10-Q · July 28, 2026
Carrier delivered Q2 revenue of $6.351 billion, up 4% year over year and 3% organically, while GAAP EPS was $0.60. Profitability weakened year over year: gross margin fell to 27.2% from 28.9%, operating margin declined…
Earnings analysis · 10-Q
CARR earnings analysis
Filed October 29, 2026 · Our reading of the company's report
The latest report
Carrier delivered strong third-quarter operating execution, with revenue up 12%, gross margin up 90 basis points and adjusted operating profit up 33% year over year. Americas was the primary growth engine, while Europe…
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Carrier delivered strong third-quarter operating execution, with revenue up 12%, gross margin up 90 basis points and adjusted operating profit up 33% year over year. Americas was the primary growth engine, while Europe improved sequentially but remains structurally challenged and triggered a $3.1B goodwill impairment, resulting in reported EPS of $(3.16). Operating cash flow improved materially to $1.705B for the first nine months, but cash declined, near-term debt maturities increased and working capital absorbed cash. Overall, the filing shows improving underlying operations offset by significant valuation, regional-demand, liquidity and legal risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-3.16
What stood out
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Revenue and gross margin improved
Third-quarter revenue was $6.263B, up 12% from $5.579B a year earlier and up 1.4% from $6.35B in Q2 2026. Gross margin increased to 26.9% from 26.0% year over year, a 90-basis-point improvement.
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Underlying operating profit strengthened
Adjusted operating profit rose to $1.091B from $823M, up 33%, while reported operating profit was $(2.273)B because of the $3.1B goodwill impairment charge. Segment operating profit increased to $1.133B from $865M.
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Americas delivered strongest growth
Climate Solutions Americas led growth with revenue of $3.354B, up 24%, and segment operating profit of $745M, up 40%; its margin expanded to 22.2% from 19.7%.
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Operating cash flow increased
Nine-month operating cash flow from continuing operations increased to $1.705B from $1.076B. Capital expenditures were $350M, compared with $261M a year earlier, implying calculated continuing-operations cash flow after capex of $1.355B, although the filing does not label this metric free cash flow.
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Tariff refunds supported margins
Management recognized a $133M benefit from IEEPA tariff refunds, primarily as a reduction to cost of products sold. It also cited productivity initiatives, pricing and higher volumes as contributors to third-quarter gross-margin improvement.
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Portfolio proceeds support capital allocation
The company completed the Riello sale for $438M of cash proceeds on July 1, 2026, and expects to use net proceeds for organic and inorganic investment, capital returns and general corporate purposes.
What to watch
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Material goodwill and valuation risk
The $3.1B Climate Solutions Europe goodwill impairment drove reported third-quarter EPS to $(3.16) versus $0.50 a year earlier. Management said the Europe reporting unit’s carrying value exceeded estimated fair value by approximately 23%; a 50-basis-point increase in the discount rate would reduce estimated fair value by approximately $630M, and a 1% lower long-term growth rate would reduce it by approximately $750M.
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Europe demand remains challenged
Climate Solutions Europe’s nine-month segment operating margin was 8.9%, only slightly above 8.7% a year earlier, despite revenue growth of 6%; management cited mixed demand, unfavorable mix, higher SG&A and warranty-related expenses. The impairment was linked to weaker demand, government policies and subsidies, a slower boiler-to-heat-pump transition and higher interest rates.
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Working capital requirements increased
Working capital absorbed cash as accounts receivable increased to $3.499B from $2.639B and inventories rose to $2.842B from $2.483B. Contract liabilities also increased to $1.118B from $894M, while accounts payable and accrued liabilities rose to $7.424B from $6.476B.
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Liquidity and near-term maturities
Cash and cash equivalents declined to $1.354B from $1.555B at December 31, 2025, while current debt rose to $1.482B from $468M, including $1.260B of current long-term debt. Total debt was $11.474B and net debt was $10.120B at September 30, 2026.
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Transportation and China weakness
Transportation revenue declined 3% to $726M, with global truck and trailer volume down 6%; nine-month Asia Pacific, Middle East & Africa profit declined 17% to $292M, with China sales down 10%. Management also cited unfavorable mix, lower volumes and higher input costs.
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Litigation and guarantee exposure
The company faces continuing legal and guarantee exposure: more than 18,000 AFFF lawsuits remained outstanding, recorded AFFF liabilities totaled $570M, and Noresco-related guarantees had a maximum potential future payment amount of approximately $1.0B.
Management's outlook
The 10-Q does not provide quantitative revenue or EPS guidance. Management states that cash balances, operating cash flow and available borrowing capacity are expected to fund the planned Fort Worth investment and other liquidity needs; the quantitative full-year outlook was provided separately in the October 29, 2026 earnings release.
Earlier filings 2
10-Q · April 30, 2026
Carrier Global Corporation reported Q1 2026 net sales of $5.34 billion, a slight increase from $5.22 billion in Q1 2025 but missed analyst EPS estimates of $0.51, reporting only $0.28 instead. The company faced a sharp…
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