Carrier (NYSE: CARR) orders jump 35%, but a goodwill charge tips it into a quarterly loss

What happened

Carrier Global Corporation (NYSE: CARR) booked a $3.1 billion non-cash goodwill charge in the third quarter. Orders, sales and backlog all rose.

The charge relates to the Climate Solutions Europe reporting unit. GAAP operating results swung from a $539 million profit a year earlier to a $2.27 billion loss. The filing says growth in all segments was offset by the charge.

Net loss from continuing operations attributable to common shareowners was $2.59 billion, or $3.16 per share. A year earlier, Carrier earned $407 million, or $0.47 per diluted share, from continuing operations.

Net sales rose 12% to $6.3 billion from $5.58 billion in the third quarter of 2025. Organic sales rose 15%, and divestitures took 3 points off growth.

Key numbers

Metric	Latest	Change	Source
Net sales	$6.26 billion	from $5.58 billion, +12%	SEC 8-K Exhibit 99
Adjusted EPS, continuing operations	$0.87	from $0.67, +30%	SEC 8-K Exhibit 99
GAAP diluted EPS, continuing operations	-$3.16	from $0.47	SEC 8-K Exhibit 99
Goodwill impairment charge (non-cash)	$3.1 billion		SEC 8-K Exhibit 99
Backlog	Over $8.5 billion	+60%	SEC 8-K Exhibit 99
Free cash flow	$674 million	from $224 million	SEC 8-K Exhibit 99

Read more: Carrier Global (CARR) company research

Orders and backlog

Demand was the strongest part of the report. Carrier said organic orders rose 35%, Commercial HVAC orders rose 60% and data center orders rose 300%.

Backlog topped $8.5 billion, up 60% from a year earlier. The company calls that a record. Carrier also signed long-term agreements worth multiple billions of dollars with minimum volume commitments, which it says are additive to backlog.

In Climate Solutions Americas, sales grew 24%. Residential rose over 30% and Commercial rose 25%. In Europe, residential heat pump and air conditioning sales each rose 35%, more than offsetting high-single digit declines in boilers. Transportation sales fell 3%.

Stock perps: every US stock that trades as a perpetual future, by leverage, live

Adjusted profit and the refund benefit

Adjusted EPS rose 30% to $0.87 from $0.67. Adjusted net earnings from continuing operations were $713 million. Adjusted operating profit rose $268 million, or 33%, to $1.09 billion.

The adjusted operating margin of 17.4% was up 260 basis points. Carrier credited mainly higher volume and price, partly offset by higher input costs and tariffs.

Several one-time items sit inside the adjusted figures. Carrier recorded about $130 million of operating profit benefit from IEEPA refunds. Adjusted EPS includes a $0.10 benefit from them, net of a $0.02 non-controlling interest impact.

In Americas, the 22.2% segment margin includes $120 million of refunds. In Europe, the 12.6% segment margin includes a 100 basis point net benefit from correcting a prior period item.

Cash flow, balance sheet and guidance

Cash generation improved sharply. Operating cash flow was $813 million versus $341 million a year earlier. Free cash flow was $674 million versus $224 million, after $139 million of capital spending. Carrier returned $600 million to shareowners through dividends and repurchases.

Net debt was $10.12 billion at Sept. 30, down from $10.28 billion at Dec. 31, 2025. Total equity fell to $10.42 billion from $14.13 billion over the same span.

Carrier raised full-year sales guidance to $23.8 billion to $24.0 billion from $23 billion. It raised organic growth guidance to about 10% from mid-to-high single digits. Adjusted operating profit guidance stayed at $3.5 billion and free cash flow at $2 billion. Adjusted EPS guidance is $2.85 to $2.90, versus $2.90 before.

Carrier expects to return about $2.3 billion to shareowners in 2026. It completed the Riello divestiture on July 1 and the NORESCO divestiture on Aug. 3. They create year-over-year revenue headwinds of $225 million and $125 million.

Why it matters

OptimistFi has argued that Carrier works if its climate portfolio turns efficiency and service demand into durable margins and cash, instead of cyclical equipment sales. The jump in free cash flow and the minimum volume commitments in the long-term agreements support that view.

The quarter is less clean than the adjusted figures suggest. The goodwill charge is non-cash and excluded from adjusted results. Those results do include the refund benefit. If the refunds do not recur, the rise in adjusted operating profit overstates recurring earnings power.

Guidance shows the same tension. Carrier lifted its sales outlook but left adjusted operating profit unchanged. It says it remains vigilant about tariffs and increasing input costs.

What's next

Carrier scheduled its earnings webcast for 7:30 a.m. ET on Oct. 29. The longer test is the full-year guidance. Through nine months, adjusted operating profit is $2.78 billion and free cash flow is $1.47 billion.

Hitting the full-year profit and cash targets while backlog converts to sales would strengthen OptimistFi's view. So would margins that hold without refund help. A shortfall against guidance would weaken it.

More from OptimistFi

• CARR stock: research and coverage of Carrier Global
• Stock research on every company OptimistFi covers

From OptimistFi Perps