Climate control specialist Carrier Global (CARR -1.06%) reported hotter-than-expected earnings in the quarter. Carrier shares were up 8% as of 2:30 p.m. ET after the company showed clear progress in its campaign to improve profitability.
Earnings up in a tough sales environment
Carrier earned $0.62 per share in the quarter, beating Wall Street's consensus estimate by $0.11, despite revenue that at $6.18 billion was about $100 million short of expectations. Strong cost controls led the way, helping Carrier to boost adjusted operating margins by 280 basis points compared to a year prior.
"We continue to perform while transforming," CEO David Gitlin said in a statement. "We are focused on capitalizing on the long-term secular sustainability trends, outperforming the market, and achieving and accelerating revenue and cost synergies."
Carrier also completed its deal for Viessmann Climate Solutions and outlined a plan to pay down its debt to a point where the company hopes to resume share repurchases before year's end.
Is Carrier a buy after its earnings report?
A wide range of industrial companies are reporting sluggish demand this quarter, with customers carefully watching the broader economy and thinking twice about large-scale capital investment. Carrier orders in the quarter were down year over year, and the company cut its full-year revenue guidance by $500 million to $26 billion.
The good news is the company's efficiency efforts appear to be taking hold, and Carrier is firming up its guidance for a 15.5% operating margin in 2024. Carrier is a work in progress and very much reliant on the health of its end markets, but the company appears to be making the right moves to build for the future.
