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. 3/6 · 23/10/2026
Moat—
Awaiting a sourced assessment under the current scoring policy and financial basis.
Pricing power—
Awaiting a sourced assessment under the current scoring policy and financial basis.
Predictability100
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 (%)
- 100.00
- Revenue growth volatility (pp)
- 2.15
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.35
Financial strength79
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
- 90.84
- netDebtEbitGrade
- 85.62
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 40.06
- Debt / FCF (x)
- 1.64
- Net debt / operating income (x)
- 0.72
- Interest coverage (x)
- 17.50
- Current ratio (x)
- 1.25
Capital allocation100
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 (%)
- 32.32
- 3-year average dilution (%)
- -1.39
- 3-year average SBC / revenue (%)
- 0.40
- cashConversionGrade
- 100.00
Management—
Awaiting a sourced assessment under the current scoring policy and financial basis.
Evidence
In our opinion, engineering, production skills and experience are more responsible for our market position than our intellectual property rights.
Business / Patents and Licenses / engineering experience assessment · Filed 08/02/2024
Since 1995, the Company has recognized an immaterial amount in adjustments to the overall transaction price of energy savings contracts as a result of these performance guarantees.
Revenue note / historical energy-savings guarantee adjustments · Filed 05/02/2026
As of December 31, 2025, the Company has outstanding performance guarantees of approximately $1 billion related to completed energy savings contracts that extend from 2026-2049.
Revenue note / outstanding performance guarantees and duration · Filed 05/02/2026
FINANCIAL PERFORMANCE HIGHLIGHTS Annual Revenue Adjusted EBITDA(a) Free Cash Flow(a) $21.3B $4.3B $2.9B Increase of 7% from 2024 Increase of 11% from 2024 Increase of 3.5% from 2024 The three core financial metrics laid out above are further modified (by up to +/-15%) based on our progress towards achieving our 2030 Sustainability Commitments as further described in the Annual Incentive Matrix ("AIM") Program section on page 46 3-Year Adjusted Cash Flow Return on Invested Capital (CROIC) (2023–2025)(a) 3-Year Total Shareholder Return (TSR) (2023-2025)(a) 36.1% 135.33% Ranks at the 83rd percentile of the companies in the S&P 500 Industrials Index Ranks at the 88th percentile of the companies in the S&P 500 Industrials Index SUSTAINABILITY PERFORMANCE HIGHLIGHTS Gigaton Challenge Leading by Example Opportunity for All •Reduced 331 million mtCO2e* from customers’ carbon footprints as part of our Gigaton Challenge •Launched 110 new products and services •Filed over 135 patents for new innovation •Invested $348M in sustainability-driven research and development** * compared to a 2019 baseline ** as reported in accordance with U.S.
Compensation Discussion and Analysis / reported innovation and performance achievements · Filed 23/04/2026
Although in aggregate the Company's intellectual property is important to its operations, the Company does not consider any single patent, trademark, copyright, trade secret, proprietary technology, technical data, business process or any other confidential information (or any related group of any such items) to be of material importance to any segment or to the business as a whole.
Business / Patents and Licenses / materiality limitations · Filed 05/02/2026
We compete worldwide with a number of other manufacturers and distributors that produce and sell similar products.
Risk Factors / manufacturers and distributors selling similar products · Filed 05/02/2026
The accelerating pace of technological change increases the risk of shortened product lifecycles.
Risk Factors / technological change and product lifecycles · Filed 05/02/2026
Gross profit margin for the six months ended June 30, 2026 decreased 160 basis points to 35.2% compared to 36.8% for the same period of 2025 primarily due to inflation and investments, partially offset by productivity and price realization.
MD&A / H1 2026 gross profit margin · Filed 30/07/2026
As an industry leader with an extensive global install base, our growth strategy includes expanding recurring revenue through services and rental options.
Business / installed base and recurring-revenue strategy · Filed 05/02/2026
U.S. sales are made through branch sales offices, distributors and dealers across the country.
Business / U.S. distribution channels · Filed 05/02/2026
Non-U.S. sales are made through numerous subsidiary sales and service companies with a supporting chain of distributors throughout the world.
Business / international sales and service distribution · Filed 05/02/2026
An order placed with and accepted by Company cannot be delayed, canceled, suspended, or extended except with Company's written consent and upon written terms accepted by Company that will reimburse Company for and indemnify Company against loss and provide Company with a reasonable profit for its materials, time, labor, services, use of facilities and otherwise.
Commercial equipment terms / Section 16 / cancellation consent and compensation · Retrieved 19/10/2026
Equipment manufactured by Company that includes required start-up and sold in North America will not be warranted by Company unless Company performs the Equipment startup .
Commercial equipment terms / Section 8 / required Company startup and warranty · Retrieved 19/10/2026
However, orders for specialized equipment or specific customer applications are submitted with extended lead times and are subject to revision and deferral, and to a lesser extent cancellation or termination.
Business / backlog / revision, deferral and cancellation · Filed 05/02/2026
The components of the period change were as follows: Volume 3.6 % Pricing 3.8 % Organic revenue (1) 7.4 % Acquisitions 0.7 % Currency translation (0.1) % Total 8.0 % The increase in organic revenue was primarily driven by realization of price increases and higher volumes led by strong demand within our Commercial HVAC business, which was partially offset by weaker volume in our Residential business.
MD&A / 2025 Americas price and volume bridge · Filed 05/02/2026
The components of the period change were as follows: Volume 3.7 % Pricing (0.3) % Organic revenue (1) 3.4 % Acquisitions 2.2 % Currency translation 4.0 % Total 9.6 % The increase in organic revenue was driven by higher volumes within our Commercial HVAC and Transport refrigeration businesses.
MD&A / 2025 EMEA price and volume bridge · Filed 05/02/2026
Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025 - Consolidated Results Dollar amounts in millions 2026 2025 Period Change 2026 % of revenues 2025 % of revenues Net revenues $ 6,353.5 $ 5,746.4 $ 607.1 Cost of goods sold (4,093.8) (3,585.8) (508.0) 64.4 % 62.4 % Gross profit 2,259.7 2,160.6 99.1 35.6 % 37.6 % Selling and administrative expenses (1,035.4) (996.4) (39.0) 16.3 % 17.3 % Operating income 1,224.3 1,164.2 60.1 19.3 % 20.3 % Interest expense (53.1) (57.4) 4.3 Other income/(expense), net (8.1) (14.1) 6.0 Earnings before income taxes 1,163.1 1,092.7 70.4 Provision for income taxes (218.2) (216.7) (1.5) Earnings from continuing operations 944.9 876.0 68.9 Discontinued operations, net of tax (9.6) 2.9 (12.5) Net earnings $ 935.3 $ 878.9 $ 56.4 27 Table of Contents Net Revenues Net revenues for the three months ended June 30, 2026 increased by 10.6%, or $607.1 million, compared with the same period in 2025, which resulted from the following: Volume 8.7 % Pricing 0.3 % Organic revenue (1) 9.0 % Acquisitions 1.2 % Currency translation 0.4 % Total 10.6 % (1) Represents a non-GAAP measure.
MD&A / Q2 2026 consolidated results and price-volume bridge · Filed 30/07/2026
The components of the period change were as follows: Volume 10.2 % Pricing (0.2) % Organic revenue (1) 10.0 % Currency translation 1.1 % Total 11.1 % The increase in organic revenue was primarily driven by higher volumes.
MD&A / Q2 2026 Asia Pacific price and volume bridge · Filed 30/07/2026
Gross Profit Margin
Gross profit margin for the year ended December 31, 2024 increased 260 basis points to 35.7% compared to 33.1% for the same period of 2023 primarily due to gross productivity and price realization, partially offset by inflation.
MD&A / 2024 gross margin and price realization · Filed 06/02/2025
Gross Profit Margin
Gross profit margin for the year ended December 31, 2023 increased 210 basis points to 33.1% compared to 31.0% for the same period of 2022 primarily due to price realization and gross productivity, partially offset by inflation and business reinvestment.
MD&A / 2023 gross margin and price realization · Filed 08/02/2024
Gross Profit Margin
Gross profit margin for the year ended December 31, 2025 increased 50 basis points to 36.2% compared to 35.7% for the same period of 2024 primarily due to gross productivity and price realization, partially offset by inflation.
MD&A / 2025 gross margin and price realization · Filed 05/02/2026
Organic bookings* up 37 percent, led by Americas Commercial HVAC, up 50 percent
Q2 2026 earnings release / organic bookings growth · Filed 30/07/2026
Record backlog of $12.1 billion, up 70 percent; Americas Commercial HVAC up 90 percent
Q2 2026 earnings release / backlog · Filed 30/07/2026
Prices for Equipment are subject to change at any time prior to shipment to reflect any cost increases related to the manufacture, supply, and shipping of Equipment.
Commercial equipment terms / Section 4 / pre-shipment cost escalation · Retrieved 19/10/2026
Company shall be entitled to equitable adjustments in the contract price to reflect any cost increases as set forth above and will provide notice to Customer prior to the date for which the increased price is to be in effect for the applicable customer contract.
Commercial equipment terms / Section 4 / equitable price adjustments and notice · Retrieved 19/10/2026
In no event will prices be decreased.
Commercial equipment terms / Section 4 / prohibition on price decreases · Retrieved 19/10/2026
These performance guarantees represent variable consideration and are estimated as part of the overall transaction price.
Revenue note / guarantees as variable consideration · Filed 05/02/2026
A reconciliation of Net cash provided by (used in) continuing operating activities to free cash flow the years ended December 31 is as follows: In millions 2025 2024 Net cash provided by (used in) continuing operating activities $ 3,220.4 $ 3,177.7 Capital expenditures (383.0) (370.6) Cash payments for restructuring 22.5 8.6 Legacy legal liability 0.6 2.7 M&A transaction costs 6.2 1.7 Proceeds from sale of corporate asset 20.6 — Adjustment for Outperformance Incentive Program(2) — (31.1) Free cash flow(1) $ 2,887.3 $ 2,789.0 (1) Represents a non-GAAP measure.
MD&A / 2025 and 2024 operating cash flow and capital expenditures · Filed 05/02/2026
Stock settled share-based compensation
47.4
Other non-cash items, net
(15.5)
(91.2)
Changes in assets and liabilities, net of the effects of acquisitions
(613.0)
Net cash provided by (used in) continuing operating activities
1,734.6
1,043.5
Net cash provided by (used in) discontinued operating activities
(20.7)
(11.9)
Net cash provided by (used in) operating activities
1,713.9
1,031.6
Cash flows from investing activities:
Capital expenditures
(156.1)
(208.8)
Acquisitions and equity method investments, net of cash acquired
(742.0)
(277.2)
Other investing activities, net
(4.2)
Net cash provided by (used in) investing activities
(902.3)
(486.0)
Cash flows from financing activities:
Cash flow statement / H1 2026 operating cash generation and investing · Filed 30/07/2026
Short-term borrowings (payments), net
398.4
Payments of long-term debt
(400.0)
(157.3)
Net proceeds from (payments of) debt
(1.6)
(157.3)
Debt issuance costs
(2.2)
(2.0)
Dividends paid to ordinary shareholders
(463.2)
(420.0)
Dividends paid to noncontrolling interests
(14.2)
(18.1)
Proceeds (payments) from shares issued under incentive plans, net
(5.6)
(1.9)
Repurchase of ordinary shares
(756.4)
(879.6)
Other financing activities, net
(2.0)
Net cash provided by (used in) financing activities
(1,243.2)
(1,480.9)
Effect of exchange rate changes on cash and cash equivalents
Cash flow statement / H1 2026 financing and shareholder distributions · Filed 30/07/2026
The year-over-year increase in net cash from continuing operating activities was primarily due to lower working capital and timing of customer down payments.
MD&A / working-capital and customer-down-payment effects on cash flow · Filed 30/07/2026
Segment Adjusted EBITDA margin for the three months ended June 30, 2026 decreased by 360 basis points to 14.7% compared to 18.3% for the same period of 2025, primarily due to integration costs related to acquisitions, inflation and lower volumes.
MD&A / Q2 2026 EMEA integration costs, volumes and margin · Filed 30/07/2026
PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) to the S&P 500 Industrials Index over a 3-year performance period, and 50% upon a market condition, measured by the Company's relative total shareholder return (TSR) as compared to the TSR of the S&P 500 Industrials Index over a 3-year performance period.
Share-Based Compensation / existing PSU performance measures · Filed 05/02/2026
Each officer must achieve and maintain ownership of ordinary shares or ordinary share equivalents at or above a prescribed level.
Compensation Discussion and Analysis / officer ownership requirements · Filed 23/04/2026
No hedging or pledging of Company stock by directors and executive officers
Compensation governance / prohibition on hedging and pledging · Filed 23/04/2026
These adjustments, reflecting both positive and negative impacts, resulted in a net 0.4% decrease to payout levels and were reviewed with the Audit Committee prior to approval by the HRCC.
Compensation decisions / actual reduction in 2025 AIM payouts · Filed 23/04/2026
Furthermore, under the 2018 Plan, PSUs will automatically vest upon a change in control of the Company based on (i) the target level prorated to reflect the period the participant was in service during the performance period or (ii) the actual performance level attained, as determined by the HRCC.
Change-in-control provisions / automatic PSU vesting · Filed 23/04/2026
In addition, each member of the Audit Committee qualifies as an independent director, meets the financial literacy and independence requirements of the SEC and the NYSE applicable to audit committee members and possesses the requisite competence in accounting or auditing in satisfaction of the requirements for audit committees prescribed by the Companies Act 2014.
Corporate Governance / Audit Committee independence · Filed 23/04/2026
Role of the Human Resources and Compensation Committee, Independent Advisor and Committee Actions The HRCC, which is composed solely of independent directors, oversees our compensation plans and policies and equity-based programs and reviews and approves all forms of compensation relating to our executive officers, including the NEOs.
Compensation Discussion and Analysis / independent HRCC · Filed 23/04/2026
The Company’s non-employee directors held five independent director meetings without management present during the fiscal year 2025.
Corporate Governance / independent director meetings in 2025 · Filed 23/04/2026
It is the Board of Directors’ view that the Company’s corporate governance principles, the quality, stature and substantive business knowledge of the members of the Board, as well as the Board’s culture of open communication with the CEO and senior management are conducive to Board effectiveness with a combined Chair and CEO position.
Corporate Governance / combined Chair and CEO position · Filed 23/04/2026
PwC has been acting continuously as our independent auditors for over one hundred years and, both by virtue of its familiarity with the Company’s affairs and its professional competencies and resources, is considered best qualified to perform this important function.
Auditor appointment discussion / continuous auditor tenure · Filed 23/04/2026
No “single-trigger” vesting for any cash payments or equity incentives upon a change-in-control
Compensation governance summary / stated absence of single-trigger vesting · Filed 23/04/2026
Ownership credit is given for actual ordinary shares owned, deferred compensation that is invested in ordinary shares within our EDCP, ordinary share equivalents accumulated in our qualified and nonqualified employee savings plans as well as unvested RSUs.
Compensation Discussion and Analysis / ownership credit including unvested RSUs · Filed 23/04/2026
