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…
Earnings analysis · 10-Q
CARR earnings analysis
Filed July 28, 2026 · Our reading of the company's report
The latest report
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…
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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 to 13.0% from 14.8%, and net earnings attributable to common shareowners fell 15% to $501 million. Demand was strongest in Americas residential and light-commercial markets, but tariff/input-cost pressure, unfavorable mix, China weakness and lower segment profits offset the top-line progress; cash generation improved materially in the first half.
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.
Reported figures
- Earnings per share
- $0.6
What stood out
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Revenue grew 4%, led by organic demand
Q2 net sales rose 4% year over year to $6.351 billion, including 3% organic growth and 1% foreign-currency benefit. Sequentially, sales increased from the implied Q1 level of $5.341 billion derived from six-month sales of $11.692 billion.
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Americas and international sales expanded
Climate Solutions Americas grew revenue 4% to $3.372 billion, with residential sales up 9% and light-commercial sales up 10%. Europe revenue grew 6% to $1.324 billion, while Asia Pacific, Middle East & Africa grew 4% to $917 million.
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Cash conversion improved despite lower earnings
Operating cash flow from continuing operations increased to $953 million for the first six months from $752 million a year earlier. After $211 million of capital expenditures, calculated six-month free cash flow was approximately $742 million, with capex equal to 1.8% of six-month sales.
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Liquidity and buyback capacity remain solid
Liquidity remains substantial, with $1.344 billion of cash and cash equivalents and a $2.5 billion revolving credit facility with zero borrowings at June 30. The company also had $4.584 billion remaining under its share-repurchase authorization after repurchasing 6.940 million shares in Q2.
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Sequential earnings and margins recovered
Q2 GAAP operating profit of $825 million was up sharply from the implied Q1 level of $258 million, and operating margin improved to 13.0% from an implied 4.8% in Q1. Diluted GAAP EPS was $0.60, versus $0.28 in Q1.
What to watch
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Tariffs and mix drove margin contraction
Despite 4% sales growth, Q2 gross margin fell 170 basis points year over year to 27.2%, gross profit declined $41 million to $1.728 billion, and operating profit declined 9% to $825 million. Management cites higher input costs, including tariffs, and unfavorable mix.
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Segment profit declined across the portfolio
All four segments posted lower operating profit: Americas fell $56 million to $823 million, Europe fell $4 million to $95 million, Asia Pacific/MEA fell $27 million to $108 million, and Transportation fell $10 million to $118 million.
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China weakness and Riello impairment pressure results
China revenue declined 14% in Q2 amid economic challenges affecting demand and price. Separately, the company recorded a $46 million Riello impairment, which contributed to a 25.0% quarterly effective tax rate versus 20.0% a year earlier.
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Leverage and interest costs increased
Net debt increased $330 million from December 31 to $10.608 billion, while net debt to net capitalization rose to 44% from 42%. Q2 interest expense increased 10% to $126 million, attributed to commercial-paper borrowings.
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No formal risk-factor changes, tariff uncertainty remains
Item 1A states there were no material changes to risk factors from the 2025 Form 10-K. However, management continues to assess tariff exposure and expects to mitigate 2026 Section 232 tariff effects through supply-chain, cost-reduction and pricing measures.
Management's outlook
The 10-Q does not provide explicit quantitative full-year revenue or EPS guidance; outlook was deferred to other company communications. Management states it expects to mitigate the 2026 impact of Section 232 tariffs through supply-chain changes, operating-cost reduction and pricing actions.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.