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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

____________________________________

FORM 10-Q

____________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-39220

____________________________________

CARRIER GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________


Delaware						83-4051582
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

13995 Pasteur Boulevard, Palm Beach Gardens, Florida 33418

(Address of principal executive offices, including zip code)

(561) 365-2000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock ($0.01 par value)

CARR

New York Stock Exchange

4.125% Notes due 2028

CARR28

New York Stock Exchange

4.500% Notes due 2032

CARR32

New York Stock Exchange

3.625% Notes due 2037

CARR37

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 15, 2025, there were 842,209,781 shares of Common Stock outstanding.

Table of Contents

CARRIER GLOBAL CORPORATION

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Three and Nine Months Ended September 30, 2025


			Page

PART I – FINANCIAL INFORMATION			3

Item 1. Financial Statements:			3

Condensed Consolidated Statement of Operations (Unaudited)			3



Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)			4

Condensed Consolidated Balance Sheet (Unaudited)			5

Condensed Consolidated Statement of Changes in Equity (Unaudited)			6

Condensed Consolidated Statement of Cash Flows (Unaudited)			8

Notes to Condensed Consolidated Financial Statements (Unaudited)			9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			32

Item 3. Quantitative and Qualitative Disclosures About Market Risk			50

Item 4. Controls and Procedures			50

PART II – OTHER INFORMATION			53

Item 1. Legal Proceedings			53

Item 1A. Risk Factors			53

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			53

Item 5. Other Information			53

Item 6. Exhibits			54

SIGNATURES			55

Carrier Global Corporation and its subsidiaries' names, abbreviations thereof, logos and product and service designators are all either the registered or unregistered trademarks or trade names of Carrier Global Corporation and its subsidiaries. Names, abbreviations of names, logos and products and service designators of other companies are either the registered or unregistered trademarks or trade names of their respective owners. As used herein, the terms "we," "us," "our," "the Company" or "Carrier," unless the context otherwise requires, mean Carrier Global Corporation and its subsidiaries. References to internet websites in this Form 10-Q are provided for convenience only. Information available through these websites is not incorporated by reference into this Form 10-Q.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share amounts)	2025		2024		2025		2024
Net sales
Product sales	$	4,906	$	5,307	$	15,035	$	15,460
Service sales	673		677		1,875		1,878
Total Net sales	5,579		5,984		16,910		17,338
Costs and expenses
Cost of products sold	(3,656)		(3,796)		(10,881)		(11,245)
Cost of services sold	(474)		(511)		(1,366)		(1,456)
Research and development	(151)		(172)		(465)		(524)
Selling, general and administrative	(803)		(799)		(2,345)		(2,394)
Total Costs and expenses	(5,084)		(5,278)		(15,057)		(15,619)
Equity method investment net earnings	60		66		182		187
Other income (expense), net	(16)		(9)		36		(34)
Operating profit	539		763		2,071		1,872
Non-service pension (expense) benefit	(9)		(1)		(8)		(1)
Interest (expense) income, net	(97)		8		(270)		(290)
Earnings before income taxes	433		770		1,793		1,581
Income tax (expense) benefit	1		(172)		(272)		(339)
Earnings from continuing operations	434		598		1,521		1,242
Discontinued operations, net of tax	21		(117)		4		1,897
Net earnings (loss)	455		481		1,525		3,139
Less: Non-controlling interest in subsidiaries'	27		34		94		86
Net earnings (loss) attributable to common shareowners	$	428	$	447	$	1,431	$	3,053
Amounts attributable to common shareowners:
Continuing operations	$	407	$	564	$	1,427	$	1,156
Discontinued operations	21		(117)		4		1,897
Net earnings (loss) attributable to common shareowners	$	428	$	447	$	1,431	$	3,053
Earnings per share
Basic:
Continuing operations	$	0.48	$	0.63	$	1.67	$	1.28
Discontinued operations	0.02		(0.13)		—		2.11
Net earnings (loss)	$	0.50	$	0.50	$	1.67	$	3.39
Diluted:
Continuing operations	$	0.47	$	0.62	$	1.64	$	1.26
Discontinued operations	0.03		(0.13)		0.01		2.08
Net earnings (loss)	$	0.50	$	0.49	$	1.65	$	3.34
Weighted-average number of shares outstanding
Basic	848.8		901.2		856.8		900.9
Diluted	858.6		915.0		867.7		914.4

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Net earnings (loss)	$	455	$	481	$	1,525	$	3,139
Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments arising during period	47		678		1,751		102









Pension and post-retirement benefit plan adjustments	3		1		(2)		2








Amortization of unrealized cash flow hedging gain (loss)	(1)		(1)		(4)		(3)
Divestitures	—		215		—		588



Other comprehensive income (loss), net of tax	49		893		1,745		689
Comprehensive income (loss)	504		1,374		3,270		3,828
Less: Comprehensive income (loss) attributable to non-controlling interest	28		43		98		91
Comprehensive income (loss) attributable to common shareowners	$	476	$	1,331	$	3,172	$	3,737

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


	As of
(In millions)	September 30, 2025		December 31, 2024
Assets
Cash and cash equivalents	$	1,423	$	3,969
Accounts receivable, net	3,129		2,651
Inventories, net	3,004		2,299

Other current assets	1,283		972
Total current assets	8,839		9,891
Future income tax benefits	1,199		1,131
Fixed assets, net	3,214		2,999
Operating lease right-of-use assets	558		554
Intangible assets, net	6,560		6,432
Goodwill	15,680		14,601
Pension and post-retirement assets	50		43
Equity method investments	1,381		1,194

Other assets	596		558
Total Assets	$	38,077	$	37,403

Liabilities and Equity
Accounts payable	$	2,959	$	2,458
Accrued liabilities	4,208		4,098

Short-term borrowings and current portion of long-term debt	580		1,336
Total current liabilities	7,747		7,892
Long-term debt	11,336		11,026
Future pension and post-retirement obligations	220		214
Future income tax obligations	1,943		2,015
Operating lease liabilities	424		432

Other long-term liabilities	1,568		1,429
Total Liabilities	23,238		23,008
Commitments and contingent liabilities (Note 19)
Equity
Common stock	9		9
Treasury stock	(6,311)		(3,915)
Additional paid-in capital	8,646		8,610
Retained earnings	12,530		11,483
Accumulated other comprehensive loss	(365)		(2,106)
Non-controlling interest	330		314
Total Equity	14,839		14,395
Total Liabilities and Equity	$	38,077	$	37,403

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2024	$	(2,106)	$	9	$	(3,915)	$	8,610	$	11,483	$	314	$	14,395
Net earnings (loss)	—		—		—		—		412		25		437
Other comprehensive income (loss), net of tax	633		—		—		—		—		—		633

Shares issued under incentive plans, net	—		—		—		(17)		—		—		(17)
Stock-based compensation	—		—		—		23		—		—		23



Treasury stock repurchase	—		—		(1,273)		—		—		—		(1,273)


Balance as of March 31, 2025	$	(1,473)	$	9	$	(5,188)	$	8,616	$	11,895	$	339	$	14,198

Net earnings (loss)	—		—		—		—		591		42		633
Other comprehensive income (loss), net of tax	1,060		—		—		—		—		3		1,063
Dividends declared on common stock (1)	—		—		—		—		(192)		—		(192)
Shares issued under incentive plans, net	—		—		—		1		—		—		1
Stock-based compensation	—		—		—		21		—		—		21

Dividends attributable to non-controlling interest	—		—		—		—		—		(76)		(76)


Treasury stock repurchase	—		—		(334)		—		—		—		(334)
Share repurchase with Viessmann	—		—		—		(300)		—		—		(300)

Balance as of June 30, 2025	$	(413)	$	9	$	(5,522)	$	8,338	$	12,294	$	308	$	15,014
Net earnings (loss)	—		—		—		—		428		27		455
Other comprehensive income (loss), net of tax	48		—		—		—		—		1		49
Dividends declared on common stock	—		—		—		—		(192)		—		(192)
Shares issued under incentive plans, net	—		—		—		(3)		—		—		(3)
Stock-based compensation	—		—		—		11		—		—		11

Dividends attributable to non-controlling interest	—		—		—		—		—		(6)		(6)


Treasury stock repurchase	—		—		(489)		—		—		—		(489)
Share repurchase with Viessmann	—		—		(300)		300		—		—		—
Balance as of September 30, 2025	$	(365)	$	9	$	(6,311)	$	8,646	$	12,530	$	330	$	14,839

(1) Cash dividends declared were $0.45 per share for the three months ended June 30, 2025

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2023	$	(1,486)	$	9	$	(1,972)	$	5,535	$	6,591	$	328	$	9,005
Net earnings (loss)	—		—		—		—		269		20		289
Other comprehensive income (loss), net of tax	(386)		—		—		—		—		(3)		(389)

Shares issued under incentive plans, net	—		—		—		(22)		—		—		(22)
Stock-based compensation	—		—		—		23		—		—		23
Acquisition of VCS Business	—		—		—		3,000		—		—		3,000




Balance as of March 31, 2024	$	(1,872)	$	9	$	(1,972)	$	8,536	$	6,860	$	345	$	11,906

Net earnings (loss)	—		—		—		—		2,337		32		2,369
Other comprehensive income (loss), net of tax	186		—		—		—		—		(1)		185
Dividends declared on common stock (1)	—		—		—		—		(343)		—		(343)
Shares issued under incentive plans, net	—		—		—		2		—		—		2
Stock-based compensation	—		—		—		25		—		—		25
Dividends attributable to non-controlling interest	—		—		—		—		—		(65)		(65)



Balance as of June 30, 2024	$	(1,686)	$	9	$	(1,972)	$	8,563	$	8,854	$	311	$	14,079
Net earnings (loss)	—		—		—		—		447		34		481
Other comprehensive income (loss), net of tax	884		—		—		—		—		9		893

Shares issued under incentive plans, net	—		—		—		(3)		—		—		(3)
Stock-based compensation	—		—		—		28		—		—		28
Dividends attributable to non-controlling interest	—		—		—		—		—		(5)		(5)





Treasury stock repurchase	—		—		(431)		—		—		—		(431)
Balance as of September 30, 2024	$	(802)	$	9	$	(2,403)	$	8,588	$	9,301	$	349	$	15,042



(1) Cash dividends declared were $0.38 per share for the three months ended June 30, 2024

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
(In millions)	2025		2024
Operating Activities
Net earnings (loss)	$	1,525	$	3,139
Discontinued operations, net of tax	(4)		(1,897)
Adjustments for non-cash items, net:
Depreciation and amortization	945		914
Deferred income tax provision	(316)		(296)
Stock-based compensation costs	55		65
Equity method investment net earnings	(182)		(187)

(Gain) loss on extinguishment of debt	—		(88)
(Gain) loss on sale of investments	(17)		(2)

Changes in operating assets and liabilities
Accounts receivable, net	(490)		(135)
Inventories, net	(528)		76
Accounts payable and accrued liabilities	170		(258)
Distributions from equity method investments	105		36
Other operating activities, net	(187)		(159)
Net cash flows provided by (used in) continuing operating activities	1,076		1,208
Net cash flows provided by (used in) discontinued operating activities	397		(777)
Net cash flows provided by (used in) operating activities	1,473		431

Investing Activities
Capital expenditures	(261)		(302)
Investment in businesses, net of cash acquired	(92)		(10,873)
Dispositions of businesses	8		—

Settlement of derivative contracts, net	120		(187)
Other investing activities, net	(7)		31
Net cash flows provided by (used in) continuing investing activities	(232)		(11,331)
Net cash flows provided by (used in) discontinued investing activities	35		6,217
Net cash flows provided by (used in) investing activities	(197)		(5,114)

Financing Activities
Increase (decrease) in short-term borrowings, net	387		37
Issuance of long-term debt	32		2,586
Repayment of long-term debt	(1,209)		(4,530)
Repurchases of common stock	(2,413)		(431)
Dividends paid on common stock	(583)		(514)
Dividends paid to non-controlling interest	(81)		(72)

Other financing activities, net	(18)		(15)
Net cash flows provided by (used in) continuing financing activities	(3,885)		(2,939)
Net cash flows provided by (used in) discontinued financing activities	—		(11)
Net cash flows provided by (used in) financing activities	(3,885)		(2,950)
Effect of foreign exchange rate changes on cash and cash equivalents	63		(18)
Net increase (decrease) in cash and cash equivalents and restricted cash, including cash classified in current assets held for sale	(2,546)		(7,651)
Less: Change in cash balances classified as assets held for sale	—		(36)
Net increase (decrease) in cash and cash equivalents and restricted cash	(2,546)		(7,615)
Cash, cash equivalents and restricted cash, beginning of period	3,972		9,853
Cash, cash equivalents and restricted cash, end of period	1,426		2,238
Less: restricted cash	3		14
Cash and cash equivalents, end of period	$	1,423	$	2,224

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: DESCRIPTION OF THE BUSINESS

Carrier Global Corporation (the "Company") is a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to its customers. The Company's portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold that offer innovative heating, ventilating, air conditioning ("HVAC") and cold chain transportation solutions to enhance the lives we live and the world we share. The Company also provides a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. The Company's operations are classified into four segments: Climate Solutions Americas, Climate Solutions Europe, Climate Solutions Asia Pacific, Middle East & Africa and Climate Solutions Transportation.

In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for 2024 filed with the SEC on February 11, 2025 (the "2024 Form 10-K"). Certain prior period amounts have been reclassified to conform to the current period financial statement presentation.

NOTE 2: BASIS OF PRESENTATION

The Unaudited Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and majority-owned subsidiaries in which it has control. Inter-company accounts and transactions have been eliminated. Related party transactions between the Company and its equity method investees have not been eliminated. Non-controlling interest represents a non-controlling investor's interests in the results of subsidiaries that the Company controls and consolidates.

Portfolio Transformation

During 2024, the Company completed several activities designed to simplify its business portfolio, transforming it into a pure-play climate and energy solutions provider. On January 2, 2024, the Company acquired the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (together with its affiliates, “Viessmann”). The VCS Business, primarily reported in the Climate Solutions Europe segment, is a premier residential and light commercial HVAC provider in Europe that expanded the Company's portfolio to offer a global, comprehensive suite of sustainable and innovative building and cold-chain solutions. In addition, the Company divested its Commercial and Residential Fire, Access Solutions and Industrial Fire businesses which were historically reported in its Fire & Security segment. The transactions represented a single disposal plan to separately divest multiple businesses over different reporting periods and met the criteria to be presented as discontinued operations in the accompanying financial statements. The Company also divested its Commercial Refrigeration business (“CCR”) during 2024. CCR, which was historically reported in the Climate Solutions Transportation segment (previously named Refrigeration), did not meet the criteria to be presented as discontinued operations.

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Segment Reorganization

As a result of the Company's portfolio transformation, the Company revised its reportable segments during the first quarter of 2025 to better reflect its business strategy, align its management reporting and increase transparency for investors. Under the revised segment structure, the Company has three new regional HVAC operating segments. Combined with the Climate Solutions Transportation operating segment, the four operating segments also serve as the Company's reportable segments. This model is designed to create a simplified, more focused and customer-centric organization across the globe. Each segment reports through separate management teams which regularly review their operating results with the Company's Chief Operating Decision Maker (the "CODM") determined in accordance with applicable accounting guidance. In connection with the revised structure, the CODM changed the measure used to evaluate segment profitability from Operating profit to Segment operating profit. All prior period comparative information has been recast to reflect the revised segment structure. See Note 17 – Segment Financial Data for additional information.

Separation from United Technologies

On April 3, 2020 (the "Distribution Date"), United Technologies Corporation ("UTC"), since renamed RTX Corporation ("Raytheon Technologies Corporation" or "RTX"), completed the spin-off of Carrier into an independent, publicly traded company (the "Separation") through a pro-rata distribution (the "Distribution") on a one-for-one basis of all of the outstanding shares of common stock of Carrier to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution. In addition, the Company entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship among the Company, UTC and Otis. As of September 30, 2025, only certain portions of the Tax Matters Agreement ("TMA") remain in effect.

Recently Issued and Adopted Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the sole source of authoritative U.S. GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. ASUs pending adoption were assessed and determined to be either not applicable or are not expected to have a material impact on the accompanying Unaudited Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires public entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU requires additional disclosures and is not expected to have a material impact on the Company's financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) ("ASU 2024-03"), which requires public entities to disclose disaggregated information about expenses by nature on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact of this ASU on its financial statements.

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NOTE 3: INVENTORIES, NET

Inventories are stated at the lower of cost or estimated net realizable value. Cost is primarily determined based on the first-in, first-out inventory method ("FIFO") or average cost methods, which approximates current replacement cost. However, certain subsidiaries use the last-in, first-out inventory method ("LIFO").

Inventories, net consisted of the following:


(In millions)	September 30, 2025		December 31, 2024
Raw materials	$	756	$	625
Work-in-process	250		213
Finished goods	1,998		1,461

Inventories, net	$	3,004	$	2,299

The Company performs periodic assessments utilizing customer demand, production requirements and historical usage rates to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to the lower of cost or estimated net realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of $391 million and $215 million as of September 30, 2025 and December 31, 2024, respectively.

NOTE 4: GOODWILL AND INTANGIBLE ASSETS

The Company records goodwill as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is tested and reviewed annually for impairment on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the reporting unit may be less than its carrying value.

The changes in the carrying amount of goodwill were as follows:


(In millions)	Climate Solutions Americas		Climate Solutions Europe		Climate Solutions Asia Pacific, Middle East & Africa		Climate Solutions Transportation		Total
Balance as of December 31, 2024	$	5,059	$	7,035	$	1,380	$	1,127	$	14,601
Acquisitions	11		6		7		44		68



Foreign currency translation	2		931		43		35		1,011
Balance as of September 30, 2025	$	5,072	$	7,972	$	1,430	$	1,206	$	15,680

Identifiable intangible assets are amortized over their estimated useful lives and consisted of the following:


	September 30, 2025						December 31, 2024
(In millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount

Customer relationships	$	6,258	$	(1,522)	$	4,736	$	5,607	$	(939)	$	4,668
Patents and trademarks	978		(201)		777		885		(147)		738

Service portfolios and other	1,713		(666)		1,047		1,530		(504)		1,026
Total intangible assets	$	8,949	$	(2,389)	$	6,560	$	8,022	$	(1,590)	$	6,432

Amortization of intangible assets was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Amortization expense of Intangible assets	$	228	$	213	$	657	$	632

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Impairment Test

In connection with its revised segment structure, the Company performed a quantitative goodwill impairment test on its reporting units prior to the reorganization to determine if any impairment existed. The tests did not indicate any goodwill impairment. The Company then reassigned goodwill among its new reporting units using a relative fair value approach. Based on these analyses, the Climate Solutions Europe reporting unit had a fair value of 10% above its carrying value. All other reporting units had fair values substantially in excess of their carrying values.

The Company tested its goodwill for impairment on July 1 as part of its annual assessment. For each test except the Climate Solutions Europe reporting unit, the Company qualitatively assessed all relevant events or circumstances that could impact the estimate of fair value and determined it was more likely than not that the fair value of each reporting unit substantially exceeded their carrying amount. For the remaining test, the Company's Climate Solutions Europe reporting unit, the Company performed a quantitative goodwill impairment test to determine if any impairment existed. Upon completion of the test, the reporting unit had a fair value of approximately 14% above its carrying value. As a result, the test did not indicate any goodwill impairment.

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NOTE 5: BORROWINGS AND LINES OF CREDIT

Short-term borrowings and current portion of long-term debt consisted of the following:


(In millions)	September 30, 2025		December 31, 2024
Commercial paper	$	415	$	—
Short-term borrowings	58		84
Current portion of long-term debt	107		1,252
Short-term borrowings and current portion of long-term debt	$	580	$	1,336

Commercial Paper Program

The Company has a $2.0 billion USD-denominated facility and a $500 million Euro-denominated facility as part of an unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes including the funding of working capital and potential acquisitions. At September 30, 2025, the Company had $415 million outstanding under its USD-denominated commercial paper facility, with a weighted average rate of 4.28%.

Long-term debt consisted of the following:


(In millions)	September 30, 2025		December 31, 2024
2.242% Notes due 2025 (1)	$	—	$	1,200
2.493% Notes due 2027	900		900
4.125% Notes due 2028	875		783
2.722% Notes due 2030	2,000		2,000
2.700% Notes due 2031	750		750
4.500% Notes due 2032	992		887
5.900% Notes due 2034	875		875
3.625% Notes due 2037	875		783
3.377% Notes due 2040	1,500		1,500
3.577% Notes due 2050	1,400		1,400
6.200% Notes due 2054	650		650
Total long-term notes	10,817		11,728

Japanese Term Loan Facility	360		342
Other debt (including project financing obligations and finance leases)	347		296
Discounts and debt issuance costs	(81)		(88)
Total long-term debt	11,443		12,278
Less: current portion of long-term debt	107		1,252
Long-term debt, net of current portion	$	11,336	$	11,026

(1) 2.242% Notes due February 15, 2025; repaid during February 2025.

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Revolving Credit Facility

On December 20, 2024, the Company refinanced its revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders, permitting aggregate borrowings of up to $2.5 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures in December 2029 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and can be used for other general corporate purposes. Borrowings are available in U.S. Dollars and Euros. U.S. Dollar borrowings bear interest at either a Term SOFR Rate plus 0.10% and a ratings-based margin or, alternatively, at an alternate base rate plus a ratings-based margin. Euro borrowings bear interest at an adjusted EURIBOR rate plus a ratings-based margin. A ratings-based commitment fee is charged on unused commitments. Upon entering into the agreement, the Company capitalized $11 million of deferred financing costs which are being amortized over its term. As of September 30, 2025, there were no borrowings outstanding under the Revolving Credit Facility.

Project Financing Arrangements

The Company is involved in long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued $22 million and $40 million of debt during the nine months ended September 30, 2025 and 2024, respectively. Long-term debt repayments associated with these financing arrangements during the nine months ended September 30, 2025 and 2024, were zero and $7 million, respectively.

Debt Covenants

The Revolving Credit Facility, the indenture for the long-term notes and the five-year, JPY 54 billion (approximately $400 million) senior unsecured term loan facility ("Japanese Term Loan Facility") contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur certain liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of September 30, 2025, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.

NOTE 6: FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement ("ASC 820"), defines fair value as the price that would be received if an asset is sold or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

•Level 1: Observable inputs such as quoted prices in active markets;

•Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal models based on observable market inputs, such as forward, interest, contract and discount rates with changes in fair value reported in Other income (expense), net in the accompanying Unaudited Condensed Consolidated Statement of Operations.

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During 2022, the Company entered into cross currency swaps with various financial institutions to fund a portion of the Yen-denominated purchase price of Toshiba Carrier Corporation ('TCC"). The cross currency swaps are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates as well as credit default swap spreads. The Company designated the cross currency swaps as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the fair value of the swaps are recorded in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. From time to time, the Company settles and enters into new cross currency swaps with the same purpose and characteristics as initially established.

The remaining portion of the Yen-denominated purchase price was funded by the Japanese Term Loan Facility. The carrying value of the facility is translated on a recurring basis using the exchange rate at the end of the applicable period and approximates its fair value. The Company designated the Japanese Term Loan Facility as a partial hedge of its investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk. As a result, changes in the carrying value of the term loan facility associated with foreign exchange rate movements are recorded in Equity in the Unaudited Condensed Consolidated Balance Sheet.

During 2023, the Company entered into several interest rate swap contracts to mitigate interest rate exposure on the forecasted issuance of long-term debt. The contracts had an aggregate notional amount of $1.5 billion and were designated as cash flow hedges with changes in fair value reported in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet. Fair value was measured on a recurring basis using observable market inputs, such as forward, discount and interest rates. In November 2023, the contracts were settled upon the issuance of the underlying debt. As a result, the Company deferred a net unrecognized gain of $58 million in Equity which will be subsequently recognized in Interest expense over the term of the related notes which range from 2034 to 2054. The amount expected to be amortized during the next twelve months is a net gain of $4 million.

The Company enters into cross currency swaps in order to manage foreign currency translation risk on assets denominated in a functional currency other than the U.S. Dollar. The swaps have an aggregate notional amount of $2.6 billion and are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates. The Company designates the cross currency swaps as a partial hedge of its investments in certain subsidiaries whose functional currency is not the U.S. Dollar. As a result, changes in the fair value of the swaps are recorded in Equity in the accompanying Unaudited Condensed Consolidated Balance Sheet.

The following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the accompanying Unaudited Condensed Consolidated Balance Sheet:


(In millions)	Total		Level 1		Level 2		Level 3
September 30, 2025


Derivative assets (1)	$	92	$	—	$	92	$	—
Derivative liabilities (2)	$	(178)	$	—	$	(178)	$	—

December 31, 2024


Derivative assets (1)	$	82	$	—	$	82	$	—
Derivative liabilities (2)	$	(41)	$	—	$	(41)	$	—

(1) Included in Other current assets and Other assets on the accompanying Unaudited Condensed Consolidated Balance Sheet.

(2) Included in Accrued liabilities and Other long-term liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet.

The following table provides the carrying amounts and fair values of the Company's long-term notes that are not recorded at fair value in the accompanying Unaudited Condensed Consolidated Balance Sheet:


	September 30, 2025				December 31, 2024
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value



Total long-term notes (1)	$	10,817	$	10,177	$	11,728	$	10,798

(1) Excludes debt discount and issuance costs.

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The fair value of the Company's long-term debt is measured based on observable market inputs which are considered Level 1 within the fair value hierarchy. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value due to the short-term nature of these accounts and would be classified as Level 1 in the fair value hierarchy. The Company's financing leases and project financing obligations, included in Long-term debt and Current portion of long-term debt on the accompanying Unaudited Condensed Consolidated Balance Sheet, approximate fair value and are classified as Level 3 in the fair value hierarchy.

NOTE 7: EMPLOYEE BENEFIT PLANS

The Company sponsors U.S. and international defined benefit pension and defined contribution plans. In addition, the Company contributes to various U.S. and international multi-employer defined benefit pension plans.

Contributions to the plans were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Defined benefit plans	$	13	$	16	$	33	$	34
Defined contribution plans	$	28	$	30	$	91	$	104
Multi-employer pension plans	$	4	$	4	$	11	$	12

The components of net periodic pension expense (benefit) for the defined benefit pension plans are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Service cost	$	3	$	4	$	10	$	11
Interest cost	7		13		21		26
Expected return on plan assets	(9)		(13)		(25)		(27)
Amortization of prior service cost	1		—		1		—
Recognized actuarial net (gain) loss	—		—		1		1
Net settlement, curtailment and special termination benefit (gain) loss	10		1		10		1
Net periodic pension expense (benefit)	$	12	$	5	$	18	$	12

NOTE 8: STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation - Stock Compensation, which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured at the date of grant and is generally not adjusted for subsequent changes. The Company's stock-based compensation plans include programs for stock appreciation rights, restricted stock units and performance share units.

Stock-based compensation expense, net of estimated forfeitures, is included in Cost of products sold, Selling, general and administrative and Research and development in the accompanying Unaudited Condensed Consolidated Statements of Operations.

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Stock-based compensation cost by award type was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Equity compensation costs - equity settled	$	11	$	28	$	55	$	76
Equity compensation costs - cash settled (1)	(2)		2		(1)		3
Total stock-based compensation expense	$	9	$	30	$	54	$	79

Amounts recorded in continuing operations	$	9	$	27	$	54	$	68
Amounts recorded in discontinued operations	—		3		—		11
Total stock-based compensation expense	$	9	$	30	$	54	$	79

(1) The cash settled awards are classified as liability awards and are measured at fair value at each balance sheet date.

NOTE 9: PRODUCT WARRANTIES

In the ordinary course of business, the Company provides standard warranty coverage on its products. Provisions for these amounts are established at the time of sale and estimated primarily based on product warranty terms and historical claims experience. In addition, the Company incurs discretionary costs to service its products in connection with specific product performance issues. Provisions for these amounts are established when they are known and estimable. The Company assesses the adequacy of its initial provisions and will make adjustments as necessary based on known or anticipated claims or as new information becomes available that suggests it is probable that future costs will be different than estimated amounts. Amounts associated with these provisions are classified on the accompanying Unaudited Condensed Consolidated Balance Sheet as Accrued liabilities or Other long-term liabilities based on their anticipated settlement date.

The changes in the carrying amount of warranty related provisions are as follows:


	Nine Months Ended September 30,
(In millions)	2025		2024
Balance as of January 1,	$	786	$	568
Warranties, performance guarantees issued and changes in estimated liability	272		229
Settlements made	(218)		(211)
Acquisitions	1		202
Other (1)	29		5


Balance as of September 30,	$	870	$	793

(1) The changes within Other include foreign currency translation activity.

NOTE 10: EQUITY

The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of September 30, 2025 and December 31, 2024, 950,311,832 and 948,068,772 shares of common stock were issued, respectively, which includes 106,390,297 and 70,093,639 shares of treasury stock, respectively.

Share Repurchase Program

The Company may repurchase its outstanding common stock from time to time subject to market conditions and at the Company's discretion. Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act. Shares acquired are recognized at cost and presented separately on the balance sheet as a reduction to Equity. Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $7.1 billion of the Company's outstanding common stock.

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In June 2025, the Company entered into a repurchase agreement with Viessmann, an entity controlled by one of the Company's directors, to acquire an aggregate 4,267,425 shares of the Company's common stock at a price per share of $70.30 for an aggregate purchase price of $300 million. In July 2025, the Company acquired the shares from Viessmann. During the nine months ended September 30, 2025, the Company repurchased 36.3 million shares of common stock for an aggregate purchase price of $2.4 billion, which included shares repurchased from Viessmann under the repurchase agreement. As a result, the Company had approximately $811 million remaining under the current authorization at September 30, 2025. In October 2025, the Company's Board of Directors approved a $5 billion increase to the Company's existing share repurchase program.

Accumulated Other Comprehensive Income (Loss)

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2025 is as follows:


(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Unrealized Hedging Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2024	$	(2,053)	$	(107)	$	54	$	(2,106)
Other comprehensive income (loss) before reclassifications, net	634		—		—		634
Amounts reclassified, pre-tax	—		—		(1)		(1)


Balance as of March 31, 2025	$	(1,419)	$	(107)	$	53	$	(1,473)
Other comprehensive income (loss) before reclassifications, net	1,067		(6)		—		1,061
Amounts reclassified, pre-tax	—		1		(2)		(1)


Balance as of June 30, 2025	$	(352)	$	(112)	$	51	$	(413)
Other comprehensive income (loss) before reclassifications, net	46		2		—		48
Amounts reclassified, pre-tax	—		1		(1)		—


Balance as of September 30, 2025	$	(306)	$	(109)	$	50	$	(365)

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 is as follows:


(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Unrealized Hedging Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2023	$	(1,444)	$	(100)	$	58	$	(1,486)
Other comprehensive income (loss) before reclassifications, net	(385)		—		—		(385)
Amounts reclassified, pre-tax	—		—		(1)		(1)


Balance as of March 31, 2024	$	(1,829)	$	(100)	$	57	$	(1,872)
Other comprehensive income (loss) before reclassifications, net	(187)		—		—		(187)
Amounts reclassified, pre-tax	—		1		(1)		—

Divestitures, net	373		—		—		373
Balance as of June 30, 2024	$	(1,643)	$	(99)	$	56	$	(1,686)
Other comprehensive income (loss) before reclassifications, net	669		—		—		669
Amounts reclassified, pre-tax	—		2		(1)		1
Tax expense (benefit) reclassified	—		(1)		—		(1)
Divestitures, net	215		—		—		215
Balance as of September 30, 2024	$	(759)	$	(98)	$	55	$	(802)

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NOTE 11: REVENUE RECOGNITION

The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers. Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment.

External segment sales disaggregated by product and service are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Sales Type
Product	$	2,393	$	2,669	$	7,682	$	7,359
Service	318		292		853		827
Climate Solutions Americas sales	2,711		2,961		8,535		8,186

Product	1,168		1,150		3,376		3,515
Service	122		96		336		217
Climate Solutions Europe sales	1,290		1,246		3,712		3,732

Product	659		678		2,016		2,153
Service	174		162		525		473
Climate Solutions Asia Pacific, Middle East & Africa sales	833		840		2,541		2,626

Product	686		810		1,961		2,433
Service	59		127		161		361
Climate Solutions Transportation sales	745		937		2,122		2,794



Net sales	$	5,579	$	5,984	$	16,910	$	17,338

Contract Balances

Total contract assets and contract liabilities consisted of the following:


(In millions)	September 30, 2025		December 31, 2024
Contract assets (included within Other current assets)	$	520	$	366
Contract assets, non-current (included within Other assets)	55		65
Total contract assets	575		431

Contract liabilities (included within Accrued liabilities)	(546)		(553)
Contract liabilities, non-current (included within Other long-term liabilities)	(186)		(164)
Total contract liabilities	(732)		(717)
Net contract assets (liabilities)	$	(157)	$	(286)

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The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under a contract or when the Company has a right to consideration that is conditioned upon transfer of a good or service to a customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

The Company recognized revenue of $491 million during the nine months ended September 30, 2025, that related to contract liabilities as of January 1, 2025. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months.

NOTE 12: RESTRUCTURING COSTS

The Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and working capital levels. Actions associated with these initiatives may include improving productivity, workforce reductions and the consolidation of facilities. Due to the size, nature and frequency of these discrete plans, they are fundamentally different from the Company's ongoing productivity actions.

The Company recorded net pre-tax restructuring costs for new and ongoing restructuring initiatives as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Climate Solutions Americas	$	8	$	5	$	12	$	6
Climate Solutions Europe	22		45		48		72
Climate Solutions Asia Pacific, Middle East & Africa	6		5		14		9
Climate Solutions Transportation	3		4		5		5
Total Segment	39		59		79		92
Corporate and other	11		1		26		5
Total restructuring costs (1)	$	50	$	60	$	105	$	97

Cost of sales	$	11	$	15	$	22	$	36
Selling, general and administrative	39		45		83		61

Total restructuring costs (1)	$	50	$	60	$	105	$	97

(1) Restructuring costs include period-related charges.

The following table summarizes changes in the restructuring reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet:


	Nine Months Ended September 30,
(In millions)	2025		2024
Balance as of January 1,	$	69	$	41
Net pre-tax restructuring costs	86		90
Acquisitions	—		8

Utilization, foreign exchange and other	(73)		(55)
Balance as of September 30,	$	82	$	84

As of September 30, 2025, the Company had $82 million accrued for costs associated with its announced restructuring initiatives. The balance relates to cost reduction efforts, primarily severance related across each of the Company's segments. The Company expects a majority of the balance to be utilized within one year.

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NOTE 13: INCOME TAXES

The Company accounts for income tax expense in accordance with ASC 740, Income Taxes ("ASC 740"), which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. The effective tax rate for the three months ended September 30, 2025, was a 0.2% benefit compared with 22.3% for the three months ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025 was lower than the effective tax rate for the three months ended September 30, 2024, primarily due to a net tax benefit of $64 million from changes to the German effective rate and a statutory reduction to the German corporate tax rate enacted during the current period and a tax benefit of $49 million from the re-organization of a Japanese subsidiary.

The effective tax rate for the nine months ended September 30, 2025, was 15.2% compared with 21.4% for the nine months ended September 30, 2024. The year-over-year decrease was primarily driven by a net tax benefit of $64 million from changes to the German effective rate and a statutory reduction to the German corporate tax rate enacted during the current period, a tax benefit of $49 million from the re-organization of a Japanese subsidiary and a $16 million tax benefit generated by the purchase of investment tax credits from a third-party. These amounts were partially offset by the absence of a $21 million tax benefit associated with the TMA and UTC's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the IRS recognized during the nine months ended September 30, 2024.

The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income that may be available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine whether valuation allowances against deferred tax assets are required. The Company maintains valuation allowances against certain deferred tax assets.

The Company conducts business globally and files income tax returns in U.S. federal, state and foreign jurisdictions. In certain jurisdictions, the Company's operations were included in UTC's combined tax returns for the periods through the Distribution. During the nine months ended September 30, 2025, the IRS finalized the examination of UTC's tax year 2020, resulting in the recognition of a tax benefit of $6 million. Carrier's tax year 2022 is under examination by the IRS, but is in an early stage. The Australia tax office is auditing the Company's 2021 tax return, including the review of the disentanglement of the Chubb Australia business, with the audit expected to close in late 2026. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including Australia, Canada, China, France, Germany, Hong Kong, India, Italy, Mexico, the Netherlands, Poland, Singapore, the United Kingdom and the United States. The Company is no longer subject to U.S. federal income tax examination for years prior to 2022 and, with few exceptions, is no longer subject to state, local and foreign income tax examinations for tax years prior to 2014.

In the ordinary course of business, there is inherent uncertainty in quantifying the Company's income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. The Company believes that it is reasonably possible that a net decrease in unrecognized tax benefits of $10 million to $50 million may occur within 12 months as a result of additional uncertain tax positions, the revaluation of uncertain tax positions arising from examinations, appeals, court decisions and/or the expiration of tax statutes.

On July 4, 2025, the One Big Beautiful Bill Act was enacted in the U.S., making permanent key provisions from the Tax Cuts and Jobs Act including full expensing of capital investments and U.S. incurred research and development costs, while also modifying the international tax framework and reinstating favorable treatment for certain business tax items. The legislation has staggered effective dates from 2025 through 2027. The U.S. law change did not have a material impact on the Company's Statement of Operations. However, the Company anticipates a reduction in 2025 U.S. cash taxes given the allowable full expensing of U.S. capital investments and U.S. incurred research and development costs.

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NOTE 14: EARNINGS PER SHARE

Earnings per share is computed by dividing Net earnings (loss) attributable to common shareowners by the weighted-average number of shares of common stock outstanding during the period (excluding treasury stock). Diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, including stock appreciation rights and stock options, when the effect of the potential exercise would be anti-dilutive.

The following table summarizes the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share amounts)	2025		2024		2025		2024
Net earnings (loss) attributable to common shareowners	$	428	$	447	$	1,431	$	3,053

Basic weighted-average number of shares outstanding	848.8		901.2		856.8		900.9
Stock awards and equity units (share equivalent)	9.8		13.8		10.9		13.5
Diluted weighted-average number of shares outstanding	858.6		915.0		867.7		914.4

Antidilutive shares excluded from computation of diluted earnings per share	2.0		2.0		2.0		2.0

NOTE 15: ACQUISITIONS

Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, Business Combinations. As a result, the aggregate purchase price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition.

Viessmann Climate Solutions

On January 2, 2024, the Company completed the acquisition of the VCS Business from Viessmann for total consideration of $14.2 billion. The purchase price consisted of (i) $11.2 billion in cash and (ii) 58,608,959 shares of the Company's common stock, subject to certain lock-up provisions and anti-dilution protection. The Company funded the cash portion of the purchase price with a combination of cash on hand, long term debt issuances and borrowings under various term facilities.

The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe. The Company believes that secular trends in these areas will drive significant, sustained future growth. In addition, the Company anticipates realizing significant operational synergies including savings through supplier rationalization and leverage, reduced manufacturing costs and lower general and administrative costs. Longer term, the Company expects to benefit from synergies related to service revenue expansion, leverage of distribution channels and cross-selling opportunities.

The components of the purchase price are as follows:


(In millions)	January 2, 2024
Cash	$	11,156
Common shares (58,608,959 shares at $51.20 per share)	3,001
Total consideration	$	14,157

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The allocation of the purchase price is as follows:


(In millions)	January 2, 2024
Cash and cash equivalents	$	393
Accounts receivable	413
Inventories	920
Other current assets	17
Fixed assets	919
Intangible assets	6,645
Other assets	299
Accounts payable	(290)
Other liabilities, current	(663)
Future income tax obligations	(1,810)
Other liabilities	(301)
Total identifiable net assets	6,542
Goodwill	7,607
Total consideration	$	14,149

The excess purchase price over the estimated fair value of the net identifiable assets acquired was recognized as goodwill and totaled $7.6 billion, which is not deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for inventory and fixed assets was based on an assessment of the acquired assets' condition as well as an evaluation of the current market value of such assets.

The Company recorded intangible assets based on its estimate of fair value which consisted of the following:


(In millions)	Estimated Useful Life (in years)	Intangible Assets Acquired
Customer relationships	17	$	4,787
Technology	10 - 20	1,051
Trademark	40	679
Backlog	1	123
Other	50	5
Total intangible assets acquired		$	6,645

The valuation of intangible assets was determined using an income approach methodology including the multi-period excess earnings method and the relief from royalty method. Key assumptions used in estimating future cash flows included projected short-term revenue growth rates, research and development expenses, EBITDA margins, income tax rates, discount rates, customer attrition rates, royalty rates, contributory asset charge and obsolescence rates among others. The projected future cash flows are discounted to present value using an appropriate discount rate. The Company finalized the process of allocating the purchase price and valuing the acquired assets and liabilities during 2024.

During 2024, $40 million of acquisition-related costs were incurred, of which $3 million and $40 million was recognized during the three and nine months ended September 30, 2024, respectively. These acquisition costs are reflected within Selling, general and administrative in the Unaudited Condensed Consolidated Statement of Operations.

The assets, liabilities and results of operations of the VCS Business were consolidated in the accompanying Unaudited Condensed Consolidated Financial Statements as of the date of acquisition and reported primarily within the Company's Climate Solutions Europe segment.

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NOTE 16: DIVESTITURES

Discontinued Operations

During 2024, the Company exited its Fire & Security segment in multiple transactions that represented a single disposal plan to separately divest multiple businesses over different reporting periods. As a result, the components of the Fire & Security segment in aggregate met the criteria to be presented as discontinued operations in the accompanying Unaudited Condensed Consolidated Statement of Operations and Unaudited Condensed Consolidated Statement of Cash Flows. Amounts reported during 2024 include the operating results of each component through their respective date of sale and related gain on sale. Amounts reported during 2025 relate to retained obligations from these business divestitures.

The components of Discontinued operations, net of tax are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Net sales	$	—	$	475	$	—	$	1,992
Costs of sales	—		(285)		—		(1,179)
Research and development	—		(16)		—		(75)
Selling, general and administrative	(5)		(115)		(5)		(479)
Other income (expense), net	—		(593)		—		(592)
Gain (loss) on divestitures and deconsolidation	—		509		(22)		3,390
Interest (expense) income, net	—		(5)		—		(39)
Earnings (loss) before income taxes	(5)		(30)		(27)		3,018
Income tax (expense) benefit	—		112		—		154
Tax on divestitures and deconsolidation	26		(199)		31		(1,275)
Discontinued operations, net of tax	$	21	$	(117)	$	4	$	1,897

On December 2, 2024, the Company completed the sale of the Commercial and Residential Fire business ("CRF Business") for cash proceeds of $2.9 billion. The CRF Business, historically reported in the Company's Fire & Security segment, is a leading manufacturer of fire detection and alarm solutions for both commercial and residential applications. Upon sale, the Company recognized a net gain on the sale of $1.4 billion, which is included in Discontinued operations, net of tax.

On July 1, 2024, the Company completed the sale of its Industrial Fire business ("Industrial Fire") for cash proceeds of $1.4 billion. Industrial Fire, historically reported in the Company's Fire & Security segment, is a leading manufacturer of a full spectrum of fire detection and suppression solutions and services in critical high-hazard environments, including oil and gas, power generation, marine and offshore facilities, automotive, data centers and aircraft hangars. Upon sale, the Company recognized a net gain on the sale of $319 million, which is included in Discontinued operations, net of tax.

On June 2, 2024, the Company completed the sale of its Access Solutions business ("Access Solutions") for cash proceeds of $5.0 billion. Access Solutions, historically reported in the Company's Fire & Security segment, is a global supplier of physical security and digital access solutions supporting the hospitality, commercial, education and military markets. Upon sale, the Company recognized a net gain on the sale of $1.8 billion, which is included in Discontinued operations, net of tax.

Continuing Operations

On October 1, 2024, the Company completed the sale of CCR for cash proceeds of $679 million. CCR, historically reported in the Company's Climate Solutions Transportation segment, is a global supplier of turnkey solutions for commercial refrigeration systems and services, with a primary focus on serving food retail customers, cold storage facilities and warehouses. Upon sale, the Company recognized a gross gain on the sale of $318 million, which is included in Other income (expense), net. During 2025, the Company finalized the working capital and other adjustments provided in the stock purchase agreement governing the sale of CCR.

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NOTE 17: SEGMENT FINANCIAL DATA

The Company conducts its operations through four reportable operating segments. In accordance with ASC 280 - Segment Reporting, the Company's segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company's CODM in deciding how to allocate resources and in assessing performance.

•Climate Solutions Americas ("CSA") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in North and South America while enhancing building performance, health, energy efficiency and sustainability.

•Climate Solutions Europe ("CSE") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Europe while enhancing building performance, health, energy efficiency and sustainability.

•Climate Solutions Asia Pacific, Middle East & Africa ("CSAME") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Asia Pacific, the Middle East and Africa while enhancing building performance, health, energy efficiency and sustainability.

•Climate Solutions Transportation ("CST") includes global transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail.

The Corporate and other category primarily includes corporate administrative functions such as tax, treasury, internal audit, legal and human resources. A portion of these costs and costs associated with shared service centers that provide transaction processing, accounting and other business support functions are allocated to the reportable segments.

Segment operating profit is the measure of profit and loss that the Company’s CODM, the Chief Executive Officer (“CEO”), uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. It represents operating profit (a GAAP measure) adjusted to exclude restructuring costs, amortization of acquired intangible assets and other significant items of a nonoperational nature. Targets are established on an annual basis and used by the CODM throughout the year to compare with actual results. Quarterly forecasts supplement annual targets and provide incremental information utilized to assess the performance of a segment. Variance analysis further provides insight into segment end-markets and operational cost optimization. These results also support the CODM to manage the Company’s business portfolio.

Consistent with the management approach for segment reporting, the tables below present reported external net sales and significant expense categories for each of the Company’s segments that are regularly provided to the CODM and included in its reported measure of segment profit or loss. The Company manages research and development costs on a global basis and allocates these costs to the reportable segments.

A summary of results by reportable segment are as follows:



	Three Months Ended September 30, 2025
(In millions)	CSA		CSE		CSAME		CST		Segment Total
Net sales	$	2,711	$	1,290	$	833	$	745	$	5,579
Cost of goods sold	(1,837)		(888)		(630)		(541)		(3,896)
Research and development	(83)		(19)		(15)		(16)		(133)
Selling, general and administrative	(273)		(264)		(122)		(74)		(733)
Equity method investment net earnings	33		—		28		—		61
Other income (expense), net	(18)		1		3		1		(13)
Segment operating profit	$	533	$	120	$	97	$	115	$	865

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	Three Months Ended September 30, 2024
(In millions)	CSA		CSE		CSAME		CST		Segment Total
Net sales	$	2,961	$	1,246	$	840	$	937	$	5,984
Cost of goods sold	(1,920)		(851)		(625)		(686)		(4,082)
Research and development	(98)		(20)		(17)		(20)		(155)
Selling, general and administrative	(230)		(259)		(125)		(90)		(704)
Equity method investment net earnings	40		—		27		—		67
Other income (expense), net	(3)		13		6		(4)		12
Segment operating profit	$	750	$	129	$	106	$	137	$	1,122

	Nine Months Ended September 30, 2025
(In millions)	CSA		CSE		CSAME		CST		Segment Total
Net sales	$	8,535	$	3,712	$	2,541	$	2,122	$	16,910
Cost of goods sold	(5,598)		(2,559)		(1,893)		(1,531)		(11,581)
Research and development	(258)		(56)		(46)		(49)		(409)
Selling, general and administrative	(800)		(781)		(360)		(215)		(2,156)
Equity method investment net earnings	102		(1)		76		6		183
Other income (expense), net	1		9		35		7		52
Segment operating profit	$	1,982	$	324	$	353	$	340	$	2,999

	Nine Months Ended September 30, 2024
(In millions)	CSA		CSE		CSAME		CST		Segment Total
Net sales	$	8,186	$	3,732	$	2,626	$	2,794	$	17,338
Cost of goods sold	(5,411)		(2,510)		(1,916)		(2,054)		(11,891)
Research and development	(298)		(62)		(53)		(60)		(473)
Selling, general and administrative	(697)		(782)		(383)		(290)		(2,152)
Equity method investment net earnings	106		(2)		77		6		187
Other income (expense), net	2		13		20		(8)		27
Segment operating profit	$	1,888	$	389	$	371	$	388	$	3,036


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Reconciliation to Earnings before income taxes
Segment operating profit	$	865	$	1,122	$	2,999	$	3,036

Corporate and other	(42)		(78)		(162)		(172)
Restructuring costs	(50)		(60)		(105)		(97)
Amortization of acquired intangibles	(221)		(175)		(636)		(517)
Acquisition step-up amortization	—		(31)		—		(251)
Acquisition/divestiture-related costs	(13)		(15)		(32)		(87)
CCR gain	—		—		7		—

Viessmann-related hedges	—		—		—		(86)
Gain on liability adjustment	—		—		—		46
Non-service pension (expense) benefit	(9)		(1)		(8)		(1)
Interest (expense) income, net	(97)		8		(270)		(290)
Earnings before income taxes	$	433	$	770	$	1,793	$	1,581

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Segment operating profit is not defined under GAAP and may not be comparable to similarly titled measures used by other companies. Measures of capital expenditures, depreciation expense, amortization expense and total assets by reportable segment are not provided to the CODM and therefore not disclosed.

Geographic external sales are attributed to the geographic regions based on their location of origin. With the exception of the United States as presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the three and nine months ended September 30, 2025 and 2024.



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
United States	$	2,860	$	3,154	$	9,027	$	8,778
International:
Europe	1,560		1,723		4,481		5,152
Asia Pacific	961		923		2,883		2,886
Other	198		184		519		522
Net sales	$	5,579	$	5,984	$	16,910	$	17,338

NOTE 18: RELATED PARTIES

Equity Method Investments

The Company sells products to and purchases products from unconsolidated entities accounted for under the equity method and, therefore, these entities are considered to be related parties. Amounts attributable to equity method investees are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Sales to equity method investees included in Product sales	$	668	$	774	$	2,293	$	2,329
Purchases from equity method investees included in Cost of products sold	$	68	$	64	$	172	$	178

The Company had receivables from and payables to equity method investees as follows:


(In millions)	September 30, 2025		December 31, 2024
Receivables from equity method investees included in Accounts receivable, net	$	255	$	363
Payables to equity method investees included in Accounts payable	$	40	$	32

NOTE 19: COMMITMENTS AND CONTINGENT LIABILITIES

The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters. In accordance with ASC 450, Contingencies, the Company records accruals for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals are generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In addition, these estimates are reviewed periodically and adjusted to reflect additional information when it becomes available. The Company is unable to predict the final outcome of the following matters based on the information currently available, except as otherwise noted. However, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon its results of operations or financial condition.

Environmental Matters

The Company’s operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance guarantees. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to individual sites, including the technology required to remediate, current laws and regulations and prior remediation experience.

The outstanding liabilities for environmental obligations are as follows:


(In millions)	September 30, 2025		December 31, 2024
Environmental reserves included in Accrued liabilities	$	13	$	25
Environmental reserves included in Other long-term liabilities	187		185
Total Environmental reserves	$	200	$	210

For sites with multiple responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of other parties to fulfill their obligations in establishing a provision for these costs. Accrued environmental liabilities are not reduced by potential insurance reimbursements and are undiscounted.

Asbestos Matters

The Company has been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos allegedly integrated into certain Carrier products or business premises. While the Company has never manufactured asbestos and no longer incorporates it into any currently-manufactured products, certain products that the Company no longer manufactures contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or have been covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos-related claims were not material individually or in the aggregate in any period.

The Company's asbestos liabilities and related insurance recoveries are as follows:


(In millions)	September 30, 2025		December 31, 2024
Asbestos liabilities included in Accrued liabilities	$	17	$	17
Asbestos liabilities included in Other long-term liabilities	201		208
Total Asbestos liabilities	$	218	$	225

Asbestos-related recoveries included in Other current assets	$	6	$	7
Asbestos-related recoveries included in Other assets	86		88
Total Asbestos-related recoveries	$	92	$	95

The amounts recorded for asbestos-related liabilities are based on currently available information and assumptions that the Company believes are reasonable and are made with input from outside actuarial experts. These amounts are undiscounted and exclude the Company’s legal fees to defend the asbestos claims, which are expensed as incurred. In addition, the Company has recorded insurance recovery receivables for probable asbestos-related recoveries.

Aqueous Film Forming Foam Litigation

As of September 30, 2025, the Company, Kidde-Fenwal, Inc. ("KFI") and others have been named as defendants in more than 13,000 lawsuits filed in United States state or federal courts and a single case in Canada alleging that the historic use of Aqueous Film Forming Foam ("AFFF") caused personal injuries and damage to property and water supplies. In December 2018, the U.S. Judicial Panel on Multidistrict Litigation transferred and consolidated all AFFF cases pending in the U.S. federal courts against the Company, KFI and others to the U.S. District Court for the District of South Carolina (the "MDL Proceedings"). Individual plaintiffs in the MDL Proceedings generally seek damages for alleged personal injuries, medical monitoring, diminution in property value and injunctive relief to remediate alleged contamination of water supplies. U.S. state, municipal and water utility plaintiffs in the MDL Proceedings generally seek damages and costs related to the remediation of public property and water supplies.

AFFF is a firefighting foam, developed beginning in the late 1960s pursuant to U.S. military specification, used to extinguish certain types of hydrocarbon-fueled fires. The lawsuits identified above relate to Kidde Fire Fighting, Inc., which owned the “National Foam” business that manufactured AFFF for sale to government (including the U.S. federal government) and non-government customers in the U.S. at a single facility located in West Chester, Pennsylvania (the "Pennsylvania Site"). Kidde Fire Fighting, Inc. was acquired by a UTC subsidiary in 2005 and merged into KFI in 2007. In 2013, KFI divested the AFFF businesses to an unrelated third party. The Company acquired KFI as part of the Separation in April 2020.

The key components that contribute to AFFF's fire-extinguishing capabilities are known as fluorosurfactants. Neither the Company, nor KFI, nor any of the Company's subsidiaries involved in the AFFF litigation manufactured fluorosurfactants. Instead, the National Foam business purchased these substances from unrelated third parties for use in manufacturing AFFF. Plaintiffs in the MDL Proceedings allege that the fluorosurfactants used by various manufacturers in producing AFFF contained, or over time degraded into, compounds known as per- and polyfluoroalkyl substances (referred to collectively as "PFAS"), including perflourooctanesulfonic acid ("PFOS") and perflourooctanoic acid ("PFOA"). Plaintiffs further allege that, as a result of the use of AFFF, PFOS and PFOA were released into the environment and, in some instances, ultimately reached drinking water supplies.

Plaintiffs in the MDL Proceedings have named multiple defendants, including suppliers of chemicals and raw materials used to manufacture fluorosurfactants, fluorosurfactant manufacturers and AFFF manufacturers. The defendants in the MDL Proceedings moved for summary judgment on the government contractor defense, which potentially applies to AFFF sold to or used by the U.S. government. After full briefing and oral argument, on September 16, 2022, the MDL court declined to enter summary judgment for the defendants. The defense, however, remains available at any trial in which it would apply.

On May 14, 2023, KFI filed a voluntary petition with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under chapter 11 of the Bankruptcy Code, after the Company determined that it would not provide financial support to KFI going forward other than ensuring KFI has access to services necessary for the effective operation of its business. As a result, all litigation against KFI was automatically stayed. By agreement, all AFFF-related litigation against the Company, its other subsidiaries and RTX also was stayed. On November 21, 2023, the Bankruptcy Court ordered certain parties, including the Company, to participate in mediation sessions with respect to claims that might be asserted by and against it in the bankruptcy proceedings.

Following the conclusion of these mediation sessions in October 2024, the Company entered into a Settlement and Plan Support Agreement which contemplates that the Company will subsequently enter into three distinct settlement agreements (collectively, the “Proposed Settlement Agreements”) with KFI, the Official Committee of Unsecured Creditors appointed in KFI’s bankruptcy case (the “Committee”) and the Plaintiffs’ Executive Committee (the “MDL PEC”) appointed in the MDL Proceedings.

The first of the Proposed Settlement Agreements relates to claims that the Company is responsible for liabilities arising from KFI’s manufacture or sale of AFFF (“Estate Claims Settlement”). Upon Bankruptcy Court approval, the Estate Claims Settlement will permanently resolve all present and future claims that the Company is responsible for any liabilities of KFI, including all liabilities arising from KFI’s manufacture and sale of AFFF. The second and third of the Proposed Settlement Agreements release a very substantial amount of current and future direct claims against the Company (the “Direct Claims Settlements”). Direct claims allege that UTC, which indirectly owned KFI’s AFFF business for eight years, engaged in conduct independent of KFI that caused harm to AFFF claimants. The Company agreed to indemnify UTC for these direct claims when it was spun-off from UTC. Upon approval by the MDL Court, the Direct Claims Settlements resolve and enjoin all current and future AFFF-related direct claims against the Company by participating public water providers and airports. Non-settling parties may still assert direct AFFF-related claims, although we expect a vast majority of public water providers and airports will participate in the Direct Claims Settlements.

As part of the Proposed Settlement Agreements, the Company will pay $615 million in cash over five years, 100% of the net sale proceeds from its sale of KFI’s assets to Pacific Avenue Capital Partners, which are estimated to be $115 million, and contribute the right to recover proceeds under certain of its insurance policies. The Company will be entitled to receive up to $2.4 billion of proceeds from those insurance policies and will contribute the first $125 million of such proceeds as additional consideration in the Direct Claims Settlements. The Company also will be entitled to any earnouts payable to KFI under the KFI sale agreement. The Company expects insurance payments it receives in the future, in the aggregate, to cover the amount paid under the Proposed Settlement Agreements. As a result of the Proposed Settlement Agreements, the Company recorded a liability in the amount of $565 million during the three months ended September 30, 2024. The amount recognized is in addition to liabilities of $50 million that the Company recorded upon the deconsolidation of KFI on May 14, 2023, as further discussed below. As of September 30, 2025, the Company has not recorded any amounts associated with expected insurance proceeds.

The Company and KFI believe that they have meritorious defenses to the remaining AFFF claims. Given the numerous factual, scientific and legal issues to be resolved relating to these claims, the Company is unable to assess the probability of liability or to reasonably estimate a range of possible loss at this time. There can be no assurance that any such future exposure will not be material in any period.

On November 14, 2024, KFI filed the chapter 11 plan of liquidation (as may be further amended, restated, supplemented, waived, or otherwise modified from time to time, the "Chapter 11 Plan"), which incorporates the Estate Claims Settlement, provides for the treatment of the various creditor classes, and establishes wind-down provisions, among other things, and the disclosure statement for the Chapter 11 Plan (as may be further amended, restated, supplemented, waived, or otherwise modified from time to time, the "Disclosure Statement"). A hearing to approve the Disclosure Statement was held in June 2025. A revised and supplemented Disclosure Statement was filed on August 15, 2025. The Bankruptcy Court held a hearing on that statement on October 6, 2025. Following that hearing, the Bankruptcy Court ordered that the revised and supplemented Disclosure Statement be modified further in two areas, which the parties are addressing.

Deconsolidation Due to Bankruptcy

As of May 14, 2023, the Company no longer controlled KFI as its activities are subject to review and oversight by the Bankruptcy Court. Therefore, KFI was deconsolidated and its respective assets and liabilities were derecognized from the Company’s Unaudited Condensed Consolidated Financial Statements. Upon deconsolidation, the Company determined the fair value of its retained interest in KFI to be zero and we accounted for it prospectively using the cost method.

In connection with the bankruptcy filing, KFI entered into several agreements with subsidiaries of the Company to ensure they have access to services necessary for the effective operation of their business. All post-deconsolidation activity between the Company and KFI are reported as third-party transactions recorded within the Company's Unaudited Condensed Consolidated Statement of Operations. Since the petition date, there were no material transactions between the Company and KFI other than a $15 million payment during 2024 by the Company to KFI under the terms of a tax sharing arrangement.

Income Taxes

Under the TMA relating to the Separation, the Company is responsible to UTC for its share of the Tax Cuts and Jobs Act transition tax associated with foreign undistributed earnings as of December 31, 2017. As a result, a liability of $101 million is included within the accompanying Unaudited Condensed Consolidated Balance Sheet within Accrued liabilities as of September 30, 2025. This obligation is expected to be settled in April 2026. The Company believes that the likelihood of incurring losses materially in excess of this amount is remote.

Other

The Company has other commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising in the ordinary course of business. The Company accrues for contingencies generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount.

In the ordinary course of business, the Company is also routinely a defendant in, party to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some of these proceedings, claims for substantial monetary damages are asserted against the Company and could result in fines, penalties, compensatory or treble damages or non-monetary relief. The Company does not believe that these matters will have a material adverse effect upon its results of operations, cash flows or financial condition.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Business Summary

Carrier Global Corporation ("we" or "our") is a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to our customers. Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold that offer innovative heating, ventilating, air conditioning ("HVAC") and cold chain transportation solutions to enhance the lives we live and the world we share. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. Our operations are classified into four segments: Climate Solutions Americas, Climate Solutions Europe, Climate Solutions Asia Pacific, Middle East & Africa and Climate Solutions Transportation.

Through our performance-driven culture, we anticipate creating long-term shareowner value by investing strategically to strengthen our product position in homes, buildings and across the cold chain in order to drive profitable growth. We believe our business segments are well positioned to benefit from favorable secular trends, including the mega-trends of urbanization, population growth and demographic shifts, food security and safety, digitalization, global connectivity and energy efficiency. Coupled with our industry-leading brands and track record of innovation, we continue to provide market-leading solutions for our customers.

Our worldwide operations are affected by global and regional industrial, economic and political factors, trade policies and trends. They are also affected by changes in the general level of economic activity, such as changes in business and consumer spending, construction and shipping activity as well as short-term economic factors such as currency fluctuations, commodity price volatility and supply disruptions. We continue to invest in our business, take pricing actions to mitigate supply chain and inflationary pressures, develop new products and services in order to remain competitive in our markets and use risk management strategies to mitigate various exposures.

We continue to actively monitor evolving macroeconomic conditions and recent trade policy announcements. Based on our updated analysis, we expect to fully mitigate our expected 2025 impact from tariffs announced to date through supply chain and productivity actions as well as approximately $200 million of incremental product pricing actions. To date, tariffs have not had a material impact on our business and we are deploying additional strategies, including cost containment measures, to limit future exposure in this current market environment.

Recent Developments

Portfolio Transformation

During 2024, we completed several activities designed to simplify our business portfolio, transforming it into a pure-play climate and energy solutions provider. On January 2, 2024, we acquired the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (together with its affiliates, “Viessmann”). The VCS Business, primarily reported in the Climate Solutions Europe segment, is a premier residential and light commercial HVAC provider in Europe that expanded our portfolio to offer a global, comprehensive suite of sustainable and innovative building and cold-chain solutions. In addition, we divested our Commercial and Residential Fire, Access Solutions and Industrial Fire businesses which were historically reported in our Fire & Security segment. The transactions represented a single disposal plan to separately divest multiple businesses over different reporting periods and met the criteria to be presented as discontinued operations. We also divested our Commercial Refrigeration business (“CCR”) during 2024. CCR, which was historically reported in the Climate Solutions Transportation segment (previously named Refrigeration), did not meet the criteria to be presented as discontinued operations.

Segment Reorganization

As a result of our portfolio transformation, we revised our reportable segments during the first quarter of 2025 to better reflect our business strategy, align our management reporting and increase transparency for investors. Under the revised segment structure, we have three new regional HVAC operating segments. Combined with the existing Climate Solutions Transportation operating segment, the four operating segments also serve as our reportable segments. This model is designed to create a simplified, more focused and customer-centric organization across the globe. Each segment reports through separate management teams which regularly review their operating results with our Chief Operating Decision Maker (the "CODM") determined in accordance with applicable accounting guidance. In connection with the revised structure, the CODM changed the measure used to evaluate segment profitability from Operating profit to Segment operating profit. All prior period comparative information has been recast to reflect the revised segment structure.

CRITICAL ACCOUNTING ESTIMATES

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses. We believe that the most complex and sensitive judgments, because of their potential significance to the accompanying Unaudited Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. In "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K, we describe the significant accounting estimates and policies used in the preparation of the accompanying Unaudited Condensed Consolidated Financial Statements. There have been no significant changes in our critical accounting estimates.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2025 Compared with the Three Months Ended September 30, 2024

The following represents our consolidated net sales and operating results:


	Three Months Ended September 30,
(In millions)	2025		2024		Period Change		% Change
Net sales	$	5,579	$	5,984	$	(405)	(7)	%
Cost of products and services sold	(4,130)		(4,307)		177		(4)	%
Gross margin	1,449		1,677		(228)		(14)	%
Operating expenses	(910)		(914)		4		—	%
Operating profit	539		763		(224)		(29)	%
Non-operating income (expense), net	(106)		7		(113)		(1614)	%
Earnings (loss) before income taxes	433		770		(337)		(44)	%
Income tax expense	1		(172)		173		(101)	%
Earnings (loss) from continuing operations	434		598		(164)		(27)	%
Discontinued operations, net of income taxes	21		(117)		138		(118)	%
Net earnings (loss)	455		481		(26)		(5)	%
Less: Non-controlling interest in subsidiaries' earnings from operations	27		34		(7)		(21)	%
Net earnings (loss) attributable to common shareowners	$	428	$	447	$	(19)	(4)	%

Net Sales

For the three months ended September 30, 2025, Net sales were $5.6 billion, a 7% decrease compared with the same period of 2024. The components of the year-over-year change were as follows:


	Three Months Ended September 30,
Organic	(4)	%
Foreign currency translation	1	%
Acquisitions and divestitures, net	(4)	%

Total % change	(7)	%

Organic sales for the three months ended September 30, 2025, decreased by 4% compared with the same period of 2024. The organic decrease was primarily due to our Climate Solutions Americas segment as reduced end-market demand and distributor destocking in our residential business impacted the segment. In addition, lower end-market demand in both our Climate Solutions Europe and Climate Solutions Asia Pacific, Middle East & Africa segments further impacted overall results. These results were partially offset by improved end-market demand in Climate Solutions Transportation. Refer to "Segment Review" below for a discussion of Net sales by segment.

Gross Margin

For the three months ended September 30, 2025, gross margin was $1.4 billion, a 14% decrease compared with the same period of 2024. The components were as follows:


	Three Months Ended September 30,
(In millions)	2025			2024
Net sales	$	5,579		$	5,984
Cost of products and services sold	(4,130)			(4,307)
Gross margin	$	1,449		$	1,677
Percentage of net sales	26.0		%	28.0		%

Gross margin decreased by $228 million compared with the three months ended September 30, 2024 primarily due to lower volumes in certain end-markets. As a result, gross margin as a percentage of Net sales decreased by 200 basis points compared with the same period of 2024. The prior period included inventory step-up and backlog amortization resulting from the recognition of acquired assets of the VCS Business at fair value which are now fully amortized. These costs had a 50 basis point unfavorable impact on the prior period gross margin as a percentage of Net sales. The decrease was partially offset by ongoing customer demand in certain end-markets and our continued focus on productivity initiatives.

Operating Expenses

For the three months ended September 30, 2025, operating expenses, including Equity method investment net earnings, were $910 million, flat compared with the same period of 2024. The components were as follows:


	Three Months Ended September 30,
(In millions)	2025			2024
Selling, general and administrative	$	(803)		$	(799)
Research and development	(151)			(172)
Equity method investment net earnings	60			66
Other income (expense), net	(16)			(9)
Total operating expenses	$	(910)		$	(914)
Percentage of net sales	16.3		%	15.3		%

For the three months ended September 30, 2025, Selling, general and administrative expenses were $803 million, a 1% increase compared with the same period of 2024. The increase primarily relates to foreign currency translation. In addition, employee-related costs associated with our portfolio transformation further impacted results. These costs were partially offset by lower compensation costs and synergies associated with the integration of the VCS Business. The current period also included $13 million of acquisition and divestiture-related costs compared with $15 million during the three months ended September 30, 2024.

Research and development costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate. In addition, we continue to invest to prepare for future product innovations and digital controls technologies.

Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting. For the three months ended September 30, 2025, Equity method investment net earnings were $60 million, a 9% decrease compared with the same period of 2024. The decrease was primarily driven by lower earnings in joint ventures within Climate Solutions Americas.

Other income (expense), net primarily includes the impact of gains and losses related to the sale of businesses or interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an entity's functional currency and hedging-related activities.

Non-Operating Income (Expense), net

For the three months ended September 30, 2025, Non-operating income (expense), net was $106 million, a 1,614% decrease compared with the same period of 2024. The components were as follows:


	Three Months Ended September 30,
(In millions)	2025		2024
Non-service pension (expense) benefit	$	(9)	$	(1)

Interest expense	$	(116)	$	(131)
Interest income	19		139
Interest (expense) income, net	$	(97)	$	8

Non-operating income (expense), net	$	(106)	$	7

Non-operating income (expense), net includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations. Interest expense is affected by the amount of debt outstanding and the interest rates on that debt. For the three months ended September 30, 2025, Interest expense was $116 million, an 11% decrease compared with the same period of 2024. Consistent with our capital allocation strategy, we reduced our outstanding debt by approximately $3 billion over the course of 2024 and repaid an additional $1.2 billion in 2025. During the three months ended September 30, 2024, our debt repayments resulted in an $11 million write off of unamortized deferred financing costs in Interest expense and recognition of a net gain of $97 million in Interest income.

Income Taxes


	Three Months Ended September 30,
	2025		2024
Effective tax rate	(0.2)	%	22.3	%

We account for income tax expense in accordance with ASC 740, which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. The effective tax rate for the three months ended September 30, 2025, was a 0.2% benefit compared with 22.3% for the three months ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025, was lower than the effective tax rate for the three months ended September 30, 2024, primarily due to a net tax benefit of $64 million from changes to the German effective rate and a statutory reduction to the German corporate tax rate enacted during the current period and a tax benefit of $49 million from the re-organization of a Japanese subsidiary.

Adjusted Operating Profit

We report our financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). In addition, we supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. Adjusted operating profit is a non-GAAP measure and defined as consolidated operating profit (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items of a nonoperational nature. This measure is useful to investors because it is how management assesses the operating performance of the business. A reconciliation of the amounts prepared in accordance with GAAP to the corresponding non-GAAP measure appears below and provides additional information as to the items and amounts that have been excluded from the adjusted measure.


	Three Months Ended September 30,
(In millions)	2025		2024
Reconciliation to Adjusted operating profit
Operating profit	$	539	$	763

Restructuring costs	50		60
Amortization of acquired intangibles	221		175
Acquisition step-up amortization	—		31
Acquisition/divestiture-related costs	13		15




Adjusted operating profit	$	823	$	1,044

Adjusted operating profit may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for Operating profit in accordance with GAAP. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as a substitute for the related GAAP measure. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Nine Months Ended September 30, 2025 Compared with the Nine Months Ended September 30, 2024

The following represents our consolidated net sales and operating results:


	Nine Months Ended September 30,
(In millions)	2025		2024		Period Change		% Change
Net sales	$	16,910	$	17,338	$	(428)	(2)	%
Cost of products and services sold	(12,247)		(12,701)		454		(4)	%
Gross margin	4,663		4,637		26		1	%
Operating expenses	(2,592)		(2,765)		173		(6)	%
Operating profit	2,071		1,872		199		11	%
Non-operating income (expense), net	(278)		(291)		13		(4)	%
Earnings (loss) before income taxes	1,793		1,581		212		13	%
Income tax expense	(272)		(339)		67		(20)	%
Earnings (loss) from continuing operations	1,521		1,242		279		22	%
Discontinued operations, net of income taxes	4		1,897		(1,893)		(100)	%
Net earnings (loss)	1,525		3,139		(1,614)		(51)	%
Less: Non-controlling interest in subsidiaries' earnings from operations	94		86		8		9	%
Net earnings (loss) attributable to common shareowners	$	1,431	$	3,053	$	(1,622)	(53)	%

Net Sales

For the nine months ended September 30, 2025, Net sales were $16.9 billion, a 2% decrease compared with the same period of 2024. The components of the year-over-year change were as follows:


	Nine Months Ended September 30,
Organic	1	%
Foreign currency translation	1	%
Acquisitions and divestitures, net	(4)	%

Total % change	(2)	%

Organic sales for the nine months ended September 30, 2025 increased by 1% compared with the same period of 2024. The organic increase was primarily due to our Climate Solutions Americas segment as ongoing demand in certain end-markets continued to drive higher volumes. In addition, improved end-market demand in our Climate Solutions Transportation segment further benefited results. These amounts were partially offset by lower end-market demand in both Climate Solutions Europe and Climate Solutions Asia Pacific, Middle East & Africa. Refer to "Segment Review" below for a discussion of Net sales by segment.

Gross Margin

For the nine months ended September 30, 2025, gross margin was $4.7 billion, a 1% increase compared with the same period of 2024. The components were as follows:

CARRIER GLOBAL Corp 10-Q