Profitability improvements help push earnings higher in the quarter.
Climate control specialist Carrier Global (CARR 9.20%) reported hotter-than-expected earnings in the quarter. Carrier shares were up 8% as of 2:30 p.m. ET after the company showed clear progress in its campaign to improve profitability.
Earnings up in a tough sales environment
Carrier earned $0.62 per share in the quarter, beating Wall Street’s consensus estimate by $0.11, despite revenue that at $6.18 billion was about $100 million short of expectations. Strong cost controls led the way, helping Carrier to boost adjusted operating margins by 280 basis points compared to a year prior.
“We continue to perform while transforming,” CEO David Gitlin said in a statement. “We are focused on capitalizing on the long-term secular sustainability trends, outperforming the market, and achieving and accelerating revenue and cost synergies.”
Carrier also completed its deal for Viessmann Climate Solutions and outlined a plan to pay down its debt to a point where the company hopes to resume share repurchases before year’s end.
Is Carrier a buy after its earnings report?
A wide range of industrial companies are reporting sluggish demand this quarter, with customers carefully watching the broader economy and thinking twice about large-scale capital investment. Carrier orders in the quarter were down year over year, and the company cut its full-year revenue guidance by $500 million to $26 billion.
The good news is the company’s efficiency efforts appear to be taking hold, and Carrier is firming up its guidance for a 15.5% operating margin in 2024. Carrier is a work in progress and very much reliant on the health of its end markets, but the company appears to be making the right moves to build for the future.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
