AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Long-term service agreements and integrated lifecycle contracts support incumbent attachment. The magnitude of switching friction and superiority over competing service providers remain unquantified.
durability · 2/4 · Five consecutive years of double-digit aftermarket growth and an existing long-term agreement base support persistence. Undisclosed renewals and contract terms limit conclusions about future durability.
customer dependency · 2/4 · Service agreements, connected equipment and installation-to-maintenance contracts embed Carrier in customer operations. Dependence on Carrier specifically, rather than on the equipment and service category, is not demonstrated.
erosion resilience · 2/4 · Aftermarket growth and successful combined 2025 tariff mitigation show resilience, balanced against realized 2026 cost and mix pressure. Significant competition and regulatory obsolescence are possible erosion channels, not demonstrated customer losses.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · Reported pricing improvements in 2024 and first-quarter 2026 establish positive realized outcomes. Promotional reimbursements and incomplete protection against 2026 input costs indicate mixed power; combined tariff mitigation cannot be attributed solely to pricing.
retention · 3/4 · Approximately 110,000 chillers under long-term agreements and five consecutive years of double-digit aftermarket growth strongly support repeat demand. This assessment uses contractual attachment and indirect operating evidence, not a fabricated renewal rate or proof that price increases leave retention unchanged.
margin resilience · 1/4 · Combined measures mitigated 2025 tariffs, but second-quarter 2026 gross margin fell from 28.9% to 27.2% amid higher input costs and unfavorable mix; first-half contraction reached 300 basis points. Realized protection is fragile, although margin changes do not isolate pricing effectiveness.
contractual freedom · — · Observed pricing actions and promotional programs demonstrate commercial discretion, but do not establish the ability to reset existing contract prices or terms. Escalation clauses, renegotiation rights and contractual restrictions are absent.
Predictability87
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 4.30
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.63
Financial strength27
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 34.59
- netDebtEbitGrade
- 5.36
- interestCoverageGrade
- 34.02
- currentRatioGrade
- 35.96
- Debt / FCF (x)
- 5.58
- Net debt / operating income (x)
- 4.73
- Interest coverage (x)
- 4.74
- Current ratio (x)
- 1.20
Capital allocation74
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 13.71
- 3-year average dilution (%)
- 0.48
- 3-year average SBC / revenue (%)
- 0.38
- cashConversionGrade
- 50.46
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Debt repayment and improved first-half continuing operating cash generation support discipline. In first-half 2026, $953 million of continuing operating cash less $211 million of capital expenditure was below $745 million of repurchases plus $400 million of common dividends, alongside increased short-term borrowing. Riello's impairment further tempers the record; buyback value creation is unestablished.
incentive alignment · 3/4 · Actual 2025 annual incentives followed the 39% Company Performance Factor without an upward individual adjustment to offset missed financial targets. Existing multiyear equity, relative-TSR and clawback arrangements reinforce alignment. Detailed ownership and target calibration are missing, preventing an exceptional assessment.
execution · 2/4 · The aftermarket growth record, reported achievement of VCS synergy targets and combined tariff mitigation demonstrate accomplishments. Below-target 2025 financial performance, 2026 margin deterioration and the Riello impairment make execution mixed. Assessment combines actual operating evidence with explicitly issuer-reported achievements.
governance · 3/4 · Eight independent directors out of ten, substantive lead-independent-director responsibilities, related-person transaction review and demonstrated compensation restraint support strong governance practices. The combined chairman-CEO role and limited evidence about oversight effectiveness constrain the assessment.
Evidence
▪Ended 2025 with approximately 110,000 chillers on long-term service agreements.
2025 business highlights / long-term chiller service agreements · Filed 03/03/2026
▪Matured digital offerings and now have more than 70,000 chillers and over 220,000 transport refrigeration units connected.
2025 business highlights / connected equipment · Filed 03/03/2026
▪Grew aftermarket1 sales double digits, marking the fifth year in a row of double-digit growth.
2025 performance highlights / five-year aftermarket growth record · Filed 03/03/2026
We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.
Business overview / installation, integration and services · Filed 28/07/2026
Some of the Company's contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of a product life-cycle such as production, installation, maintenance and support.
Revenue recognition / contracts spanning equipment lifecycle phases · Filed 05/02/2026
Other Matters Relating to Our Business as a Whole Competitive Conditions Each of our businesses is subject to significant competition from a number of companies throughout the world.
Competitive conditions / significant worldwide competition · Filed 05/02/2026
The most significant competitive factors we face are technology differentiation, product performance, service, delivery schedule and price.
Competitive conditions / technology, service and price · Filed 05/02/2026
In some instances, these requirements may render our existing technology, particularly some of our HVAC and refrigeration products, non-compliant or obsolete and we may be required to make increased capital expenditures to meet new regulations and standards, changing interpretations and stricter enforcement of current laws and regulations, or divergent requirements across jurisdictions in which we operate.
Risk factors / regulatory obsolescence and investment requirements · Filed 05/02/2026
The main driver of the increase related to ongoing customer demand, pricing improvements and our continued focus on productivity initiatives.
2024 MD&A / realized pricing improvements and productivity · Filed 11/02/2025
These amounts were partially offset by higher volumes in certain end-markets, pricing improvements and our continued focus on productivity initiatives.
First-quarter 2026 gross margin / pricing improvements as a partial offset · Filed 30/04/2026
Through a combination of supply‑chain adjustments, productivity initiatives and pricing actions, we fully mitigated the 2025 impact of tariffs implemented in 2025.
Business overview / reported combined mitigation of 2025 tariffs · Filed 28/07/2026
The components were as follows: Three Months Ended June 30, (In millions) 2026 2025 Net sales $ 6,351 $ 6,113 Cost of products and services sold (4,623) (4,344) Gross margin $ 1,728 $ 1,769 Percentage of net sales 27.2 % 28.9 % Gross margin decreased by $41 million compared with the three months ended June 30, 2025, primarily due to higher input costs, including the impact of tariffs, and unfavorable business mix.
Second-quarter 2026 gross margin / higher input costs, tariffs and unfavorable mix · Filed 28/07/2026
As a result, gross margin as a percentage of Net sales decreased by 300 basis points compared with the same period of 2025.
First-half 2026 gross margin / 300-basis-point contraction · Filed 28/07/2026
The principal incentive programs provide reimbursements to distributors for offering promotional pricing for products.
Revenue recognition / distributor promotional pricing reimbursements · Filed 05/02/2026
6 Table of Contents CARRIER GLOBAL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six Months Ended June 30, (In millions) 2026 2025 Operating Activities Net earnings (loss) $ 806 $ 1,070 Discontinued operations, net of tax — 17 Adjustments for non-cash items, net: Depreciation and amortization 629 620 Deferred income tax provision (242) (158) Stock-based compensation costs 33 44 Equity method investment net earnings (89) (122) (Gain) loss on sale of investments and impairments, net 37 (17) Changes in operating assets and liabilities Accounts receivable, net (651) (702) Inventories, net (335) (412) Accounts payable and accrued liabilities 631 378 Distributions from equity method investments 51 81 Other operating activities, net 83 (47) Net cash flows provided by (used in) continuing operating activities 953 752 Net cash flows provided by (used in) discontinued operating activities 53 380 Net cash flows provided by (used in) operating activities 1,006 1,132 Investing Activities Capital expenditures (211) (144) Investment in businesses, net of cash acquired (54) (61) Dispositions of businesses 15 8 Settlement of derivative contracts, net 6 87 Other investing activities, net 9 (3) Net cash flows provided by (used in) continuing investing activities (235) (113) Net cash flows provided by (used in) discontinued investing activities — 35 Net cash flows provided by (used in) investing activities (235) (78) Financing Activities Increase (decrease) in short-term borrowings, net 361 (57) Issuance of long-term debt 39 15 Repayment of long-term debt (57) (1,208) Repurchases of common stock (745) (1,628) Dividends paid on common stock (400) (390) Dividends paid to non-controlling interest (65) (9) Other financing activities, net (34) (17) Net cash flows provided by (used in) continuing financing activities (901) (3,294) Net cash flows provided by (used in) discontinued financing activities — — Net cash flows provided by (used in) financing activities (901) (3,294) Effect of foreign exchange rate changes on cash and cash equivalents (10) 68 Net increase (decrease) in cash and cash equivalents and restricted cash, including cash classified in current assets held for sale (140) (2,172) Less: Change in cash balances classified as assets held for sale 70 — Net increase (decrease) in cash and cash equivalents and restricted cash (210) (2,172) Cash, cash equivalents and restricted cash, beginning of period 1,557 3,972 Cash, cash equivalents and restricted cash, end of period 1,347 1,800 Less: restricted cash 3 3 Cash and cash equivalents, end of period $ 1,344 $ 1,797 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
First-half 2026 cash flow statement / operating cash, investment, distributions and borrowing · Filed 28/07/2026
▪Paid down $1.2 billion in long-term debt.
2025 capital deployment / long-term debt repayment · Filed 03/03/2026
During the three months ended June 30, 2026, our Climate Solutions Europe segment recorded a $46 million impairment on its Riello business.
Second-quarter 2026 operating expenses / Riello impairment · Filed 28/07/2026
▪Delivered on our Viessmann Climate Solutions revenue and cost synergy targets.
2025 performance highlights / reported achievement of VCS synergy targets · Filed 03/03/2026
For 2025, given that company financial performance fell below established targets, the Compensation Committee determined that annual incentive payouts should reflect company performance without any increase from the Individual Performance Factor.
Compensation discussion / below-target 2025 financial performance · Filed 03/03/2026
As a result, annual incentive payouts were directly aligned with the 39% Company Performance Factor and were not adjusted to mitigate the impact of below-target financial performance.
Compensation discussion / actual annual incentive payout treatment · Filed 03/03/2026
What We Do What We Do Not Do Use an independent executive compensation consultant to advise the Committee Annually review and update the composition of our Compensation Peer Group, as appropriate Emphasize long-term, performance-based compensation and meaningful share ownership guidelines to align executive and shareowner interests Align a portion of PSU payouts with share price performance through a relative Total Shareholder Return “Relative TSR” metric Design transparent, formulaic incentive plans to promote short- and long-term business success Have “double-trigger” provisions for severance payable in the event of a change in control Have a stand-alone Clawback Policy applicable to Section 16 officers in accordance with the New York Stock Exchange listing requirements Have additional clawback provisions in both the Annual and Long- Term Incentive plans to recover cash and equity incentive payments from executives for misconduct and other circumstances Maintain a three-year vesting schedule for annual equity awards Perform an annual compensation risk assessment to ensure program does not encourage excessive risk-taking Provide excise tax gross-ups on severance/ change-in-control payments Permit repricing of stock options or other equity-based awards without shareowner approval Pay dividends on SARs or PSUs during performance period Permit non-employee directors, executives or other employees to engage in short sales or enter into pledging, hedging, puts, calls or other “derivative” transactions with respect to company securities Provide excessive perquisites Provide “single-trigger” benefits under change-in-control agreements 2026 Proxy Statement Proposal 2: NEO Compensation 28 2025 Say-on-Pay Vote and Shareowner Engagement At our 2025 Annual Meeting of Shareowners, approximately 85% of the votes cast were in favor of our Say‑on‑Pay proposal.
Compensation governance / existing incentive safeguards and 2025 say-on-pay result · Filed 03/03/2026
2026 Proxy Statement 4 Proposal 1: Election of Directors Board Nominee Highlights TENURE AGE INDEPENDENCE 4.9 years average tenure Our 10-member Board of Directors includes our Chairman & Chief Executive Officer, one other non-independent director and eight independent directors.
Board composition / eight independent directors and combined chairman-CEO role · Filed 03/03/2026
The Lead Independent Director’s responsibilities include the following and essentially mirror a non-executive Chairman’s responsibilities: ▪May call and preside over private sessions of the independent directors ▪May call special meetings of the Board and preside over such meetings when the Chairman is not present ▪Serves as liaison between the non-employee directors and the Chairman ▪Engages with significant constituencies, as requested ▪Works with the Chairman to plan and set the agenda for Board meetings ▪Oversees the performance evaluation and compensation of the CEO ▪Facilitates succession planning and management development ▪Facilitates the Board’s annual self-evaluation process with the Chair of the Governance Committee ▪Authorizes the retention of outside advisors and consultants who report to the Board on board-wide issues The Board believes that a Lead Independent Director with well-defined responsibilities enhances the effectiveness of the independent directors, improves risk management and oversight and provides a channel for independent directors to candidly raise issues or concerns for the Board’s consideration.
Corporate governance / lead independent director responsibilities · Filed 03/03/2026
The Related Person Transactions Policy requires review, approval or ratification of transactions in which Carrier is a participant and in which a Carrier director, executive officer, a beneficial owner of more than 5% of Carrier’s outstanding shares, or an immediate family member of any of the foregoing persons has a direct or indirect material interest.
Related-person transactions / review and approval policy · Filed 03/03/2026
To maximize our buying effectiveness and leverage our scale, we have a central strategic sourcing group that consolidates purchases of certain materials and components across our business segments.
Raw materials and supplies / centralized sourcing · Filed 05/02/2026
Brand reputation, service to customers and quality are also important competitive factors for our products and services.
Competitive conditions / importance of brand, service and quality · Filed 05/02/2026
