Utilization, foreign exchange and other | (34) | (50) | ||
Ending balance | 44 | 33 | 44 | 33 |
Restructuring reserve | 44 | 44 | ||
Cost of sales | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 3 | 1 | 12 | 8 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | 3 | 1 | 12 | 8 |
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 25 | 5 | 42 | 21 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | 25 | 5 | 42 | 21 |
Operating Segments | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 28 | 6 | 52 | 27 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | 28 | 6 | 52 | 27 |
Operating Segments | HVAC | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 25 | 2 | 27 | 8 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | 25 | 2 | 27 | 8 |
Operating Segments | Refrigeration | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 4 | 3 | 14 | 9 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | 4 | 3 | 14 | 9 |
Operating Segments | Fire & Security | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | (1) | 1 | 11 | 10 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | (1) | 1 | 11 | 10 |
General corporate expenses | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 0 | 0 | 2 | 2 |
Restructuring Reserve [Roll Forward] | ||||
Net pre-tax restructuring costs | $ 0 | $ 0 | $ 2 | $ 2 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 14, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |||||
Effective income tax rate reconciliation, percent | 35.90% | 9.40% | 34.40% | 15.60% | |
Net tax charge | $ 33 | ||||
Effective income tax rate reconciliation, equity in earnings of unconsolidated subsidiary, amount | $ 732 | $ 732 | |||
Deconsolidation, loss amount | $ 297 | 297 | |||
Effective income tax rate, gain amount | 1,100 | ||||
Effective income tax rate reconciliation, favorable adjustments | $ 32 | ||||
Minimum | |||||
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |||||
Decrease in unrecognized tax benefits is reasonably possible | $ 70 | 70 | |||
Maximum | |||||
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |||||
Decrease in unrecognized tax benefits is reasonably possible | 85 | 85 | |||
VCS Business | Foreign Exchange Forward | |||||
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |||||
Loss on mark-to-market valuation | $ 257 | $ 368 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to common shareowners | $ 357 | $ 1,312 | $ 929 | $ 3,264 |
Basic weighted-average number of shares outstanding (in shares) | 838.7 | 839.6 | 836.6 | 846.1 |
Stock awards and equity units (share equivalent) (in shares) | 16 | 16.9 | 16.1 | 18.2 |
Diluted weighted-average number of shares outstanding (in shares) | 854.7 | 856.5 | 852.7 | 864.3 |
Antidilutive shares excluded from computation of diluted earnings per share (in shares) | 2 | 4.5 | 1.9 | 3.1 |
Earnings Per Share | ||||
Basic (in dollars per share) | $ 0.43 | $ 1.56 | $ 1.11 | $ 3.86 |
Diluted (in dollars per share) | $ 0.42 | $ 1.53 | $ 1.09 | $ 3.78 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) € in Billions | 3 Months Ended | 9 Months Ended | |||||||||||
May 19, 2023 USD ($) | May 19, 2023 EUR (€) | Apr. 25, 2023 EUR (€) | Feb. 06, 2022 USD ($) | Mar. 31, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | May 19, 2023 EUR (€) | Apr. 25, 2023 USD ($) | Apr. 25, 2023 EUR (€) | Dec. 31, 2022 USD ($) | Aug. 01, 2022 USD ($) | Feb. 27, 2020 USD ($) | |
Business Acquisition [Line Items] | |||||||||||||
Goodwill | $ 9,825,000,000 | $ 9,977,000,000 | |||||||||||
Aggregate principal amount | $ 11,000,000,000 | ||||||||||||
Bridge Loan | Unsecured Debt | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Aggregate principal amount | € | € 8.2 | ||||||||||||
Capitalized deferred financing costs | $ 48,000,000 | ||||||||||||
Principal reduction | € | € 2.3 | ||||||||||||
Accumulated amortization, debt issuance costs | $ 10,000,000 | ||||||||||||
Delayed Draw Facility | Line of Credit | The Credit Agreement | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Maximum borrowing capacity | € | € 2.3 | ||||||||||||
Debt issuance costs, net | 4,000,000 | ||||||||||||
Revolving Credit Facility | Line of Credit | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Capitalized deferred financing costs | 2,000,000 | ||||||||||||
Maximum borrowing capacity | 2,000,000,000 | ||||||||||||
Revolving Credit Facility | Senior Unsecured Revolving Credit Facility | The Credit Agreement | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 500,000,000 | ||||||||||||
Debt instrument, term | 364 days | 364 days | |||||||||||
Toshiba Carrier Corporation | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Business combination, consideration transferred | $ 920,000,000 | ||||||||||||
Goodwill | $ 876,000,000 | $ 876,000,000 | |||||||||||
Working capital adjustments and other transaction-related items | $ 41,000,000 | ||||||||||||
Accounts receivable | $ 12,000,000 | $ 428,000,000 | |||||||||||
Business combination, step acquisition, equity interest in acquiree, remeasurement gain | $ 696,000,000 | ||||||||||||
Acquisition-related costs | $ 29,000,000 | $ 26,000,000 | |||||||||||
Toshiba Carrier Corporation | Toshiba Carrier Corporation | Toshiba Corporation | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Ownership percentage | 5% | 5% | |||||||||||
VCS Business | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Business combination, consideration transferred | € | € 12 | ||||||||||||
Business combination, percentage of purchase price to be paid in equity | 20% | ||||||||||||
Business combination, percentage of purchase price to be paid in cash | 80% |
ACQUISITIONS - Purchase Price (
ACQUISITIONS - Purchase Price (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Aug. 01, 2022 | Feb. 06, 2022 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 9,825 | $ 9,977 | ||
Toshiba Carrier Corporation | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 462 | |||
Accounts receivable | $ 12 | 428 | ||
Inventories | 373 | |||
Other assets, current | 54 | |||
Fixed assets | 330 | |||
Intangible assets | 965 | |||
Goodwill | 876 | $ 876 | ||
Other assets | 299 | |||
Accounts payable | (412) | |||
Accrued liabilities | (445) | |||
Contract liabilities, current | (21) | |||
Other long-term liabilities | (569) | |||
Net assets acquired | 2,340 | |||
Less: Fair value of non-controlling interests | (22) | |||
Less: Fair value of previously held TCC equity investments | (1,398) | |||
Total cash consideration | $ 920 |
ACQUISITIONS - Intangible Asset
ACQUISITIONS - Intangible Assets Acquired (Details) - Toshiba Carrier Corporation $ in Millions | Aug. 01, 2022 USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Intangible Assets Acquired | $ 965 |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (in years) | 23 years |
Intangible Assets Acquired | $ 497 |
Technology | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (in years) | 7 years |
Intangible Assets Acquired | $ 220 |
Trademark | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (in years) | 26 years |
Intangible Assets Acquired | $ 180 |
Backlog | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (in years) | 1 year |
Intangible Assets Acquired | $ 60 |
Land use rights | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life (in years) | 45 years |
Intangible Assets Acquired | $ 8 |
DIVESTITURES (Details)
DIVESTITURES (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Chubb Fire and Security $ in Billions | 9 Months Ended | |
Sep. 30, 2022 USD ($) | Jan. 03, 2022 USD ($) country | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Enterprise value | $ 2.9 | |
Gain on sale | $ 1.1 | |
Fire & Security | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of countries | country | 17 |
SEGMENT FINANCIAL DATA (Details
SEGMENT FINANCIAL DATA (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 3 | |||
Net Sales | $ 5,731 | $ 5,451 | $ 16,996 | $ 15,316 |
Operating Profit | 645 | 1,526 | 1,689 | 4,082 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 3,335 | 3,154 | 9,584 | 9,109 |
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 1,124 | 1,024 | 3,525 | 3,188 |
Asia Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 1,061 | 1,071 | 3,288 | 2,436 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 211 | 202 | 599 | 583 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 5,855 | 5,562 | 17,364 | 15,642 |
Operating Profit | 1,034 | 1,572 | 2,367 | 4,233 |
Operating Segments | HVAC | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 4,008 | 3,734 | 11,846 | 10,092 |
Operating Profit | 763 | 1,314 | 1,940 | 2,369 |
Operating Segments | Refrigeration | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 924 | 923 | 2,794 | 2,940 |
Operating Profit | 107 | 116 | 327 | 370 |
Operating Segments | Fire & Security | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 923 | 905 | 2,724 | 2,610 |
Operating Profit | 164 | 142 | 100 | 1,494 |
Eliminations and other | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | (124) | (111) | (368) | (326) |
Operating Profit | (298) | (10) | (482) | (50) |
General corporate expenses | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 0 | 0 | 0 | 0 |
Operating Profit | $ (91) | $ (36) | $ (196) | $ (101) |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Sales to equity method investees included in Product sales | $ 5,731 | $ 5,451 | $ 16,996 | $ 15,316 | |
Receivables from equity method investees included in Accounts receivable, net | 3,030 | 3,030 | $ 2,833 | ||
Payables to equity method investees included in Accounts payable | 2,887 | 2,887 | 2,833 | ||
Product | |||||
Related Party Transaction [Line Items] | |||||
Sales to equity method investees included in Product sales | 5,081 | 4,891 | 15,122 | 13,723 | |
Purchases from equity method investees included in Cost of products sold | 3,428 | 3,569 | 10,655 | 9,930 | |
Related Party | |||||
Related Party Transaction [Line Items] | |||||
Receivables from equity method investees included in Accounts receivable, net | 289 | 289 | 154 | ||
Payables to equity method investees included in Accounts payable | 35 | 35 | $ 44 | ||
Related Party | Product | |||||
Related Party Transaction [Line Items] | |||||
Sales to equity method investees included in Product sales | 730 | 718 | 2,371 | 2,129 | |
Purchases from equity method investees included in Cost of products sold | $ 57 | $ 60 | $ 159 | $ 261 |
COMMITMENTS AND CONTINGENT LI_3
COMMITMENTS AND CONTINGENT LIABILITIES - Outstanding Liabilities for Environmental Obligations (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Environmental reserves included in Accrued liabilities | $ 12 | $ 24 |
Environmental reserves included in Other long-term liabilities | 208 | 211 |
Total Environmental reserves | $ 220 | $ 235 |
COMMITMENTS AND CONTINGENT LI_4
COMMITMENTS AND CONTINGENT LIABILITIES - Asbestos Liabilities and Recoveries (Details) - Asbestos Matters - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Loss Contingencies [Line Items] | ||
Asbestos liabilities included in Accrued liabilities | $ 16 | $ 16 |
Asbestos liabilities included in Other long-term liabilities | 207 | 212 |
Total Asbestos liabilities | 223 | 228 |
Asbestos-related recoveries included in Other assets, current | 5 | 5 |
Asbestos-related recoveries included in Other assets | 89 | 90 |
Total Asbestos-related recoveries | $ 94 | $ 95 |
COMMITMENTS AND CONTINGENT LI_5
COMMITMENTS AND CONTINGENT LIABILITIES - Narrative (Details) | 9 Months Ended | ||
May 14, 2023 USD ($) | Sep. 30, 2023 USD ($) case | Sep. 30, 2022 USD ($) | |
Other Commitments [Line Items] | |||
Potential contingent liabilities | $ 0 | ||
Deconsolidation, loss amount | 297,000,000 | $ 297,000,000 | |
Kidde-Fenwal, Inc. deconsolidation | $ 134,000,000 | 134,000,000 | $ 0 |
Tax cuts and jobs act, transition tax for accumulated foreign earnings, liability, current | 75,000,000 | ||
Tax cuts and jobs act, transition tax for accumulated foreign earnings, liability | $ 293,000,000 | ||
Aqueous Film Forming Foam | |||
Other Commitments [Line Items] | |||
Number of litigation cases (more than) | case | 5,000 | ||
Number of litigation cases filed by state, municipality, and water utilities (more than) | case | 600 | ||
Number of litigation cases in state court (fewer than) | case | 6 |