UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

____________________________________

FORM 10-Q

____________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-39220

____________________________________

CARRIER GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________


Delaware						83-4051582
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

13995 Pasteur Boulevard, Palm Beach Gardens, Florida 33418

(Address of principal executive offices, including zip code)

(561) 365-2000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock ($0.01 par value)

CARR

New York Stock Exchange

4.375% Notes due 2025

CARR25

New York Stock Exchange

4.125% Notes due 2028

CARR28

New York Stock Exchange

4.500% Notes due 2032

CARR32

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April ~~17, 2023,~~15, 2024, there were ~~834,838,102~~901,012,491 shares of Common Stock outstanding.

Table of Contents

CARRIER GLOBAL CORPORATION

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Three Months Ended March 31, ~~2023~~2024


			Page

PART I – FINANCIAL INFORMATION			3

Item 1. Financial Statements:			3

Condensed Consolidated Statement of Operations (Unaudited)			3



Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)			4

Condensed Consolidated Balance Sheet (Unaudited)			5

Condensed Consolidated Statement of Changes in Equity (Unaudited)			6

Condensed Consolidated Statement of Cash Flows (Unaudited)			7

Notes to Condensed Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			2631

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2732

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3742

Item 4. Controls and Procedures			3742

PART II – OTHER INFORMATION			3843

Item 1. Legal Proceedings			3843

Item 1A. Risk Factors			3843

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3843

Item 5. Other Information			43


Item 6. Exhibits			4044

SIGNATURES			4146

Carrier Global Corporation and its subsidiaries' names, abbreviations thereof, logos and product and service designators are all either the registered or unregistered trademarks or trade names of Carrier Global Corporation and its subsidiaries. Names, abbreviations of names, logos and products and service designators of other companies are either the registered or unregistered trademarks or trade names of their respective owners. As used herein, the terms "we," "us," "our," "the Company" or "Carrier," unless the context otherwise requires, mean Carrier Global Corporation and its subsidiaries. References to internet websites in this Form 10-Q are provided for convenience only. Information available through these websites is not incorporated by reference into this Form 10-Q.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended March 31,

(In millions, except per share amounts)

2023

2022

Net sales

Product sales

4,686

4,170

Service sales

587

484

Service sales

Total Net sales

5,273

4,654

Costs and expenses

Cost of products sold

(3,458)

(2,998)

Cost of services sold

(437)

(363)

Cost of services sold

Research and development

(139)

(125)

Selling, general and administrative

(721)

(601)

Selling, general and administrative

Total Costs and expenses

(4,755)

(4,087)

Equity method investment net earnings

Other income (expense), net

(7)

1,112

Operating profit

555

1,737

Non-service pension (expense) benefit

—

(1)

Operating profit

Interest (expense) income, net

(46)

(48)

Income from operations before income taxes

509

1,688

Income from operations before income taxes

Income tax (expense) benefit

(122)

(301)

Net income from operations

387

1,387

Net income from operations

Less: Non-controlling interest in subsidiaries' earnings from operations

Net income attributable to common shareowners

373

1,379

Net income attributable to common shareowners

Earnings per share

Basic

0.45

1.62

Basic

Diluted

0.44

1.58

Weighted-average number of shares outstanding

Basic

835.0

853.3

Diluted

852.2

874.1

Diluted

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended March 31,

(In millions)

2023

2022

(In millions)

Net income from operations

387

1,387

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments arising during period

(61)

Pension and post-retirement benefit plan adjustments

—

(2)

Chubb divestiture

—

(245)

Amortization of unrealized cash flow hedging gain (loss)

Other comprehensive income (loss), net of tax

(308)

Comprehensive income (loss)

441

1,079

Comprehensive income (loss)

Less: Comprehensive income (loss) attributable to non-controlling interest

Comprehensive income (loss) attributable to common shareowners

425

1,071

Comprehensive income (loss) attributable to common shareowners

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)
As of
(In millions) March 31, 2023 December 31, 2022
Assets
Cash and cash equivalents $ 3,347 $ 3,520
Accounts receivable, net 3,032 2,833
Contract assets, current 568 537
Inventories, net 2,803 2,640
Other assets, current 408 349
Total current assets 10,158 9,879
Future income tax benefits 639 612
Fixed assets, net 2,277 2,241
Operating lease right-of-use assets 625 642
Intangible assets, net 1,287 1,342
Goodwill 9,987 9,977
Pension and post-retirement assets 29 26
Equity method investments 1,103 1,148
Other assets 306 219
Total Assets $ 26,411 $ 26,086
Liabilities and Equity
Accounts payable $ 2,926 $ 2,833
Accrued liabilities 2,374 2,610
Contract liabilities, current 516 449
Current portion of long-term debt 142 140
Total current liabilities 5,958 6,032
Long-term debt 8,708 8,702
Future pension and post-retirement obligations 354 349
Future income tax obligations 581 568
Operating lease liabilities 506 529
Other long-term liabilities 1,836 1,830
Total Liabilities 17,943 18,010
Commitments and contingent liabilities (Note 19)
Equity
Common stock 9 9
Treasury stock (1,972) (1,910)
Additional paid-in capital 5,494 5,481
Retained earnings 6,239 5,866
Accumulated other comprehensive loss (1,636) (1,688)
Non-controlling interest 334 318
Total Equity 8,468 8,076
Total Liabilities and Equity $ 26,411 $ 26,086


	As of
(In millions)	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	1,313	$	10,015
Accounts receivable, net	3,156		2,481
Contract assets, current	320		306
Inventories, net	3,189		2,217
Assets held for sale, current	3,169		3,314
Other assets, current	568		447
Total current assets	11,715		18,780
Future income tax benefits	823		739
Fixed assets, net	3,179		2,293
Operating lease right-of-use assets	633		491
Intangible assets, net	7,351		1,028
Goodwill	15,366		7,989
Pension and post-retirement assets	78		32
Equity method investments	1,155		1,140

Other assets	510		330
Total Assets	$	40,810	$	32,822

Liabilities and Equity
Accounts payable	$	3,074	$	2,742
Accrued liabilities	2,994		2,811
Contract liabilities, current	501		425
Liabilities held for sale, current	820		862
Current portion of long-term debt	1,248		51
Total current liabilities	8,637		6,891
Long-term debt	15,647		14,242
Future pension and post-retirement obligations	259		155
Future income tax obligations	2,272		535
Operating lease liabilities	505		391

Other long-term liabilities	1,584		1,603
Total Liabilities	28,904		23,817
Commitments and contingent liabilities (Note 19)
Equity
Common stock	9		9
Treasury stock	(1,972)		(1,972)
Additional paid-in capital	8,536		5,535
Retained earnings	6,860		6,591
Accumulated other comprehensive loss	(1,872)		(1,486)
Non-controlling interest	345		328
Total Equity	11,906		9,005
Total Liabilities and Equity	$	40,810	$	32,822

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


(In millions)	(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2022		$	(1,688)	$	9	$	(1,910)	$	5,481	$	5,866	$	318	$	8,076
(In millions)
(In millions)																Accumulated Other Comprehensive Income (Loss)	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Non-Controlling Interest	Total Equity
Balance as of December 31, 2023
Net income	Net income	—		—		—		—		373		14		387
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	52		—		—		—		—		2		54

Shares issued under incentive plans, net
Shares issued under incentive plans, net
Shares issued under incentive plans, net	Shares issued under incentive plans, net	—		—		—		(9)		—		—		(9)
Stock-based compensation	Stock-based compensation	—		—		—		22		—		—		22

Treasury stock repurchase		—		—		(62)		—		—		—		(62)

Acquisition of VCS Business

Balance as of March 31, 2023		$	(1,636)	$	9	$	(1,972)	$	5,494	$	6,239	$	334	$	8,468

Acquisition of VCS Business

Acquisition of VCS Business

Balance as of March 31, 2024
Balance as of March 31, 2024
Balance as of March 31, 2024

(In millions)	(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2021		$	(989)	$	9	$	(529)	$	5,411	$	2,865	$	327	$	7,094
Net income		—		—		—		—		1,379		8		1,387
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 March 31, 2022		$	(1,297)	$	9	$	(1,270)	$	5,415	$	4,244	$	329	$	7,430

(In millions)

(In millions)																Accumulated Other Comprehensive Income (Loss)	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Non-Controlling Interest	Total Equity
Balance as of December 31, 2022
Net income
Other comprehensive income (loss), net of tax

Shares issued under incentive plans, net
Shares issued under incentive plans, net
Shares issued under incentive plans, net
Stock-based compensation

Treasury stock repurchase

Treasury stock repurchase

Treasury stock repurchase
Balance as of March 31, 2023

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
(In millions)	(In millions)	2023		2022		(In millions)	2024	2023
Operating Activities	Operating Activities
Net income from operations	Net income from operations	$	387	$	1,387
Net income from operations
Net income from operations
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	136		79
Deferred income tax provision	Deferred income tax provision	(24)		48
Stock-based compensation costs	Stock-based compensation costs	22		21
Equity method investment net earnings	Equity method investment net earnings	(44)		(58)

(Gain) loss on extinguishment of debt		—		(36)
(Gain) loss on sale of investments		(16)		(1,112)

(Gain) loss on sale of investments / deconsolidation

(Gain) loss on sale of investments / deconsolidation

(Gain) loss on sale of investments / deconsolidation

Changes in operating assets and liabilities	Changes in operating assets and liabilities
Changes in operating assets and liabilities
Changes in operating assets and liabilities
Accounts receivable, net
Accounts receivable, net
Accounts receivable, net	Accounts receivable, net	(157)		(207)
Contract assets, current	Contract assets, current	(28)		(154)
Inventories, net	Inventories, net	(126)		(390)
Other assets, current	Other assets, current	(60)		(15)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(25)		132
Contract liabilities, current	Contract liabilities, current	64		13
Defined benefit plan contributions	Defined benefit plan contributions	(6)		(4)
Distributions from equity method investments	Distributions from equity method investments	3		11
Other operating activities, net	Other operating activities, net	(6)		83
Net cash flows provided by (used in) operating activities	Net cash flows provided by (used in) operating activities	120		(202)

Investing Activities	Investing Activities
Investing Activities
Investing Activities
Capital expenditures
Capital expenditures
Capital expenditures	Capital expenditures	(70)		(56)
Investment in businesses, net of cash acquired	Investment in businesses, net of cash acquired	(52)		(9)
Dispositions of businesses	Dispositions of businesses	35		2,935

Settlement of derivative contracts, net	Settlement of derivative contracts, net	(18)		(32)
Settlement of derivative contracts, net
Settlement of derivative contracts, net

Other investing activities, net
Other investing activities, net
Other investing activities, net	Other investing activities, net	5		(18)
Net cash flows provided by (used in) investing activities	Net cash flows provided by (used in) investing activities	(100)		2,820

Financing Activities	Financing Activities
Financing Activities
Financing Activities
Increase (decrease) in short-term borrowings, net
Increase (decrease) in short-term borrowings, net
Increase (decrease) in short-term borrowings, net	Increase (decrease) in short-term borrowings, net	10		(33)
Issuance of long-term debt	Issuance of long-term debt	5		14
Repayment of long-term debt	Repayment of long-term debt	(2)		(1,123)
Repurchases of common stock	Repurchases of common stock	(62)		(734)
Dividends paid on common stock	Dividends paid on common stock	(154)		(129)
Dividends paid to non-controlling interest

Other financing activities, net
Other financing activities, net
Other financing activities, net	Other financing activities, net	(10)		(15)
Net cash flows provided by (used in) financing activities	Net cash flows provided by (used in) financing activities	(213)		(2,020)

Effect of foreign exchange rate changes on cash and cash equivalents	Effect of foreign exchange rate changes on cash and cash equivalents	20		(1)

Effect of foreign exchange rate changes on cash and cash equivalents

Effect of foreign exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents and restricted cash, including cash classified in current assets held for sale
Less: Change in cash balances classified as assets held for sale
Net increase (decrease) in cash and cash equivalents and restricted cash	Net increase (decrease) in cash and cash equivalents and restricted cash	(173)		597
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	3,527		3,025
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	3,354		3,622
Less: restricted cash	Less: restricted cash	7		18
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	3,347	$	3,604

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: DESCRIPTION OF THE BUSINESS

Carrier Global Corporation (the "Company") is ~~the leading~~a global ~~provider of healthy, safe, sustainable~~leader in intelligent climate and ~~intelligent building and cold chain~~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, Viessmann, 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~~2023 filed with the SEC on February ~~7, 2023~~6, 2024 (the ~~"2022~~"2023 Form 10-K").

NOTE 2: 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.

Acquisition of ~~Toshiba Carrier Corporation~~Viessmann Climate Solutions

On ~~February 6, 2022,~~April 25, 2023, the Company announced that it entered into a ~~binding agreement~~Share Purchase Agreement (the “Agreement”) to acquire ~~a majority ownership interest in Toshiba Carrier Corporation~~the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (“~~TCC”~~Viessmann”), a ~~variable refrigerant flow ("VRF")~~privately-held company. The VCS Business develops intelligent, integrated and ~~light commercial HVAC joint venture between Carrier~~sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and ~~Toshiba Corporation.~~digital solutions, primarily for residential customers in Europe. The acquisition was completed on ~~August 1, 2022.~~January 2, 2024. As a result, the assets, liabilities and results of operations of ~~TCC~~the VCS Business 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~~Portfolio Transformation

On ~~July 26, 2021,~~April 25, 2023, the Company announced plans to exit its Fire & Security and Commercial Refrigeration businesses over the course of 2024. On December 7, 2023, the Company entered into a stock purchase agreement to sell its ~~Chubb Fire and Security~~Access Solutions business ("~~Chubb"~~Access Solutions") to ~~APi Group Corporation ("APi"). Chubb, which was~~Honeywell International Inc. for an enterprise value of approximately $4.95 billion. Access Solutions, historically reported ~~within~~in the ~~Company’s~~Company's Fire & Security segment, ~~delivered essential fire safety~~is a global supplier of physical security and ~~security~~digital access solutions ~~from design~~supporting the hospitality, commercial, education and ~~installation~~military markets. On December 12, 2023, the Company entered into a stock purchase agreement to ~~monitoring, service~~sell its Commercial Refrigeration business ("CCR") to Haier Group Corporation for an enterprise value of approximately $775 million. CCR, historically reported in the Company's Refrigeration segment, is a global supplier of turnkey solutions for commercial refrigeration systems and ~~maintenance across more than 17 countries around~~services, with a primary focus on serving food retail customers, cold storage facilities and warehouses. As a result, the ~~globe. The~~assets and liabilities of each business are presented as held for sale in the accompanying Unaudited Condensed Consolidated Balance Sheet as of ~~Chubb was completed on January 3, 2022 (the "Chubb Sale").~~March 31, 2024 and December 31, 2023, and recorded at the lower of their carrying value or fair value less estimated cost to sell. See Note 16 - Divestitures for additional information.

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In addition, the net assets of the Company’s Industrial Fire business ("Industrial Fire") met the criteria to be classified as held for sale during the fourth quarter of 2023. Industrial Fire, historically reported in the Company's Fire & Security segment, is a leading manufacturer of a full spectrum of fire detection and suppression solutions and services in critical high-hazard environments, including oil and gas, power generation, marine and offshore facilities, automotive, data centers and aircraft hangars. As a result, the assets and liabilities of the business are presented as held for sale in the accompanying Unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023, and recorded at the lower of their carrying value or fair value less estimated cost to sell. On March 5, 2024, the Company entered into a stock purchase agreement to sell Industrial Fire to Sentinel Capital Partners for an enterprise value of approximately $1.425 billion. See 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.

Separation from United Technologies

On April 3, 2020 (the Distribution Date"), United Technologies Corporation ("UTC"), since renamed RTX Corporation ("Raytheon Technologies ~~Corporation ("UTC"~~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~~Following the Separation and Distribution, the Company ~~issued an aggregate principal balance~~entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects 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 relationship among the Company, ~~received cash contributions totaling $590 million from~~ UTC ~~related to~~and Otis. As of March 31, 2024, only certain portions of the ~~Separation.~~Tax Matters Agreement ("TMA") remain in effect.

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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.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. In addition, the amendments clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact of this ASU on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires public entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact of this ASU on its financial statements.

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On March 6, 2024, the SEC adopted new rules designed to enhance public company disclosures related to the risks and impacts of climate-related matters. The rules amend the provisions of both Regulation S-K and Regulation S-X and will be required in annual reports and registration statements. Amendments to Regulation S-K require disclosure of climate-related risks, transition plans, targets and goals, risk management and governance. Amendments to Regulation S-X require disclosure of the financial effects of severe weather events and other natural conditions as well as the use of carbon offsets or renewable energy credits. Disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025, subject to legal challenges and the SEC's voluntary stay of the disclosure requirements. The Company will continue to assess the impact of these new rules on its financial statements while the stay is in place.

NOTE 3: 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)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Raw materials	Raw materials	$	881	$	884
Work-in-process	Work-in-process	292		230
Finished goods	Finished goods	1,630		1,526

Inventories, net	Inventories, net	$	2,803	$	2,640
Inventories, net
Inventories, net

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 ~~$221~~$260 million and ~~$190~~$223 million as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

NOTE 4: GOODWILL AND INTANGIBLE ASSETS

The 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 (13) (4) — (17)
Foreign currency translation 16 3 8 27
Balance as of March 31, 2023 $ 6,395 $ 1,196 $ 2,396 $ 9,987


(In millions)	HVAC		Refrigeration		Fire & Security		Total
Balance as of December 31, 2023	$	6,407	$	1,124	$	458	$	7,989
Acquisitions (1)	7,576		—		—		7,576
Reclassified to held for sale (2)	—		—		25		25
Foreign currency translation	(253)		(22)		51		(224)
Balance as of March 31, 2024	$	13,730	$	1,102	$	534	$	15,366

(1) See Note 15 - Acquisitions for additional information.

(2) See Note 16 - Divestitures for additional information.

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.

910

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Identifiable intangible assets consisted of the following:


			March 31, 2023						December 31, 2022
		March 31, 2024																	March 31, 2024			December 31, 2023
(In millions)	(In millions)		Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount		(In millions)	Gross Amount	Accumulated Amortization	Net Amount		Gross Amount	Accumulated Amortization		Net Amount
Amortized:	Amortized:
Customer relationships
Customer relationships
Customer relationships	Customer relationships		$	1,426	$	(734)	$	692	$	1,431	$	(720)	$	711
Patents and trademarks	Patents and trademarks		404		(199)		205		401		(191)		210

Service portfolios and other	Service portfolios and other		956		(630)		326		953		(595)		358
			2,786		(1,563)		1,223		2,785		(1,506)		1,279
Service portfolios and other
Service portfolios and other
		8,753
Unamortized:	Unamortized:
Trademarks and other	Trademarks and other		64		—		64		63		—		63
Trademarks and other
Trademarks and other
Intangible assets, net	Intangible assets, net		$	2,850	$	(1,563)	$	1,287	$	2,848	$	(1,506)	$	1,342

Amortization of intangible assets was as follows:

Three Months Ended March 31,

(In millions)

2023

2022

Amortization expense of Intangible assets

Impairment Assessment

On January 1, 2024, the Company reorganized its HVAC segment reporting units due to the VCS Business acquisition. As a result, the Company performed a quantitative goodwill impairment test on its legacy Commercial HVAC, North America residential and light commercial and Global Comfort solutions reporting units prior to the reorganization which did not result in a goodwill impairment. The Company then reassigned goodwill among its new regional reporting units using a relative fair value approach and performed a goodwill impairment assessment which did not result in a goodwill impairment.

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NOTE 5: BORROWINGS AND LINES OF CREDIT

Long-term debt consisted of the following:

(In millions) March 31,
2023 December 31,
2022
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 408 404
Other debt (including project financing obligations and finance leases) 152 149
Discounts and debt issuance costs (60) (61)
Total debt 8,850 8,842
Less: current portion of long-term debt 142 140
Long-term debt, net of current portion $ 8,708 $ 8,702


(In millions)	March 31, 2024		December 31, 2023
2.242% Notes due 2025 (1)	$	1,200	$	1,200
4.375% Notes due 2025	812		830
5.800% Notes due 2025	1,000		1,000
2.493% Notes due 2027	900		900
4.125% Notes due 2028	812		830
2.722% Notes due 2030	2,000		2,000
2.700% Notes due 2031	750		750
4.500% Notes due 2032	921		941
5.900% Notes due 2034	1,000		1,000
3.377% Notes due 2040	1,500		1,500
3.577% Notes due 2050	2,000		2,000
6.200% Notes due 2054	1,000		1,000
Total long-term notes	13,895		13,951
Delayed Draw Facility	2,536		—
Japanese Term Loan Facility	357		379
Other debt (including project financing obligations and finance leases)	213		74
Discounts and debt issuance costs	(106)		(111)
Total debt	16,895		14,293
Less: current portion of long-term debt	1,248		51
Long-term debt, net of current portion	$	15,647	$	14,242

(1) 2.242% Notes due February 15, 2025; reclassified to Current portion of long-term debt.

Acquisition Funding

On January 2, 2024, the Company completed the acquisition of the VCS Business for total consideration of $14.2 billion. Under the terms of the Agreement, 20% of the purchase price was paid in Carrier common stock, issued directly to Viessmann and subject to certain lock up provisions and 80% was paid in cash, subject to working capital and other adjustments. In order to fund the Euro-denominated cash portion of the purchase price, the Company used cash on hand, debt financing and various term loan facilities.

Debt Issuance

In November 2023, the Company issued $3.0 billion principal amount of USD-denominated notes in three tranches. The tranches consisted of $1.0 billion aggregate principal amount of 5.8% notes due 2025, $1.0 billion aggregate principal amount of 5.90% notes due 2034 and $1.0 billion aggregate principal amount of 6.2% notes due 2054 (collectively, the “USD Notes”). In addition, the Company issued €2.35 billion principal amount of Euro-denominated notes in three tranches. The tranches consisted of €750 million aggregate principal amount of 4.375% notes due 2025, €750 million aggregate principal amount of 4.125% notes due 2028 and €850 million aggregate principal amount of 4.5% notes due 2032 (collectively, the “Euro Notes”). The Company capitalized $51 million of deferred financing costs which are being amortized over the term of their related notes. The notes are subject to certain customary covenants and the Company has the option to redeem the notes in whole or in part at any time, prior to their stated maturity date at the redemption price set forth in the indenture agreements.

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Bridge Loan

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”). Euro-denominated borrowings bore interest at the EURIBOR Rate plus a ratings-based margin, USD-denominated borrowings bore interest at either a Term SOFR Rate plus 0.10% and a ratings-based margin or, alternatively, at a base rate plus a ratings-based margin. The Company capitalized $48 million of deferred financing costs associated with the Bridge Loan which were amortized over the commitment period. Upon entering into a senior unsecured delayed draw term loan facility and issuing the USD Notes and the Euro Notes, the Company reduced the Bridge Loan by €7.7 billion and accelerated the amortization on $25 million of deferred financing costs in Interest expense during 2023. On January 2, 2024, the Company entered into a 60-day senior unsecured term loan agreement consisting of a Euro-denominated tranche in an aggregate amount of €113 million and a USD-denominated tranche in an aggregate amount of $349 million (the “60-day Loan”). Upon entering into the 60-day Loan, the Company reduced the final portion of the Bridge Loan by €500 million and subsequently terminated the agreement. As of March 31, 2024, borrowings under the 60-day Loan have been fully repaid.

Delayed Draw Facility

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"). The facility consists of an 18-month, Euro-denominated tranche in an aggregate amount of €1.15 billion and a 3-year, Euro-denominated tranche in an aggregate amount of €1.15 billion. Euro-denominated borrowings bear interest at the EURIBOR Rate plus a ratings-based margin, USD-denominated borrowings bear interest at either a Term SOFR Rate plus 0.10% and a ratings-based margin or, alternatively, at a base rate plus a ratings-based margin. The Company capitalized $4 million of deferred financing costs which will be amortized over the respective term of the tranches. On January 2, 2024, the Company borrowed the full amount available under the Delayed Draw Facility in U.S. Dollars.

364 Day Revolver

On May 19, 2023, 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”), the proceeds of which became available upon closing of the acquisition of the VCS Business. Borrowings bear interest at either a Term SOFR Rate plus 0.10% and a ratings-based margin or, alternatively, at a base rate plus a ratings-based margin. As of March 31, 2024, there were no borrowings outstanding under the Revolver.

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~~Yen-denominated purchase price of Toshiba Carrier Corporation ("TCC") and to pay related fees and expenses.

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Revolving Credit Facility

On ~~February 10, 2020,~~May 19, 2023, the Company entered into a revolving credit agreement with ~~various banks~~JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders, permitting aggregate borrowings of up to ~~$2.0~~$2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures ~~on April 3, 2025~~in May 2028 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and ~~cash requirements.~~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 ~~of 0.125%~~ is charged on unused commitments. ~~Borrowings under t~~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. he Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling. Pounds Sterling borrowings bear interest at a variable rate based on daily simple SONIA plus 0.0326%, Euro borrowings bear interest at EURIBOR rates and U.S. Dollar borrowings bear interest at LIBOR plus a ratings-based margin, which was 125 basis points as of ~~March 31, 2023~~. As of March 31, ~~2023,~~2024, there were no borrowings outstanding under the Revolving Credit Facility.

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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 March 31, ~~2023,~~2024, 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 $5$10 million and ~~$14~~$5 million of debt during the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. Long-term debt repayments associated with these financing arrangements during the three months ended March 31, 2024 and 2023 ~~and 2022~~ were $2$5 million and $8$2 million, respectively.

Debt Covenants

The Revolving Credit Facility, Revolver, 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~~certain liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of March 31, ~~2023,~~2024, 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.~~

NOTE 6: 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.

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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 ~~earnings~~Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations.

~~In connection with the TCC acquisition,~~During 2022, the Company ~~funded~~entered into cross currency swaps with various financial institutions to fund 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.~~of TCC. The ~~fair value of 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. From time to time, the Company settles and enters into new cross currency swaps with the same purpose and characteristics as initially established.

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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.

During 2023, 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 of the VCS Business. The instruments had an aggregate notional amount of €7 billion and a settlement window between November 28, 2023 and February 27, 2024. The window forward contracts were 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 months ended March 31, 2024, the Company recognized a $86 million loss on the mark-to-market valuation of its window forward contracts. The Company settled the window forward contracts on January 2, 2024 upon the acquisition of the VCS Business.

During 2023, the Company entered into several interest rate swap contracts to mitigate interest rate exposure on the forecasted issuance of long-term debt. The contracts had an aggregate notional amount of $1.525 billion and were designated as cash flow hedges with changes in fair value reported in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. Fair value was measured on a recurring basis using observable market inputs, such as forward, discount and interest rates. In November 2023, the contracts were settled upon the issuance of the underlying debt. As a result, the Company deferred a net unrecognized gain of $58 million in Equity which will be subsequently recognized in Interest expense over the term of the related notes which range from 2034 to 2044. The amount expected to be amortized during 2024 is a net gain of $5 million.

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)	(In millions)	Total		Level 1		Level 2		Level 3		(In millions)	Total	Level 1	Level 2	Level 3
March 31, 2023
March 31, 2024

Derivative assets (1)(3)

Derivative assets (1)(3)

Derivative assets (1)(3)	Derivative assets (1)(3)	$	20	$	—	$	20	$	—
Derivative liabilities (2)(3)	Derivative liabilities (2)(3)	$	(71)	$	—	$	(71)	$	—

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023

Derivative assets (1) (3)

Derivative assets (1) (3)

Derivative assets (1) (3)	Derivative assets (1) (3)	$	28	$	—	$	28	$	—
Derivative liabilities (2) (3)	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.~~swaps and window forward contracts (which were settled on January 2, 2024).

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:

March 31, 2023

December 31, 2022

March 31, 2024

(In millions)

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Total long-term Notes (1)

8,350

7,105

8,350

6,832

Total long-term Notes (1)

(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

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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.

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NOTE 7: EMPLOYEE BENEFIT PLANS

The Company sponsors ~~both funded and unfunded domestic~~U.S. and international defined benefit pension and defined contribution plans. In addition, the Company contributes to various ~~domestic~~U.S. and international multi-employer defined benefit pension plans.

Contributions to the plans were as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In millions)
(In millions)
(In millions)	(In millions)	2023		2022
Defined benefit plans	Defined benefit plans	$	6	$	4
Defined benefit plans
Defined benefit plans
Defined contribution plans
Defined contribution plans
Defined contribution plans	Defined contribution plans	$	37	$	38
Multi-employer pension plans	Multi-employer pension plans	$	4	$	3
Multi-employer pension plans
Multi-employer pension plans

The components of net periodic pension expense (benefit) for the defined benefit pension plans are as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In millions)
(In millions)
(In millions)
Service cost
Service cost
Service cost
Interest cost
Interest cost
Interest cost
Expected return on plan assets
Expected return on plan assets
Expected return on plan assets

		Three Months Ended March 31,
(In millions)		2023		2022
Service cost		$	4	$	5
Interest cost		8		4
Expected return on plan assets		(8)		(7)
Amortization of prior service credit		—		1
Recognized actuarial net (gain) loss		—		2

Net periodic pension expense (benefit)	Net periodic pension expense (benefit)	$	4	$	5

Net periodic pension expense (benefit)

Net periodic pension expense (benefit)

NOTE 8: 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 March 31,

(In millions)

2023

2022

Equity compensation costs - equity settled

Equity compensation costs - cash settled (1)

(6)

Total stock-based compensation expense

(1) The cash settled awards are classified as liability awards and are measured at fair value at each balance sheet date.

NOTE 9: 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

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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.

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The changes in the carrying amount of warranty related provisions are as follows:


			Three Months Ended March 31,
		Three Months Ended March 31,								Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Balance as of January 1,	Balance as of January 1,		$	552	$	524
Warranties, performance guarantees issued and changes in estimated liability	Warranties, performance guarantees issued and changes in estimated liability		54		45
Settlements made	Settlements made		(45)		(43)
Other	Other		2		—
Acquisitions (1)

Balance as of March 31,	Balance as of March 31,		$	563	$	526
Balance as of March 31,
Balance as of March 31,

(1) See Note 15 - Acquisitions for additional information.

NOTE 10: EQUITY

The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of March 31, ~~2023~~2024 and December 31, ~~2022, 878,272,100~~2023, 944,433,341 and ~~876,487,480~~883,068,393 shares of common stock were issued, respectively, which includes 43,490,981 ~~and 42,103,995~~ shares of treasury stock, for both periods 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,~~2023, the Company repurchased ~~42.1~~43.5 million shares of common stock for an aggregate purchase price of ~~$1.9~~$2.0 billion, including shares repurchased under an accelerated share repurchase agreement. As a result, the Company had approximately ~~$2.2~~$2.1 billion remaining under the current authorization at December 31, ~~2022.~~

~~During~~2023. Upon announcement of the proposed acquisition of the VCS Business, the Company temporarily paused its share repurchase program in order to advance its capital allocation strategy. As a result, there is no share repurchase activity during the three months ended March 31, 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 March 31, 2023.2024.

Accumulated Other Comprehensive Income (Loss)

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three months ended March 31, ~~2023~~2024 is as follows:


(In millions)	(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2022		$	(1,604)	$	(84)	$	(1,688)
(In millions)
(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, 2023
Other comprehensive income (loss) before reclassifications, net	Other comprehensive income (loss) before reclassifications, net	52		—		52
Amounts reclassified, pre-tax	Amounts reclassified, pre-tax	—		—		—
Tax expense (benefit) reclassified		—		—		—

Balance as of March 31, 2023		$	(1,552)	$	(84)	$	(1,636)

Balance as of March 31, 2024

Balance as of March 31, 2024

Balance as of March 31, 2024

1417

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A summary of changes in the components of Accumulated other comprehensive income (loss) for the three months ended March 31, ~~2022~~2023 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)


(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



Balance as of March 31, 2023	$	(1,552)	$	(84)	$	—	$	(1,636)

NOTE 11: 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 March 31,

(In millions)

2023

2022

Sales Type

Product

3,201

2,639

Service

421

331

Service

HVAC sales

3,622

2,970

Product

787

867

Product

Service

111

109

Service

Refrigeration sales

898

976

Product

813

771

Product

Service

Fire & Security sales

869

818

Total segment sales

5,389

4,764

Total segment sales

Eliminations and other

(116)

(110)

Net sales

5,273

4,654

Net sales

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Contract Balances

Total contract assets and contract liabilities consisted of the following:


(In millions)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Contract assets, current	Contract assets, current	$	568	$	537
Contract assets, non-current (included within Other assets)	Contract assets, non-current (included within Other assets)	6		6
Total contract assets	Total contract assets	574		543

Contract liabilities, current	Contract liabilities, current	(516)		(449)
Contract liabilities, current
Contract liabilities, current
Contract liabilities, non-current (included within Other long-term liabilities)	Contract liabilities, non-current (included within Other long-term liabilities)	(174)		(174)
Total contract liabilities	Total contract liabilities	(690)		(623)
Net contract assets (liabilities)	Net contract assets (liabilities)	$	(116)	$	(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 ~~$178~~$345 million during the three months ended March 31, ~~2023~~2024 that related to contract liabilities as of January 1, ~~2023.~~2024. 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.

NOTE 12: RESTRUCTURING COSTS

The 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 March 31,

(In millions)

2023

2022

HVAC

(1)

HVAC

Refrigeration

—

Fire & Security

Total Segment

General corporate expenses

—

Total restructuring costs

General corporate expenses

Total restructuring costs (1)

Cost of sales

Selling, general and administrative

Total restructuring costs

Total restructuring costs (1)

(1) 2024 restructuring costs include period related charges.

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The following table summarizes ~~the reserve and charges relating to~~changes in the restructuring reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet:


	Three Months Ended March 31,
(In millions)	2024		2023
Balance as of January 1,	$	55	$	24
Net pre-tax restructuring costs	12		17
Acquisitions (1)	8		—
Utilization, foreign exchange and other	(24)		(6)
Balance as of March 31,	$	51	$	35

~~Table of Contents~~(1) See Note 15 - Acquisitions for additional information.

Three Months Ended March 31,
(In millions) 2023 2022
Balance as of January 1, $ 24 $ 54
Net pre-tax restructuring costs 17 10
Utilization, foreign exchange and other (6) (21)
Balance as of March 31, $ 35 $ 43

During the three months ended March 31, 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 March 31, ~~2023,~~2024, the Company had ~~$35~~$51 million accrued for costs associated with its announced restructuring ~~initiatives, all~~initiatives. The balance relates to cost reduction efforts, primarily severance related across each of ~~which is expected~~the Company's segments, along with reserves associated with the Company's planned portfolio transformation. The Company expects a majority of the balance to be ~~paid~~utilized within one year.

NOTE 13: 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 13.7% for the three months ended March 31, 2024 compared with 24.0% for the three months ended March 31, ~~2023 compared with 17.8% for the three months ended March 31, 2022.~~2023. The year-over-year ~~increase~~decrease was primarily driven by a ~~lower effective~~ tax ~~rate on~~benefit of ~~the $1.1 billion Chubb gain compared~~$21 million associated with the ~~Company's~~TMA and UTC's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the U.S. ~~statutory rate~~Internal Revenue Service ("IRS"), a net tax benefit of $19 million related to adjustments to basis differences in certain companies presented as held-for-sale and a ~~favorable~~net tax ~~adjustment~~benefit of ~~$32~~$16 million ~~associated with~~related to the re-organization and disentanglement of certain Fire & Security industrial businesses in advance of the planned divestitures. These amounts were partially offset by a tax charge of $15 million related to a reduction of utilizable foreign tax ~~credits generated and utilized in the prior year.~~credits.

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~~IRS has completed its audit of UTC's ~~tax years~~ 2017 and 2018 ~~and this audit could conclude within the next twelve months.~~tax years. 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~~2020 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 ~~$50~~$30 million to ~~$65~~$45 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.

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NOTE 14: 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 March 31,

(In millions, except per share amounts)

2023

2022

(In millions, except per share amounts)

Net income attributable to common shareowners

373

1,379

Basic weighted-average number of shares outstanding

835.0

853.3

Basic weighted-average number of shares outstanding

Stock awards and equity units (share equivalent)

17.2

20.8

Stock awards and equity units (share equivalent)

Diluted weighted-average number of shares outstanding

852.2

874.1

Antidilutive shares excluded from computation of diluted earnings per share

6.5

3.2

Antidilutive shares excluded from computation of diluted earnings per share

Earnings Per Share

Basic

0.45

1.62

Basic

Diluted

0.44

1.58

Diluted

NOTE 15: 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~~Viessmann Climate Solutions

On ~~February 6, 2022,~~January 2, 2024, the Company ~~entered into~~completed the acquisition of the VCS Business from Viessmann for total consideration of $14.2 billion. The purchase price consisted of (i) $11.2 billion in cash and (ii) 58,608,959 shares of the Company's common stock, subject to certain lock-up provisions and anti-dilution protection. The Company funded the cash portion of the purchase price with a ~~binding agreement to acquire a majority ownership interest in TCC for $920 million. TCC, a VRF~~combination of cash on hand, net proceeds from the USD Notes and ~~light commercial HVAC joint venture between Carrier~~Euro Notes 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 pipelineborrowings under the Delayed Draw Facility and the ~~long-term use~~60-day Loan.

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 Company believes that secular trends in these areas will drive significant, sustained future growth. In addition, the Company anticipates realizing significant operational synergies including savings through supplier rationalization and leverage, reduced manufacturing costs and lower general and administrative costs. Longer term, the Company expects to benefit from synergies related to service revenue expansion, leverage of ~~Toshiba’s iconic brand. The acquisition was completed on August 1, 2022~~distribution channels and ~~funded through the Japanese Term Loan Facility and cash on hand. Upon closing, Toshiba Corporation retained a 5% ownership interest in TCC.~~cross-selling opportunities.

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The components of the purchase price is as follows:


(In millions)	January 2, 2024
Cash	$	11,156
Common shares (58,608,959 shares at $51.20 per share)	3,001
Total consideration	$	14,157

The preliminary allocation of the purchase price is as follows:


(In millions)	~~August 1, 2022~~January 2, 2024
Cash and cash equivalents	$	~~462~~394
Accounts receivable	~~426~~408
Inventories	~~373~~948
Other assets, current	5417
Fixed assets	~~343~~913
Intangible assets	~~965~~6,640
Goodwill	~~876~~7,576
Other assets	~~293~~284
Accounts payable	~~(412)~~(288)
~~Accrued liabilities~~	~~(445)~~
~~Contract~~Other liabilities, current	~~(21)~~(626)
Future income tax obligations	(1,825)
Other ~~long-term~~ liabilities	~~(574)~~(284)
Net assets acquired	$	~~2,340~~14,157
~~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 identifiable assets acquired was recognized as goodwill and totaled ~~$876 million,~~$7.6 billion, 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 the year ended December 31, 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 during the first quarter of 2023. In addition, the parties finalized amounts related to pension funding levels during the period. As a result, the Company recorded a receivable of $12 million which is expected to be paid by Toshiba Corporation during the second quarter of 2023.

The Company recorded intangible assets based on its ~~preliminary~~ estimate of fair value which consisted of the following:


(In millions)	(In millions)	Estimated Useful Life (in years)	Intangible Assets Acquired		(In millions)	Estimated Useful Life (in years)	Intangible Assets Acquired
Customer relationships	Customer relationships	23	$	497
Technology	Technology	7	220
Trademark	Trademark	26	180
Backlog	Backlog	1	60
Land use rights		45	8
Total intangible assets acquired	Total intangible assets acquired		$	965

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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~~EBITDA 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 March 31, ~~2023,~~2024, the Company

~~Table of Contents~~

~~finalized~~ is in the process of ~~allocating~~completing its valuation of tangible, intangible and tax-related assets relating to the VCS Business and the allocation of the purchase price ~~and valuing~~to the assets acquired ~~assets~~ and liabilities ~~except for certain amounts associated with income taxes.~~assumed will be completed once the valuation process has been finalized.

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~~the VCS Business are consolidated in the accompanying Unaudited Condensed C~~onsolidated~~Consolidated Financial Statements as of the date of acquisition and reported within the Company's HVAC segment. ~~The~~For the period from January 2, 2024 to March 31, 2024, revenues for the VCS Business were $875 million and its net loss was $124 million which included amortization of the step-up to fair value of inventory and backlog of $111 million as well as $139 million of intangible asset amortization.

During the three months ended March 31, 2024, the Company incurred ~~$29~~$30 million of acquisition-related costs. During 2023, $80 million of acquisition-related costs ~~during 2022,~~were incurred, of which $6$12 million was recognized during the three months ended March 31, ~~2022 and~~2023 ~~included~~. These acquisition costs are reflected within Selling, general and administrative onin the ~~accompanying~~ Unaudited Condensed Consolidated Statement of Operations.

Unaudited Pro Forma Financial Information

The ~~Company has not included~~following unaudited pro forma financial information ~~required under ASC 805~~is presented to illustrate the estimated effects of the acquisition of the VCS Business as if the business combination had occurred on January 1, 2023:


	Three Months Ended March 31,
(In millions)	2024		2023
Revenue	$	6,182	$	6,278
Earnings	343		79

The pro forma ~~impact was~~amounts include the historical operating results of the Company and the VCS Business prior to the acquisition, with adjustments directly attributable to the acquisition including amortization of the step-up to fair value of inventory and amortization expense of acquired intangible assets. The unaudited pro forma financial information is not ~~significant.~~necessarily indicative of the results of operations that actually would have been achieved had the acquisition of the VCS Business been consummated as of the dates indicated, nor is it indicative of any future results. In addition, the unaudited pro forma financial information does not reflect the expected realization of any synergies or cost savings associated with the acquisition.

NOTE 16: DIVESTITURES

~~Sale of Chubb~~Portfolio Transformation

On April 25, 2023, the Company announced plans to exit its Fire & Security ~~Business~~

and Commercial Refrigeration businesses over the course of 2024. On ~~January 3, 2022,~~December 7, 2023, the Company ~~completed~~entered into a stock purchase agreement to sell its Access Solutions business to Honeywell International Inc. for an enterprise value of approximately $4.95 billion. Access Solutions, historically reported in the ~~Chubb Sale for net proceeds of $2.9 billion. Chubb, which was reported within the Company’s~~Company's Fire & Security segment, ~~delivered essential fire safety~~is a global supplier of physical security and ~~security~~digital access solutions ~~from design~~supporting the hospitality, commercial, education 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 three months ended March 31, 2022,military markets. On December 12, 2023, the Company ~~recognized~~entered into a ~~net gain~~stock purchase agreement to sell the CCR business to Haier Group Corporation for an enterprise value of approximately $775 million. CCR, historically reported in the Company's Refrigeration segment, is a global supplier of turnkey solutions for commercial refrigeration systems and services, with a primary focus on serving food retail customers, cold storage facilities and warehouses. As a result, the assets and liabilities of both businesses are presented as held for sale ~~of $1.1 billion, which is included~~ in~~Other income (expense), net~~ on the accompanying Unaudited Condensed Consolidated ~~Statement~~Balance Sheet as of ~~Operations.~~March 31, 2024 and December 31, 2023, and recorded at the lower of their carrying value or fair value less estimated cost to sell. Both transactions are expected to close in 2024 and are subject to customary closing conditions.

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In addition, the net assets of Industrial Fire met the criteria to be classified as held for sale during the fourth quarter of 2023. Industrial Fire, historically reported in the Company's Fire & Security segment, is a leading manufacturer of a full spectrum of fire detection and suppression solutions and services in critical high-hazard environments, including oil and gas, power generation, marine and offshore facilities, automotive, data centers and aircraft hangars. As a result, the assets and liabilities of the business are presented as held for sale in the accompanying Unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023, and recorded at the lower of their carrying value or fair value less estimated cost to sell. On March 5, 2024, the Company entered into a stock purchase agreement to sell its Industrial Fire business to Sentinel Capital Partners for an enterprise value of approximately $1.425 billion. The transaction is expected to close in 2024 and is subject to customary closing conditions.

The following table summarizes assets and liabilities classified as held for sale:


	March 31, 2024
(In millions)	Commercial Refrigeration		Access Solutions		Industrial Fire		Total
Cash and cash equivalents	$	107	$	10	$	11	$	128
Accounts receivable, net	189		85		96		370
Inventories, net	93		34		68		195
Contract assets, current	106		2		49		157
Other assets, current	16		4		5		25
Fixed assets, net	77		14		23		114
Intangible assets, net	—		52		2		54
Goodwill	72		1,479		433		1,984
Operating lease right-of-use assets	49		14		26		89

Other assets	44		7		2		53
Total assets held for sale	$	753	$	1,701	$	715	$	3,169

Accounts payable	$	123	$	29	$	43	$	195
Accrued liabilities	156		20		50		226
Contract liabilities, current	25		57		17		99

Long-term debt, including current portion	7		—		—		7
Future pension and post-retirement obligations	198		—		—		198
Future income tax obligations	4		—		3		7
Operating lease liabilities	38		11		21		70
Other long-term liabilities	3		12		3		18
Total liabilities held for sale	$	554	$	129	$	137	$	820

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	December 31, 2023
(In millions)	Commercial Refrigeration		Access Solutions		Industrial Fire		Total
Cash and cash equivalents	$	131	$	6	$	20	$	157
Accounts receivable, net	274		104		101		479
Inventories, net	84		31		65		180
Contract assets, current	98		2		42		142
Other assets, current	15		3		4		22
Fixed assets, net	78		13		22		113
Intangible assets, net	—		53		2		55
Goodwill	72		1,498		439		2,009
Operating lease right-of-use assets	49		13		28		90

Other assets	44		10		13		67
Total assets held for sale	$	845	$	1,733	$	736	$	3,314

Accounts payable	$	129	$	20	$	39	$	188
Accrued liabilities	181		21		55		257
Contract liabilities, current	23		53		22		98

Long-term debt, including current portion	8		—		—		8
Future pension and post-retirement obligations	203		—		1		204
Future income tax obligations	4		2		3		9
Operating lease liabilities	40		11		23		74
Other long-term liabilities	3		12		9		24
Total liabilities held for sale	$	591	$	119	$	152	$	862

NOTE 17: 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.

2025

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Net sales and Operating profit by segment are as follows:


			Net Sales				Operating Profit
			Three Months Ended March 31,				Three Months Ended March 31,
		Net Sales												Net Sales			Operating Profit
		Three Months Ended March 31,												Three Months Ended March 31,			Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		2023		2022		(In millions)	2024	2023		2024	2023
HVAC	HVAC		$	3,622	$	2,970	$	435	$	470
Refrigeration	Refrigeration		898		976		108		107
Fire & Security	Fire & Security		869		818		93		1,218
Total segment	Total segment		5,389		4,764		636		1,795
Eliminations and other	Eliminations and other		(116)		(110)		(38)		(24)
General corporate expenses	General corporate expenses		—		—		(43)		(34)
Total Consolidated	Total Consolidated		$	5,273	$	4,654	$	555	$	1,737

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 three months ended March 31, ~~2023~~2024 and ~~2022.~~2023.

Three Months Ended March 31,

(In millions)

2023

2022

United States

2,860

2,784

United States

International:

Europe

1,196

1,045

Europe

Asia Pacific

1,033

652

Other

184

173

Other

Net sales

5,273

4,654

Net sales

NOTE 18: 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 March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
(In millions)	(In millions)	2023		2022		(In millions)	2024	2023
Sales to equity method investees included in Product sales	Sales to equity method investees included in Product sales	$	754	$	624
Purchases from equity method investees included in Cost of products sold	Purchases from equity method investees included in Cost of products sold	$	43	$	110

The Company had receivables from and payables to equity method investees as follows:


(In millions)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Receivables from equity method investees included in Accounts receivable, net	Receivables from equity method investees included in Accounts receivable, net	$	260	$	154
Payables to equity method investees included in Accounts payable	Payables to equity method investees included in Accounts payable	$	24	$	44

2126

NOTE 19: 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 ~~will be~~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)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Environmental reserves included in Accrued liabilities	Environmental reserves included in Accrued liabilities	$	19	$	24
Environmental reserves included in Other long-term liabilities	Environmental reserves included in Other long-term liabilities	214		211
Total Environmental reserves	Total Environmental reserves	$	233	$	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.

2227

The Company's asbestos liabilities and related insurance recoveries are as follows:


(In millions)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Asbestos liabilities included in Accrued liabilities	Asbestos liabilities included in Accrued liabilities	$	16	$	16
Asbestos liabilities included in Other long-term liabilities	Asbestos liabilities included in Other long-term liabilities	211		212
Total Asbestos liabilities	Total Asbestos liabilities	$	227	$	228

Asbestos-related recoveries included in Other assets, current	Asbestos-related recoveries included in Other assets, current	$	5	$	5
Asbestos-related recoveries included in Other assets, current
Asbestos-related recoveries included in Other assets, current
Asbestos-related recoveries included in Other assets	Asbestos-related recoveries included in Other assets	89		90
Total Asbestos-related recoveries	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 ("Raytheon"), 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, 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. Oral arguments on the appeal is scheduled to occur before the Second Circuit on June 29, 2023.

Aqueous Film Forming Foam Litigation

As of March 31, ~~2023,~~2024, the Company, KFI and ~~certain of its subsidiaries, including Kidde-Fenwal, Inc. ("KFI"),~~others have been named as defendants in more than ~~3,800~~7,000 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 ~~certain of its subsidiaries, including KFI,~~others have also been named as ~~a defendant~~defendants in more than ~~370~~800 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 ~~("MDL Court") for pre-trial proceedings ("MDL~~(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 primarily at military bases and airports. AFFF was manufactured by several companies, including National Foam and Angus Fire. UTC subsidiaries first entered the AFFF business with their acquisition of National Foam and Angusfires. The lawsuits identified above relate to Kidde Fire ~~in 2005 as part of the acquisition of KFI and Kidde Products Limited ("KPL"). In 2013, KFI and KPL divested~~Fighting, Inc., which owned the National Foam business. Kidde Fire Fighting, Inc. was acquired by a UTC subsidiary in 2005 and ~~Angus Fire businesses to a third party.~~merged into KFI in 2007. The ~~Company acquired KFI and KPL as part of the Separation in April 2020. During the eight-year period of its operation by KFI,~~ 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 ~~("Pennsylvania~~(the "Pennsylvania Site"). ~~During~~In 2013, KFI divested the ~~same period, Angus Fire manufactured~~ AFFF ~~for sale outside~~businesses to an unrelated third party. The Company acquired KFI as part of the ~~United States at a single facility located~~Separation in ~~Bentham, England.~~April 2020.

The key components ~~of AFFF~~ that contribute to ~~its~~AFFF's fire-extinguishing capabilities are known as fluorosurfactants. Neither the Company, nor KFI, nor any of ~~its former or current~~the Company's subsidiaries ~~including~~involved in the AFFF litigation manufactured fluorosurfactants. Instead, the National ~~Foam/Angus Fire and KFI/KPL, respectively, manufactured fluorosurfactants; they instead~~Foam business purchased these substances from unrelated third parties ~~to,~~for use in ~~turn, manufacture~~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 ~~perflourooctane sulfonate~~per- and polyfluoroalkyl substances (referred to collectively as "PFAS"), including perflourooctanesulfonic acid ("PFOS") ~~and/or perflourooctane~~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 ~~and Angus Fire)~~business). Compounds containing PFOS and PFOA (as well as many other ~~per- and polyfluoroalkyl substances known collectively as "PFAS")~~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 ~~four~~ suppliers of chemicals and raw materials used to manufacture fluorosurfactants, ~~four~~ fluorosurfactant manufacturers ~~two toll manufacturers of fluorosurfactants~~ and ~~seven current (including National Foam and Angus Fire) and former (including the Company and KFI)~~ 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.~~al., for a bellwether trial. That trial iswas scheduled ~~for~~to begin in early June ~~2023.~~2023 but was postponed indefinitely. The MDL court ~~has~~ ordered that the bellwether process for personal injury cases ~~will~~to begin in 2023. ~~The~~However, 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 ~~also~~ 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, ~~and its subsidiaries, including~~ 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 ~~him~~ certain personal injuries.

The Company and ~~its subsidiaries, including~~ KFI believe that they have meritorious defenses to the claims in the MDL Proceedings and the other AFFF lawsuits. Based on its 2013 agreement for the sale of National Foam and Angus Fire, the Company and its subsidiaries, including KFI, are pursuing indemnification against these claims from the purchaser and current owner of National Foam and Angus Fire. The Company and its subsidiaries, including KFI, are also pursuing insurance coverage for these claims. At this time, however, givenGiven 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 ~~the damages, if any, to be allocated to the Company and its subsidiaries, including KFI, if one or more plaintiffs were to prevail in these cases.~~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. On November 21, 2023, the bankruptcy court ordered certain parties, including the Company, to participate in a mediation with respect to claims that might be asserted by and against it in the bankruptcy proceedings. The parties have engaged in several mediation sessions and anticipate further sessions in the future. The terms and scope of any potential settlement may be affected by, among other factors, the bankruptcy court’s ability to approve nonconsensual releases of litigation claims against non-debtors, which the United States Supreme Court is expected to decide in Harrington v. Purdue Pharma, L.P.

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 Statement 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 Statement 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 Statement of Operations. Since the petition date, there were no material transactions between the Company and KFI.

On March 15, 2024, the Company and Pacific Avenue Capital Partners entered into certain agreements including a stock and asset purchase agreement whereby Pacific Avenue Capital Partners shall acquire certain assets and operating liabilities of KFI, subject to approval by the bankruptcy court. On April 1, 2024, the bankruptcy court subsequently approved the sale. However, there has been no determination with respect to the allocation of sale proceeds.

Income Taxes

Under the ~~Tax Matters Agreement~~TMA 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. AsDuring the three months ended March 31, 2024, the Company recognized a ~~result, liabilities~~$46 million gain associated with the TMA and UTC's conclusion of ~~$49~~certain income tax matters from their 2017 and 2018 tax audit with the IRS. Liabilities under the TMA of $96 million and ~~$368~~$233 million are included within the accompanying Unaudited Condensed Consolidated Balance Sheet within Accrued Liabilities and Other Long-Term Liabilities as of March 31, ~~2023,~~2024, respectively. This obligation is expected to be settled in annual installments ending in April 2026 with the next installment of ~~$49~~$96 million due in ~~2023.~~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.

~~NOTE 20~~: ~~SUBSEQUENT EVENTS~~

On April 25, 2023, the Company announced that it entered into a Share Purchase Agreement (the “Agreement”) to acquire the climate solutions business (the "Business") of Viessmann Group GmbH & Co. KG (“Viessmann”), a privately-held company, for approximately €12 billion. The 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 debt financing and expects the transaction to close around the end of 2023, subject to customary closing conditions and regulatory approvals. On April 26, 2023, the Company entered into a forward contract with a total notional amount of €7 billion to mitigate the foreign currency risk of the Euro cash outflows associated with the acquisition.

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 Company’s Transicold transport refrigeration, Profroid mechanical systems or the Sensitech monitoring businesses.

With respect to the accompanying Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") reported that it has applied limited procedures in accordance with professional standards for a review of such information. However, its report dated April ~~26, 2023,~~25, 2024, appearing below, states that the firm did not audit and does not express an opinion on the accompanying Unaudited Condensed Consolidated Financial Statements. PricewaterhouseCoopers has not carried out any significant or additional audit tests beyond those that would have been necessary if their report had not been included. Accordingly, the degree of reliance on its report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Securities Act"), for its report on the accompanying Unaudited Condensed Consolidated Financial Statements because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers within the meaning of Sections 7 and 11 of the Securities Act.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareowners of Carrier Global Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Carrier Global Corporation and its subsidiaries (the “Company”) as of March 31, ~~2023,~~2024, and the related condensed consolidated statements of operations, of comprehensive income (loss), of changes in equity and of cash flows for the three-month ~~periods~~period ended March 31, ~~2023~~2024 and ~~2022,~~2023, including the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, ~~2022,~~2023, and the related consolidated statements of operations, of comprehensive income (loss), of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated February ~~7, 2023,~~6, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2022,~~2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ PricewaterhouseCoopers LLP

~~Hallandale Beach,~~Miami, Florida

April ~~26, 2023~~25, 2024

2631

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Business Summary

Carrier Global Corporation ("we" or "our") is ~~the leading~~a global ~~provider of healthy, safe, sustainable~~leader in intelligent climate and ~~intelligent building and cold chain~~energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to our customers. Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic, Carrier Transicold, Kidde, Edwards and LenelS2 that offer innovative heating, ventilating and air conditioning ("HVAC"), refrigeration, fire, security and building automation technologies to help make the world safer and more comfortable. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. Our operations are classified into three segments: HVAC, Refrigeration and Fire & Security.

Our worldwide operations are affected by global and regional industrial, economic and political factors and trends. These include the mega-trends of urbanization, climate change and increasing requirements for food safety driven by the food needs of the growing global population and the rising standards of living in emerging markets. We believe that our business segments are well positioned to benefit from favorable secular trends, including these mega-trends and from the strength of our industry-leading brands and track record of innovation. In addition, we regularly review our end markets to proactively identify trends and adapt our strategies accordingly.

Our business is also affected by changes in the general level of economic activity, such as changes in business and consumer spending, construction and shipping activity as well as short-term economic factors such as currency fluctuations, commodity price volatility and supply disruptions. We continue to invest in our business, take pricing actions to mitigate supply chain and inflationary pressures, develop new products and services in order to remain competitive in our markets and use risk management strategies to mitigate various exposures. We believe that we have industry-leading global brands, which form the foundation of our business strategy. Coupled with our focus on growth, innovation and operational efficiency, we expect to drive long-term future growth and increased value for our shareowners.

Recent Developments

The ongoing global economic recovery from the COVID-19 pandemic has caused significant challenges for global supply chains resulting in inflationary cost pressures, component shortages and transportation delays. As a result, we have incurred incremental costs for commodities and components used in our products as well as component shortages that have negatively impacted our sales and results of operations. Inflationary cost pressures have begun to moderate, but remain elevated and continue to affect our results. We expect that these challenges will continue to impact our businesses for the foreseeable future.

We continue to take proactive steps to limit the impact of these challenges and are working closely with our suppliers to ensure availability of products and implement other cost savings initiatives. In addition, we continue to invest in our supply chain to improve its resilience with a focus on automation, dual sourcing of critical components and localized manufacturing when feasible. To date, there has been limited disruption to the availability of our products, though it is possible that more significant disruptions could occur if these supply chain challenges continue.

Acquisition of ~~Toshiba Carrier Corporation~~Viessmann Climate Solutions

On ~~February 6, 2022,~~April 25, 2023, we announced that we entered into a ~~binding agreement~~Share Purchase Agreement (the “Agreement”) to acquire ~~a majority ownership interest in Toshiba Carrier Corporation ("TCC"~~the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (“Viessmann”), a ~~variable refrigerant flow ("VRF")~~privately-held company. The VCS Business develops intelligent, integrated and ~~light commercial HVAC joint venture between Carrier~~sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and Toshiba Corporation. TCC 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.digital solutions, primarily for residential customers in Europe. The acquisition was completed on ~~August 1, 2022.~~January 2, 2024. As a result, the assets, liabilities and results of operations of ~~TCC~~the VCS Business are consolidated in the accompanying Unaudited Condensed Consolidated Financial Statements as of the date of acquisition and reported within our HVAC segment. ~~Upon closing, Toshiba Corporation retained a 5% ownership interest in TCC.~~

~~Sale of Chubb Fire & Security Business~~Portfolio Transformation

On ~~July 26, 2021,~~April 25, 2023, we announced plans to exit our Fire & Security and Commercial Refrigeration businesses over the course of 2024. On December 7, 2023, we entered into a stock purchase agreement to sell our ~~Chubb Fire and Security~~Access Solutions business ("~~Chubb"~~Access Solutions") to ~~APi Group Corporation ("APi"). Chubb, which was~~Honeywell International Inc. for an enterprise value of approximately $4.95 billion. Access Solutions, historically reported ~~within~~in our Fire & Security segment, ~~delivered essential~~is a global supplier of physical security and digital access solutions supporting the hospitality, commercial, education and military markets. On December 12, 2023, we entered into a stock purchase agreement to sell our Commercial Refrigeration business ("CCR") to Haier Group Corporation for an enterprise value of approximately $775 million. CCR, historically reported in our Refrigeration segment, is a global supplier of turnkey solutions for commercial refrigeration systems and services, with a primary focus on serving food retail customers, cold storage facilities and warehouses. On March 5, 2024, we entered into a stock purchase agreement to sell our Industrial Fire business ("Industrial Fire") to Sentinel Capital Partners for an enterprise value of approximately $1.425 billion. Industrial Fire, historically reported in our Fire & Security segment, is a leading manufacturer of a full spectrum of fire ~~safety~~detection and ~~security~~suppression solutions ~~from design~~ and ~~installation~~services in critical high-hazard environments, including oil and gas, power generation, marine and offshore facilities, automotive, data centers and aircraft hangars. These transactions are expected to ~~monitoring, service~~close in 2024.

Deconsolidation of Kidde-Fenwal, Inc.

On May 14, 2023, Kidde-Fenwal, Inc. ("KFI"), an indirect wholly-owned subsidiary of ours, 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 ~~maintenance across more than 17 countries around~~suppression business historically reported in our Fire & Security segment, has indicated that it intends to use the ~~globe. On January 3, 2022, we completed~~bankruptcy process to explore strategic alternatives, including the sale of ~~Chubb (the "Chubb Sale") for net proceeds of $2.9 billion and recognized~~KFI as a ~~gain on the sale of $1.1 billion~~going concern. KFI has further stated that, during the ~~year ended December 31, 2022.~~

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 our Unaudited Condensed Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses. We believe that the most complex and sensitive judgments, because of their potential significance to the accompanying Unaudited Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. In "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our ~~2022~~2023 Form 10-K, we describe the significant accounting estimates and policies used in the preparation of the accompanying Unaudited Condensed Consolidated Financial Statements. ~~There~~Except as noted below, there have been no significant changes in our critical accounting estimates.

28Business Combinations

In accordance with ASC 805, Business Combinations ("ASC 805"), acquisitions that meet the definition of a business are recorded using the acquisition method of accounting. We recognize and measure the identifiable assets acquired, liabilities assumed and any non-controlling interest as of the acquisition date at fair value. The valuation of intangible assets is determined by an income approach methodology, using assumptions such as projected future revenues, customer attrition rates, royalty rates, tax rates and discount rates. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any non-controlling interest is recognized as goodwill. Costs incurred as a result of a business combination other than costs related to the issuance of debt or equity securities are recorded in the period the costs are incurred.

RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2023~~2024 Compared with the Three Months Ended March 31, ~~2022~~

The results of TCC's operations are included in our consolidated results since the acquisition date of August 1, 2022. Prior to the acquisition, we accounted for our minority ownership in TCC under the equity method of accounting and recognized our portion of earnings within ~~Equity method investment in net earnings~~ ~~as part of operating expenses. As a result, prior period results may not be comparable to the current period.~~2023

The following represents our consolidated net sales and operating results:


			Three Months Ended March 31,
		Three Months Ended March 31,																						Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		Period Change		% Change		(In millions)	2024			2023				Period Change						% Change
Net sales	Net sales		$	5,273	$	4,654	$	619	13	%	Net sales	$	6,182	$	$	5,273	$		$	909		17				17		%
Cost of products and services sold	Cost of products and services sold		(3,895)		(3,361)		(534)		16	%	Cost of products and services sold	(4,477)		(3,895)		(3,895)		(582)			(582)		15					15	%
Gross margin	Gross margin		1,378		1,293		85		7	%	Gross margin	1,705		1,378		1,378		327			327		24					24	%
Operating expenses	Operating expenses		(823)		444		(1,267)		(285)	%	Operating expenses	(1,205)		(823)		(823)		(382)			(382)		46					46	%
Operating profit	Operating profit		555		1,737		(1,182)		(68)	%	Operating profit	500		555		555		(55)			(55)		(10)					(10)	%
Non-operating income (expenses), net			(46)		(49)		3		(6)	%
Non-operating income (expense), net											Non-operating income (expense), net	(165)			(46)				(119)						259		%
Income from operations before income taxes	Income from operations before income taxes		509		1,688		(1,179)		(70)	%	Income from operations before income taxes	335		509		509		(174)			(174)		(34)					(34)	%
Income tax expense	Income tax expense		(122)		(301)		179		(59)	%	Income tax expense	(46)		(122)		(122)		76			76		(62)					(62)	%
Net income from operations	Net income from operations		387		1,387		(1,000)		(72)	%	Net income from operations	289		387		387		(98)			(98)		(25)					(25)	%
Less: Non-controlling interest in subsidiaries' earnings from operations	Less: Non-controlling interest in subsidiaries' earnings from operations		14		8		6		75	%	Less: Non-controlling interest in subsidiaries' earnings from operations	20		14		14		6			6		43					43	%
Net income attributable to common shareowners	Net income attributable to common shareowners		$	373	$	1,379	$	(1,006)	(73)	%	Net income attributable to common shareowners	$	269	$	$	373	$		$	(104)		(28)				(28)		%

Net Sales

For the three months ended March 31, ~~2023,~~2024, Net sales were ~~$5.3~~$6.2 billion, a ~~13%~~17% increase compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Three Months Ended March 31, ~~2023~~2024
Organic	42	%
Foreign currency translation	~~(2)~~—	%
Acquisitions and divestitures, net	1115	%

Total % change	1317	%

Organic sales for the three months ended March 31, ~~2023~~2024, increased by 4%2% compared with the same period of ~~2022.~~2023. The organic increase was primarily driven by our HVAC segment due to improved end-markets in the Americas, which more than offset reduced end-market demand in EMEA and Asia. In addition, our Fire & Security segment ~~due to~~benefited from volume growth and price improvements in both the Commercial and ~~volume growth in each region. In addition, improved global end-markets in our Commercial HVAC business further benefited our results.~~Residential fire and Industrial fire businesses. Refrigeration results decreased as each of the segment's businesses experienced challenges in certain end-markets during the quarter. Refer to "Segment Review" below for a discussion of Net salesby segment.

On January 2, 2024, we acquired the VCS Business, a leading manufacturer of high efficiency heating and renewable energy systems in Europe. The results of the VCS Business have been included in our Unaudited Condensed Consolidated Financial Statements since the date of acquisition. The transaction added 16% to Net sales during the three months ended March 31, 2024, and is included in Acquisitions and divestitures, net.

As of May 14, 2023, we no longer controlled KFI as their activities are subject to review and oversight by ~~segment.~~the bankruptcy court. Therefore, KFI was deconsolidated and their respective assets and liabilities were derecognized from our Unaudited Condensed Consolidated Financial Statements. The deconsolidation had a 1% impact on Net sales during the three months ended March 31, 2024, and is included in Acquisitions and divestitures, net.

Gross Margin

For the three months ended March 31, ~~2023,~~2024, grossmargin was ~~$1.4~~$1.7 billion, a 7%24% increase compared with the same period of

~~2022.~~ 2023. The components were as follows:


			Three Months Ended March 31,
		Three Months Ended March 31,													Three Months Ended March 31,
(In millions)	(In millions)			2023			2022			(In millions)	2024		2023
Net sales	Net sales			$	5,273		$	4,654
Cost of products and services sold	Cost of products and services sold			(3,895)			(3,361)
Gross margin	Gross margin			$	1,378		$	1,293
Percentage of net sales	Percentage of net sales			26.1		%	27.8		%	Percentage of net sales	27.6	%	26.1	%

Gross margin increased by ~~$85~~$327 million compared with the three months ended March 31, ~~2022.~~2023. The main driver of the increase related to ongoing customer demand, pricing improvements and our continued focus on productivity initiatives. ~~In addition, incremental~~Operating results associated with ~~TCC~~the VCS Business since the date of acquisition further benefited gross margin during the period. As a result, gross margin as a percentage of Net sales increased by 150 basis points compared with the same period of 2023. However, the results of ~~TCC~~the VCS Business included inventory step-up, backlog amortization and intangible asset amortization resulting from the recognition of acquired assets at fair value. These costs had a ~~240~~250 basis point unfavorable impact on gross margin as a percentage of Net sales. ~~In addition, each of our segments continue to be impacted by~~

Operating Expenses

For the higher cost of commodities and components used in our products, certain supply chain constraints and higher freight costs. Although pricing improvements more than offset inflationary impacts and supply chain challenges, gross margin asthree months ended March 31, 2024, operating expenses, including Equity method investment net earnings, were $1.2 billion, a ~~percentage of~~ ~~Net sales~~ ~~decreased by 170 basis points~~46% increase compared with the same period of ~~2022.~~2023. The components were as follows:

~~Operating Expenses~~


	Three Months Ended March 31,
(In millions)	2024			2023
Selling, general and administrative	$	(985)		$	(721)
Research and development	(224)			(139)
Equity method investment net earnings	31			44
Other income (expense), net	(27)			(7)
Total operating expenses	$	(1,205)		$	(823)
Percentage of net sales	19.5		%	15.6		%

For the three months ended March 31, ~~2023, operating~~2024, Selling, general and administrative expenses ~~including~~ ~~Equity method investment net earning~~s, were ~~$823~~$985 million, a ~~285%~~37% increase compared with the same period of ~~2022. The components were as follows:~~

Three Months Ended March 31,
(In millions) 2023 2022
Selling, general and administrative $ (721) $ (601)
Research and development (139) (125)
Equity method investment net earnings 44 58
Other income (expense), net (7) 1,112
Total operating expenses $ (823) $ 444
Percentage of net sales 15.6 % (9.5) %

~~For the three months ended March 31, 2023,~~ ~~Selling, general and administrative expenses~~ ~~were $721 million, a 20% increase compared with the same period of 2022.~~2023. The increase is primarily due to ~~the~~ incremental ~~selling, general and administrative~~ expenses associated with ~~TCC~~the VCS Business since the date of acquisition. In addition, ~~higher compensation and other employee-related costs further contributed to~~ the ~~increase. The~~ current period also included ~~$12~~$89 million of ~~acquisition-related~~acquisition and divestiture-related costs compared with $6$12 million during the three months ended March 31, ~~2022~~.2023.

Research and development costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate. In addition, we continue to invest to prepare for future energy efficiency and refrigerant regulation changes and in digital controls technologies.

Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting. For the three months ended March 31, ~~2023,~~2024, Equity method investment net earnings were ~~$44~~$31 million, a ~~24%~~30% decrease compared with the same period of ~~2022.~~2023. The decrease was primarily driven by a $23 million charge associated with the ~~increase~~devaluation of U.S. Dollar denominated balances at an HVAC equity investment in ~~our ownership interest in TCC on August 1, 2022. As a result, TCC is no longer accounted for under the equity method of accounting since the date of acquisition. During the~~ ~~three months ended March 31, 2022, pre-acquisition equity earnings of TCC totaled $20 million~~.Egypt.

Other income (expense), net primarily includes the impact of gains and losses related to the sale of businesses or interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an

entity's functional currency and hedging-related activities. ~~During~~In connection with the acquisition of the VCS Business, we recognized a $86 million loss during the three months ended March 31, ~~2022,~~2024 on the mark-to-market valuation of our window forward contracts associated with the cash outflows of the Euro-denominated purchase price for the VCS Business. In addition, we ~~completed the Chubb Sale and~~ recognized a ~~net~~$46 million gain onassociated with our share of United Technologies Corporation's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the ~~sale of $1.1 billion.~~Internal Revenue Service ("IRS").

Non-Operating Income ~~(Expenses)~~(Expense), net

For the three months ended March 31, ~~2023~~2024, , No~~n-operating~~Non-operating income ~~(expenses)~~(expense), net was ~~$46~~$165 million, ~~an 6%~~a 259% increase compared with the same period of ~~2022.~~2023. The components were as follows:


			Three Months Ended March 31,
		Three Months Ended March 31,								Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Non-service pension (expense) benefit	Non-service pension (expense) benefit		$	—	$	(1)

Interest expense	Interest expense		$	(71)	$	(87)
Interest expense
Interest expense
Interest income	Interest income		25		39
Interest (expense) income, net	Interest (expense) income, net		$	(46)	$	(48)

Non-operating income (expenses), net			$	(46)	$	(49)
Non-operating income (expense), net
Non-operating income (expense), net
Non-operating income (expense), net

Non-operating income ~~(expenses)~~(expense), net includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations. Interest expense is affected by the amount of debt outstanding and the interest rates on that debt. For the three months ended March 31, ~~2023,~~2024, Interest expense was ~~$71~~$180 million, a ~~18% decrease~~154% increase compared with the same period of ~~2022. During~~2023. In connection with the ~~three months ended March 31, 2022,~~acquisition of the VCS Business, we ~~completed tender offers~~entered into several financing arrangements to ~~repurchase approximately $1.15 billion aggregate principal~~fund the cash portion of ~~our 2.242% Notes due 2025 and 2.493% Notes due 2027. Upon settlement, we wrote off $5 million of unamortized deferred financing costs in~~ ~~Interest expense~~ ~~and recognizeda net gain of $33 million in~~ ~~Interest income~~.the Euro-denominated purchase price.

Income Taxes

Three Months Ended March 31,
2023 2022
Effective tax rate 24.0 % 17.8 %


	Three Months Ended March 31,
	2024		2023
Effective tax rate	13.7	%	24.0	%

We account for income tax expense in accordance with 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 13.7% for the three months ended March 31, 2024, compared with 24.0% for the three months ended March 31, ~~2023 compared with 17.8% for the three months ended March 31, 2022.~~ 2023. The year-over-year ~~increase~~decrease was primarily driven by a ~~lower effective~~ tax ~~rate on the $1.1 billion Chubb gain compared with our U.S. statutory rate and~~benefit of ~~a favorable tax adjustment of $32~~$21 million associated with United Technologies Corporation's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the IRS, a net tax benefit of $19 million related to adjustments to basis differences in certain companies presented as held-for-sale and a net tax benefit of $16 million related to the re-organization and disentanglement of certain Fire & Security industrial businesses in advance of the planned divestitures. These amounts were partially offset by a tax charge of $15 million related to a reduction of utilizable foreign tax ~~credits generated and utilized in the prior year.~~credits.

SEGMENT REVIEW

We have three operating segments:

•The Fire & Security segment provides a wide range of residential, commercial and industrial technologies designed to help protect people and property.

We determine our segments based on how our Chief Executive Officer, who is the Chief Operating Decision Maker (the "CODM"), allocates resources, assesses performance and makes operational decisions. The CODM allocates resources and evaluates the financial performance of each of our segments based on Net sales and Operating profit. Adjustments to reconcile segment reporting to the consolidated results are included in Note 17 - Segment Financial Data.

Three Months Ended March 31, ~~2023~~2024 Compared with Three Months Ended March 31, ~~2022~~2023

Summary performance for each of our segments is as follows:
Net Sales Operating Profit Operating Profit Margin
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
(In millions) 2023 2022 2023 2022 2023 2022
HVAC $ 3,622 $ 2,970 $ 435 $ 470 12.0 % 15.8 %
Refrigeration 898 976 108 107 12.0 % 11.0 %
Fire & Security 869 818 93 1,218 10.7 % 148.9 %
Total segment $ 5,389 $ 4,764 $ 636 $ 1,795 11.8 % 37.7 %
Summary performance for each of our segments is as follows:


	Net Sales				Operating Profit				Operating Profit Margin
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
(In millions)	2024		2023		2024		2023		2024		2023
HVAC	$	4,541	$	3,622	$	429	$	435	9.4	%	12.0	%
Refrigeration	884		898		97		108		11.0	%	12.0	%
Fire & Security	887		869		153		93		17.2	%	10.7	%
Total segment	$	6,312	$	5,389	$	679	$	636	10.8	%	11.8	%

HVAC Segment

For the three months ended March 31, ~~2023,~~2024, Net sales in our HVAC segment were ~~$3.6~~$4.5 billion, a ~~22%~~25% increase compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Net Sales
Organic	62	%
Foreign currency translation	~~(2)~~(1)	%
Acquisitions and divestitures, net	1824	%


Total % change in Net sales	2225	%

The organic increase in Net sales of 6%2% was driven by continued strong results in the segment. ~~Increased sales~~Growth in ~~our Commercial HVAC business~~the Americas (up 14%) benefited from pricing improvements and ongoing customer demand in our end-markets. The business saw strong growth in all regions including Europe and Asia as current economic conditions and inflationary cost pressures moderated from the prior year. In addition, increased sales in our Global Comfort Solutions business (up 18%6%) were primarily driven by our Commercial and Light commercial businesses which benefited from ongoing customer demand and pricing improvements. ~~Lower sales in our North America residential and light commercial business (down 2%) were primarily driven~~Growth was partially offset by volume reductions in ~~North America~~our Residential business. EMEA (down 10%) was impacted by lower customer demand in residential ~~end-markets. These amounts were~~markets. The reduction was partially offset by strong ongoing customer demand and pricing improvements ~~and~~in commercial markets. Asia (flat) was impacted by lower demand in Japan, offset by improved ~~mix associated with regulatory changes effective as of the beginning of 2023.~~results in China.

On ~~August 1, 2022,~~January 2, 2024, we acquired the ~~Commercial HVAC business acquired~~VCS Business, a ~~majority ownership interest~~leading manufacturer of high efficiency heating and renewable energy systems in ~~TCC, a VRF and light commercial HVAC joint venture between Carrier and Toshiba Corporation.~~Europe. The results of ~~TCC~~the VCS Business have been included in our

Unaudited Condensed Consolidated Financial Statements since the date of acquisition. The transaction added ~~18%~~24% to Net sales during the three months ended March 31, ~~2023~~2024 and is included in Acquisitions and divestitures, net.

For the three months ended March 31, ~~2023,~~2024, Operating profit in our HVAC segment was ~~$435~~$429 million, a 7%1% decrease compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Operating Profit
Operational	~~(7)~~29	%
~~Foreign currency translation~~	~~(1)~~	%
Acquisitions and divestitures, net	83	%
Restructuring	1 (2)	%
Amortization of acquired intangibles	~~(7)~~(31)	%
~~Other~~	~~(1)~~	%
Total % change in Operating profit	~~(7)~~(1)	%

The operational profit ~~decrease~~increase of 7%29% was primarily attributable to ~~volume reductions~~ongoing customer demand and pricing improvements in certain end-markets compared with the prior year. In addition, favorable material and logistics costs drove productivity benefits in the segment. These benefits more than offset volume reductions in certain end-markets. Segment results were also impacted by lower earnings from equity method investments ~~also impacted operational profit due to~~which included a $23 million charge associated with the ~~increase~~devaluation of U.S. Dollar denominated balances at an HVAC equity investment in our ownership interest in TCC on August 1, 2022. As a result, TCC is no longer accounted for under the equity method of accounting since the date of acquisition. Pricing and productivity improvements more than offset higher costs for commodities and components used in our products as well as higher freight and logistics costs. I~~nflationary cost pressures have begun to moderate, but remain elevated and continue to impact our~~ ~~operating profit.~~Egypt.

Refrigeration Segment

For the three months ended March 31, ~~2023,~~2024, Net sales in our Refrigeration segment were ~~$898~~$884 million, a 8%2% decrease compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Net Sales
Organic	~~(5)~~(2)	%
Foreign currency translation	~~(3)~~—	%
~~Acquisitions and divestitures, net~~	—		%


Total % change in Net sales	~~(8)~~(2)	%

Organic Net salesdecreased 5%2% compared towith the prior year as ~~each of~~ the ~~segment's businesses~~segment experienced challenges in certain end-markets during the period. Results for Commercial refrigeration decreased (down ~~15%~~3%) compared with the prior year, primarily driven by lower volumes in Europe as economic conditions and inflationary cost pressures impacted end-market demand. In addition, ~~results~~Asia was impacted by reduced end-market demand in ~~Asia continued to be affected by ongoing COVID-19 impacts. However, these impacts were partially offset by pricing improvements.~~China. Transport refrigeration ~~sales increased (up 1%~~results decreased (down 3%) compared to the prior year as ~~pricing improvements and strong~~lower end-market demand in ~~the U.S. and Europe were~~North America more than offset improved results in Europe and Asia. In addition, the year-over-year decrease was partially offset by ~~continued weakness in~~strong container end-markets.

For the three months ended March 31, ~~2023,~~2024, Operating profit in our Refrigeration segment was ~~$108~~$97 million, a ~~1% increase~~10% decrease compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


			Operating Profit
Operational	12	~~(15)~~%

Acquisitions and divestitures, net	(1)	%
~~Foreign currency translation~~Restructuring			~~(3)~~3	%

~~Restructuring~~			~~(3)~~	%

Other			22 (24)	%
Total % change in Operating profit			1(10)	%

The ~~decrease~~increase in operational profit of ~~15%~~12% was primarily driven by ~~volume reductions in certain end-markets~~favorable productivity initiatives and price improvements compared with the prior year. In addition, volume growth in certain end-markets further benefited the ~~higher costs of commodities and components used in our products further impacted segment results.~~segment. These amounts were partially offset by ~~pricing improvements, favorable productivity initiatives and lower selling, general and administrative costs during the period. Inflationary~~volume reductions in certain end-markets. Inflationary cost pressures ~~have begun to moderate,~~are moderating but ~~remain elevated and~~ continue to impact our operating profit. Amounts reported in Other represent a $24 million gain on the sale of a business within Transport ~~refrigeration.~~refrigeration in the prior year.

Fire & Security Segment

For the three months ended March 31, ~~2023,~~2024, Net sales in our Fire & Security segment were ~~$869~~$887 million, a 6%2% increase compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Net Sales
Organic	97	%



~~Foreign currency translation~~KFI deconsolidation	~~(3)~~(5)	%



Total % change in Net sales	62	%

The organic increase in Net sales of 9%7% was primarily driven by ~~pricing improvements and~~ volume growth and price improvements compared with the prior year. ~~Sales grew~~Increased sales in ~~all three regions with strong commercial results in Europe~~our Commercial and ~~Asia as current economic conditions~~Residential fire business benefited from ongoing customer demand and ~~end-market demand improved. Growth~~price improvements in the Americas ~~was impacted by reduced residential end-market demand. Global industrial sales benefited segment results due to pricing improvements~~ and ~~strong demand. The segment continues to be impacted by ongoing supply chain constraints for certain components used~~Europe. Growth in our ~~products.~~Global Industrial business was driven by strong end-market demand and pricing improvements.

For the three months ended March 31, ~~2023,~~2024, Operating profit in our Fire & Security segment was ~~$93~~$153 million, a ~~92% decrease~~65% increase compared with the same period of ~~2022.~~2023. The components of the year-over-year change were as follows:


	Operating Profit
Operational	—75	%


Restructuring	~~(1)~~6	%
KFI deconsolidation	(14)	%
~~Chubb gain~~Other	~~(91)~~(2)	%
Total % change in Operating profit	~~(92)~~65	%

~~Operational~~The increase in operational profit of 75% was ~~flat~~primarily driven by volume growth and price improvements compared towith the prior year. In addition, favorable material and logistics costs drove productivity benefits during the period. The segment also benefited from lower inventory-related reserves compared with the prior year as ~~each of the segment's businesses~~supply chain challenges improved. In addition, lower depreciation and amortization, which was ~~impacted by the higher costs of commodities~~ceased on held-for-sale assets in accordance with ASC 360, Property, Plant and ~~components used in our products as well as higher freight and logistics costs.~~Equipment, further benefited operational profit. These amounts were partially offset by ~~pricing improvements, volume growth and ongoing productivity initiatives. Inflationary~~lower volumes in certain end-markets. Inflationary cost pressures ~~have moderated,~~are moderating but ~~remain elevated and~~ continue to impact our operating ~~profit. Amounts reported in Other represent the net gain on the Chubb Sale of $1.1 billion.~~profit.

LIQUIDITY AND FINANCIAL CONDITION

We assess liquidity in terms of our ability to generate adequate amounts of cash necessary to fund our current and future cash requirements to support our business and strategic initiatives. In doing so, we review and analyze our cash on hand, working capital, debt service requirements and capital expenditures. We rely on operating cash flows as our primary source of liquidity. In addition, we have access to other sources of capital to finance our strategic initiatives and fund growth.

As of March 31, ~~2023,~~2024, we had cash and cash equivalents of ~~$3.3~~$1.3 billion, of which approximately ~~37%~~96% was held by our foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds and the cost effectiveness with which we can access funds held by foreign subsidiaries. On occasion, we are required to maintain cash deposits in connection with contractual obligations related to acquisitions, divestitures or other legal obligations. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the amount of such restricted cash was approximately $7$4 million and ~~$39~~$2 million, respectively.

We maintain 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. In addition, we maintain our $2.0 billion revolving credit agreement with various banks (the "Revolving Credit Facility") that matures on April 3, 2025 which supports

our commercial paper borrowing program and cash requirements. A commitment fee of 0.125% is charged on unused commitments. Borrowings under the Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling. As of March 31, 2023, we had no borrowings outstanding under our commercial paper program and our Revolving Credit Facility.

We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our customers. This is accomplished through research and development activities with a focus on new product development and new technology innovation as well as sustaining activities with a focus on improving existing products and reducing production costs. We also pursue potential acquisitions to complement existing products and services to enhance our product portfolio. In addition, we routinely conduct discussions, evaluate targets and enter into agreements regarding possible acquisitions, divestitures, joint ventures and equity investments to manage our business portfolio.

We believe that our available cash and operating cash flows will be sufficient to meet our future operating cash needs. Our committed credit facilities and access to the debt and equity markets provide additional sources of short-term and long-term capital to fund current operations, debt maturities and future investment opportunities. Although we believe that the arrangements currently in place permit us to finance our operations on acceptable terms and conditions, our access to and the availability of financing on acceptable terms and conditions in the future will be impacted by many factors, including: (1) our credit ratings or absence of credit ratings, (2) the level of our existing indebtedness, (3) the restrictions under our debt agreements, (4) the liquidity of the overall capital markets and ~~(3)~~(5) the state of the economy. There can be no assurance that we will be able to obtain additional financing on terms favorable to us, if at all.

The following table contains several key measures of our financial condition and liquidity:


(In millions)	(In millions)	March 31, 2023			December 31, 2022			(In millions)	March 31, 2024		December 31, 2023
Cash and cash equivalents	Cash and cash equivalents	$	3,347		$	3,520
Total debt	Total debt	$	8,850		$	8,842
Total equity	Total equity	$	8,468		$	8,076

Net debt (total debt less cash and cash equivalents)	Net debt (total debt less cash and cash equivalents)	$	5,503		$	5,322
Net debt (total debt less cash and cash equivalents)
Net debt (total debt less cash and cash equivalents)
Total capitalization (total debt plus total equity)	Total capitalization (total debt plus total equity)	$	17,318		$	16,918
Net capitalization (total debt plus total equity less cash and cash equivalents)	Net capitalization (total debt plus total equity less cash and cash equivalents)	$	13,971		$	13,398
Total debt to total capitalization	Total debt to total capitalization	51		%	52		%	Total debt to total capitalization	59	%	61	%
Net debt to net capitalization	Net debt to net capitalization	39		%	40		%	Net debt to net capitalization	57	%	32	%

Acquisition of the VCS Business

On April 25, 2023, we announced that we entered into an Agreement to acquire the VCS Business. Under the terms of the Agreement, 20% of the purchase price was to be paid in Carrier common stock, issued directly to Viessmann and subject to certain lock-up provisions and 80% was to be paid in cash. Simultaneously, we 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 senior unsecured bridge term loan facility (the "Bridge Loan") to fund a portion of the Euro-denominated purchase price.

On May 19, 2023, we 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"). In addition, we 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"). Upon entering into the Delayed Draw Facility, the aggregate principal amount of the Bridge Loan was reduced by €2.3 billion. In November 2023, we issued $3.0 billion principal amount of USD-denominated notes ("USD Notes") and €2.35 billion principal amount of Euro-denominated notes ("Euro Notes"). Upon issuance, the aggregate principal amount of the Bridge Loan was reduced by €5.4 billion. On January 2, 2024, we entered into a 60-day senior unsecured term loan agreement consisting of a Euro-denominated tranche in an aggregate amount of €113 million and a USD-denominated tranche in an aggregate amount of $349 million (the “60-day Loan”). Upon entering into the 60-day Loan, we reduced the final portion of the Bridge Loan by €500 million and subsequently terminated the agreement.

On January 2, 2024, we completed the acquisition of the VCS Business for $14.2 billion. The cash portion of the purchase price was funded through cash on hand, proceeds from the USD Notes and the Euro Notes and borrowings under the Delayed Draw Facility and the 60-day Loan. In addition, proceeds from the Revolver became available upon closing.

Borrowings and Lines of Credit

We maintain a $2.0 billion unsecured, unsubordinated commercial paper program which we can use for general corporate purposes, including the funding of working capital and potential acquisitions. In addition, we maintain a $2.0 billion revolving credit agreement with various banks (the "Revolving Credit Facility") that matures in May 2028 which supports our commercial paper borrowing program and can be used for general corporate purposes. A ratings-based commitment fee is charged on unused commitments. As of March 31, 2024, we had no borrowings outstanding under our commercial paper program or our Revolving Credit Facility.

Our short-term obligations primarily consist of current maturities of long-term debt. Our long-term obligations primarily consist of long-term notes with maturity dates ranging between 2025 and ~~2050.~~2054. Interest payments related to long-term Notes are expected to approximate ~~$249~~$708 million per year, reflecting an approximate weighted-average interest rate of ~~2.85%~~4.22%. Any borrowings from the Revolving Credit Facility are subject to variable interest rates. See Note 5 – Borrowings and Lines of Credit in the Notes to the accompanying Unaudited Condensed Consolidated Financial Statements for additional information regarding the terms of our long-term debt obligations.

On March 15, 2022, we commenced tender offers to repurchase up to $1.15 billion aggregate principal of our 2.242% Notes due 2025 and 2.493% Notes due 2027. 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, we 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 and included $800 million of Notes due 2025 and $350 million of Notes due 2027. Upon settlement, we recognized a net gain of $33 million and wrote off $5 million of unamortized deferred financing costs during the three months ended March 31, 2022.

On July 15, 2022, we 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 bear interest at a rate equal to the Tokyo Term Risk Free Rate plus 0.75%. In addition, it is subject to customary covenants including a covenant to maintain a maximum consolidated leverage ratio. On July 25, 2022, we 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.~~

The Revolving Credit Facility, the Japanese Term Loan Facility and the indentures for the long-term notes contain affirmative and negative covenants customary for financings of these types, which among other things, limit our ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of March 31, 2023, we were compliant with the covenants under the agreements governing our outstanding indebtedness.

The following table presents our credit ratings and outlook as of March 31, ~~2023:~~2024:

Rating Agency

Long-term Rating (1)

Short-term Rating

Outlook (2) (3)

Standards & Poor's ("S&P")

BBB

Positive

Moody's Investors Service Inc. ("Moody's")

Baa3

Positive

Fitch Ratings ("Fitch")

~~BBB-~~BBB

Stable

(1) The long-term rating for S&P was affirmed on May 14, 2021, and for Moody's on March 30, 2022. Fitch's long-term rating was ~~affirmed on June 3, 2021.~~updated in December 2023.

(2) S&P revised its outlook to positive from stable ~~on May 20, 2022.~~in December 2023.

(3) Moody's Investors Service revised its outlook to positive from stable on February 28, 2023.

Portfolio Transformation

On April 25, 2023, we announced plans to exit our Fire & Security and Commercial Refrigeration businesses over the course of 2024. On December 7, 2023, we entered into a stock purchase agreement to sell our Fire & Security Access Solutions business to Honeywell International Inc. for an enterprise value of approximately $4.95 billion. On December 12, 2023, we entered into a stock purchase agreement to sell CCR to Haier Group Corporation for an enterprise value of approximately $775 million. On March 5, 2024, we entered into a stock purchase agreement to sell Industrial Fire to Sentinel Capital Partners for an enterprise value of approximately $1.425 billion. These transactions are expected to close in 2024.

Share Repurchase Program

We may repurchase our outstanding common stock from time to time subject to market conditions and at our 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. Since the initial authorization in February 2021, our Board of Directors authorized the repurchase of up to $4.1 billion of our outstanding common stock. As of December 31, ~~2022,~~2023, we repurchased ~~42.1~~43.5 million shares of common stock for an aggregate purchase price of ~~$1.9~~$2.0 billion, including shares repurchased under an accelerated share repurchase agreement. As a result, we had approximately ~~$2.2~~$2.1 billion remaining under the current authorization at December 31, ~~2022.~~

~~During~~2023. Upon announcement of the ~~three months ended March 31, 2023,~~acquisition of the VCS Business, we repurchased 1.4 million shares of common stock for an aggregate purchase price of $62 million. As a result, we have approximately $2.1 billion remaining under the current authorization at March 31, 2023.temporarily paused our share repurchase program in order to advance our capital allocation strategy.

Dividends

We paid dividends on common stock during the three months ended March 31, ~~2023,~~2024, totaling ~~$154~~$159 million. In April ~~2023,~~2024, the Board of Directors declared a dividend of ~~$0.185~~$0.19 per share of common stock payable on May ~~24, 2023~~22, 2024 to shareowners of record at the close of business on May ~~5, 2023.~~3, 2024.

Discussion of Cash Flows


			Three Months Ended March 31,
		Three Months Ended March 31,								Three Months Ended March 31,
(In millions)	(In millions)		2023		2022		(In millions)	2024	2023
Net cash flows provided by (used in):	Net cash flows provided by (used in):
Operating activities
Operating activities
Operating activities	Operating activities		$	120	$	(202)
Investing activities	Investing activities		(100)		2,820
Financing activities	Financing activities		(213)		(2,020)
Effect of foreign exchange rate changes on cash and cash equivalents	Effect of foreign exchange rate changes on cash and cash equivalents		20		(1)
Net increase (decrease) in cash and cash equivalents and restricted cash	Net increase (decrease) in cash and cash equivalents and restricted cash		$	(173)	$	597

Cash flows from operating activities primarily represent inflows and outflows associated with our operations. Primary activities include net income from operations adjusted for non-cash transactions, working capital changes and changes in other assets and liabilities. The year-over-year ~~increase~~decrease in net cash provided by operating activities was primarily driven by ~~a more moderate~~an increase in working capital balances compared with the prior period. Higher accounts receivable balances due to increased sales and lower account payables impacted working capital. Prior year working capital balances increased due to higher safety stock and supply chain constraints. ~~In addition, higher accounts payable balances more than offset higher accounts receivable balances in the current period.~~

Cash flows from investing activities primarily represent inflows and outflows associated with long-term assets. Primary activities include capital expenditures, acquisitions, divestitures and proceeds from the sale of fixed assets. During the three months ended March 31, 2024, net cash used in investing activities was $11.1 billion. The primary driver of the outflow related to the acquisition of the VCS Business, which totaled $10.8 billion, net of cash acquired. Additional investing outflows include $209 million related to settlement of derivatives and $104 million of capital expenditures. During the three months ended March 31, 2023, net cash used in investing activities was $100 million. The primary driver of the outflow related to $70 million of capital expenditures. In addition, we settled working capital and other transaction-related items associated with the acquisition of ~~TCC~~Toshiba Carrier Corporation and invested in several businesses. These amounts totaled $52 million, net of cash acquired and were partially offset by the proceeds from the sale of a business during the period. During the three months ended March 31, 2022, net cash provided by investing activities was $2.8 billion. The primary driver of the inflow related to the net proceeds from the Chubb Sale. This amount was partially offset by the acquisition of several businesses and minority-owned businesses, which totaled $9 million net of cash acquired and $56 million of capital expenditures.

Cash flows from financing activities primarily represent inflows and outflows associated with equity or borrowings. During the three months ended March 31, 2024, net cash provided by financing activities was $2.4 billion. The primary driver of the inflow related to the proceeds of borrowings on the Bridge Loan and Delayed Draw Facility which were used to fund the cash portion of the acquisition of the VCS Business. This amount was partially offset by the outflow related to the payment of $159 million in dividends to our common shareowners. During the three months ended March 31, 2023, net cash used in financing activities was $213 million. The primary driver of the outflow related to the payment of $154 million in dividends to our common shareowners. In addition, we paid $62 million to repurchase shares of our common stock. During the three months ended March 31, 2022, net cash used in financing activities was $2.0 billion. The primary driver of the outflow related to the settlement of our tender offers for $1.15 billion. In addition, we paid $129 million in dividends to our common shareowners and paid $734 million to repurchase shares of our common stock.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three months ended March 31, ~~2023.~~2024. For discussion of our exposure to market risk, refer to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Risk Management" in our ~~2022~~2023 Form 10-K.

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we carried out an evaluation under the supervision and with the participation of our management, including the Chairman and Chief Executive Officer ("CEO"), the Senior Vice President and Chief Financial Officer ("CFO") and the Vice President, Controller and Chief Accounting Officer ("~~Controller"~~CAO") of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, ~~2023.~~2024. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our CEO, CFO and ~~Controller~~CAO have concluded that, as of March 31, ~~2023,~~2024, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO, CFO and ~~Controller,~~CAO, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the three months ended March 31, ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This Form 10-Q and other materials Carrier has filed or will file with the SEC contain or incorporate by reference statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance or the Separation. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to, those described above under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, below under Part II, Item 1A. Risk Factors, and other risks and uncertainties listed from time to time in our filings with the SEC.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 19 – Commitments and Contingent Liabilities in the Notes to the accompanying Unaudited Condensed Consolidated Financial Statements for information regarding legal proceedings.

Except as otherwise noted previously, there have been no material developments in legal proceedings. For previously reported information about legal proceedings refer to "Business – Legal Proceedings" in our ~~2022~~2023 Form 10-K.

Item 1A. Risk Factors

~~Except as noted below, there~~There have been no material changes in the Company’s risk factors from those disclosed in "Risk Factors" in our ~~2022~~2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our purchases during the three months ended March 31, ~~2023~~2024 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.

Total Number of Shares Purchased
(in 000's)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of a Publicly Announced Program
(in 000's) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions)
2023
January 1 - January 31 459 $43.55 459 $2,171
February 1 - February 28 421 $45.10 421 $2,152
March 1 - March 31 506 $45.40 506 $2,129
Total 1,386 $44.70 1,386


	Total Number of Shares Purchased (in 000's)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of a Publicly Announced Program (in 000's)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
2024
January 1 - January 31	—	$	—	—	$	2,129
February 1 - February 29	—	$	—	—	$	2,129
March 1 - March 31	—	$	—	—	$	2,129
Total	—	$	—	—

(1) Excludes broker commissions.

We may purchase our outstanding common stock from time to time subject to market conditions and at our 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. ~~In July~~Since the initial authorization in February 2021, ~~our~~the Company's Board of Directors ~~approved a $1.75 billion increase to our existing $350 million share repurchase program authorizing~~authorized the repurchase of up ~~to $2.1~~$4.1 billion of ~~our~~the Company's outstanding common stock. ~~In October 2022, our Board~~

On January 2, 2024, the Company completed the acquisition of ~~Directors approved~~the VCS Business from Viessmann for total consideration of $14.2 billion. The purchase price consisted of (i) $11.2 billion in cash and (ii) 58,608,959 shares of the Company's common stock, which were issued to Viessmann in a ~~$2 billion increase~~transaction exempt from registration pursuant to ~~our existing $2.1 billion share repurchase program.~~Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 5. Other Information

~~Trade Compliance~~

~~Under~~During the three months ended March 31, 2024, no director or Section ~~13(r)~~16 officer of the ~~Exchange Act, the~~ Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is ~~required to disclose~~defined in ~~its periodic reports if it or any~~Item 408(a) of its affiliates knowingly conducted transactions or dealing with entities or individuals designated pursuant to certain executive orders issued by the U.S. government. The Company maintains a policy against dealings with sanctioned parties or countries. A Company subsidiary in the United Kingdom produces a product that is sold to marine engine builders. As part of a remediation safety notice campaign, the subsidiary became aware that certain of its products were installed on four ships now owned by various subsidiaries of the Islamic Republic of Iran Shipping Line. The original product sales were legal at the time of the sale. The Company sent the already created, standardized remediation safety notice to the current owner, as the provision ofRegulation S-K.

~~informational materials is an exempt transaction under the International Emergencies Powers Act. The Company did not provide any parts or services as part of this activity.~~

~~Departure of Executive Officer~~

~~On April 25, 2023, the Company announced that Christopher Nelson, President, HVAC, will depart from the Company in May.~~

3943

Item 6. Exhibits


Exhibit Number						Exhibit Description
10.1						Schedule of Terms for Performance Share Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (rev. ~~February 1, 2023)~~January 30 , 202 4 )*+
10.2						Schedule of Terms for Restricted Stock Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan ~~(February 1, 2023)~~(January 30 , 202 4 )*+
10.3						Schedule of Terms for Stock Appreciation Right Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan ~~(February 1, 2023)~~(January 30 , 202 4 )*+
10.4						Schedule of Terms for Performance Share Unit Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (rev. ~~February 1, 2023)~~January 30 , 202 4 )*+
10.5						Schedule of Terms for Restricted Stock Unit Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan ~~(February 1, 2023)~~(January 30 , 202 4 )*+
10.6						Schedule of Terms for Stock Appreciation Right Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan ~~(February 1, 2023)~~(January 30 , 202 4 )*+
10.7						Schedule of Terms for Performance Share Unit Awards (supplemental) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (Supplemental Retention Award January 30, 2024)*+
10.8						Schedule of Terms for Stock Appreciation Right Awards (supplemental) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (Supplemental Retention Award January 30, 2024)*+
10.9						Schedule of Terms for Performance Share Unit Awards (modified annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (rev. January 30, 2024)*+
10.10						Form of Award Agreement ~~for 2023 Performance Share Unit and Stock Appreciation Right Awards~~ granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan*+
~~10.8~~						~~Carrier Global Corporation Executive Annual Bonus Plan~~ ~~(amended and~~ ~~restated January 1, 2023)~~*+
15						Letter Re: Unaudited Interim Financial Information*
31.1						Rule 13a-14(a)/15d-14(a) Certification*
31.2						Rule 13a-14(a)/15d-14(a) Certification*
31.3						Rule 13a-14(a)/15d-14(a) Certification*
32						Section 1350 Certifications*
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* (File name: carr-20220331.xml)
101.SCH						XBRL Taxonomy Extension Schema Document.* (File name: carr-20220331.xsd)
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.* (File name: carr-20220331_cal.xml)
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.* (File name: carr-20220331_def.xml)
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.* (File name: carr-20220331_lab.xml)
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.* (File name: carr-20220331_pre.xml)
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101

Notes to Exhibits List:

* Filed herewith.

+ Exhibit is a management contract or compensatory plan or arrangement.

** Certain exhibits and schedules to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

†Certain portions of this exhibit have been omitted in accordance with Item 601(b)(2)(ii) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, (ii) Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, (iii) Condensed Consolidated Balance Sheet as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, (iv) Condensed Consolidated Statement of Cash Flows for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, (v) Condensed Consolidated Statement of Changes in Equity for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 and (vi) Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CARRIER GLOBAL CORPORATION (Registrant)

Dated:	April ~~26, 2023~~25, 2024	by:	/s/PATRICK GORIS
			Patrick Goris
			Senior Vice President and Chief Financial Officer

			(on behalf of the Registrant and as the Registrant's Principal Financial Officer)

Dated:	April ~~26, 2023~~25, 2024	by:	/s/KYLE CROCKETT
			Kyle Crockett
			Vice President, Controller and Chief Accounting Officer

			(on behalf of the Registrant and as the Registrant's Principal Accounting Officer)

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