Carrier Global Corp. (NYSE:CARR)

The analysis of the annual current and deferred income tax expenses reveals distinct trends over the three-year period.

Current Income Tax Expense

The current income tax expense shows a gradual increase from 752 million USD in 2020 to 773 million USD in 2021, followed by a further rise to 832 million USD in 2022. This upward trend indicates a consistent growth in the immediate income tax obligations over the examined timeframe.

Deferred (Future) Income Tax Expense

The deferred income tax expense exhibits a significant change in direction and magnitude. In 2020, there was a positive deferred expense of 97 million USD, which then flipped to a negative value of -74 million USD in 2021 and further decreased to -124 million USD in 2022. This shift from positive to increasingly negative values suggests the recognition of deferred tax assets or the reversal of previously recognized deferred tax liabilities.

Total Income Tax Expense

The total income tax expense, which is the sum of current and deferred components, declined from 849 million USD in 2020 to 699 million USD in 2021. In 2022, it increased slightly to 708 million USD but remained below the 2020 level. This pattern reflects the impact of the deferred tax component, which dampened the overall income tax expense despite the rising current tax expense.

Overall, while immediate tax liabilities have progressively increased, the deferred tax elements have introduced fluctuations leading to a net income tax expense that declined and then stabilized at a lower level than the initial year. This behavior could be indicative of strategic tax planning or changes in timing differences relating to taxable income recognition.

The analysis of the annual financial data reveals distinct trends in the composition and magnitude of tax rates over the three-year period ending in 2022.

Consistent statutory tax base

The statutory U.S. federal income tax rate remained stable at 21% across all three years, indicating no changes in the federal tax legislation affecting the company.

Variability in state income tax

The state income tax rate experienced minor fluctuations, rising from 1.7% in 2020 to 1.9% in 2021, before decreasing to 1.5% in 2022. This suggests adjustments or differing state tax obligations impacting the overall tax burden.

Significant changes in tax on international activities

A notable increase occurred in the tax on international activities, escalating from 4.2% in 2020 to 7.2% in 2021, which may reflect expanded international operations or changes in taxation policies abroad. However, there was a subsequent and sharp decline to -1% in 2022, indicating a tax credit or reversal effect related to international activities in that year.

Separation and acquisition impacts

The separation impact was positively significant at 3.4% in 2020 but absent in the following years, implying a one-time effect likely associated with organizational restructuring or spin-off activities during that year. The TCC acquisition impact appeared only in 2022 as a negative 4.2%, suggesting a tax benefit or adjustment resulting from acquisition-related expenses or goodwill amortization.

Other tax effects

Other miscellaneous tax effects remained consistently negative, ranging from -0.6% to -1% over the period, indicating small but continual offsets to the overall tax rate.

Trend in effective income tax rate

The effective income tax rate showed a decreasing trajectory, starting at 29.7% in 2020, slightly declining to 29.1% in 2021, and then dropping substantially to 16.5% in 2022. The significant reduction in 2022 correlates with the negative contributions from the tax on international activities and the TCC acquisition impact, which together lower the overall effective tax burden.

In summary, the data suggest stable federal tax conditions coupled with fluctuating state and international tax components. One-time events related to corporate restructuring and acquisition activities exerted material influence on tax rates, particularly evident in the sharp decline in the effective income tax rate in 2022.

The financial data reveals several notable trends and changes over the three-year period ending December 31, 2022. The overall movements in tax-related assets and liabilities, valuation allowances, and basis differences provide insight into the company's tax position and intangible asset evaluations.

Insurance and Employee Benefits

These costs increased from 109 million US dollars in 2020 to a peak of 198 million in 2021, followed by a decline to 161 million in 2022. This pattern indicates a significant rise in 2021 that partially reversed the following year.

Other Assets and Liabilities Basis Differences

Other asset basis differences increased steadily from 152 million in 2020 to 284 million in 2022, showing a consistent growth in the value differences of other assets. Conversely, other liabilities basis differences also increased steadily from 487 million to 571 million, implying growing adjustments or discrepancies on the liabilities side.

Tax Loss and Credit Carryforwards

Tax loss carryforwards decreased from 258 million in 2020 to 175 million in 2021 and remained relatively stable at 177 million in 2022, signaling realization or expiration of some tax benefits. Tax credit carryforwards declined sharply from 63 million to 24 million in 2021 but experienced a mild recovery to 29 million in 2022.

Valuation Allowances

The valuation allowances showed significant improvement by decreasing from -231 million in 2020 to -90 million in 2021, representing a reduction in reserves against deferred tax assets, but slightly worsened to -100 million in 2022. This suggests some cautious reassessment of recoverability of deferred tax assets after the initial improvement.

Future Income Tax Benefits

These benefits exhibited a steady increase each year, growing from 838 million in 2020 to 985 million in 2021 and reaching 1122 million in 2022. This steady growth indicates enhanced recognition of future tax advantage potential.

Goodwill and Intangible Assets

Goodwill and intangible assets showed a mixed trend with a decrease in negative impact from -411 million in 2020 to -270 million in 2021, followed by a significant increase in the negative value to -449 million in 2022. This fluctuation signifies volatility in the valuation adjustments related to goodwill and intangibles.

Other Asset Basis Differences (Negative)

Negative other asset basis differences moved from -336 million in 2020 to -307 million in 2021, and then further declined to -395 million in 2022, indicating fluctuations but an overall increase in negative basis differences over the period.

Future Income Tax Payables

There was a decline in future income tax payables from -747 million in 2020 to -577 million in 2021, followed by a sharp increase to -844 million in 2022. This suggests increased anticipated tax liabilities in the most recent year after a brief reduction.

Future Income Tax Benefit (Payables)

This net figure showed considerable volatility, moving from 91 million in 2020 to a peak of 408 million in 2021, then dropping to 278 million in 2022. This pattern reflects significant swings in the balance between tax benefits and payables, with a notable peak in 2021.

In summary, the data reflects variable trends across tax assets, liabilities, and valuation allowances, with 2021 generally representing a year of improvement in tax-related benefits followed by some reversals or increased liabilities in 2022. Goodwill and intangible assets displayed marked volatility, while insurance and employee benefits costs increased sharply in 2021 before declining. Overall, the fiscal measures related to deferred taxes and intangible asset adjustments suggest ongoing revisions in the assessment of future tax positions and asset valuations.

The data reveals several notable financial trends over the three-year period ending December 31, 2022. Total assets, both reported and adjusted for deferred income tax, show a gradual increase from 2020 to 2021 followed by a slight decline in 2022. Specifically, reported total assets rose from 25,093 million US dollars in 2020 to 26,172 million in 2021, then decreased marginally to 26,086 million in 2022. The adjusted total assets mirrored this trend, increasing from 24,644 million to 25,609 million and then declining to 25,474 million over the same periods.

Total liabilities exhibit a somewhat different pattern, with reported liabilities increasing from 18,515 million in 2020 to 19,078 million in 2021 before decreasing significantly to 18,010 million in 2022. Adjusted liabilities follow a similar trajectory but at slightly lower values: a rise from 18,036 million to 18,724 million and a subsequent decline to 17,442 million. This reduction in liabilities in 2022 may indicate improved debt management or changes in operational financing.

Equity attributable to common shareowners demonstrates a consistent upward trend throughout the period. Reported equity rose steadily from 6,252 million in 2020 to 6,767 million in 2021 and further to 7,758 million in 2022. Adjusted equity also increased, although with a less pronounced growth between 2020 and 2021 (6,161 million to 6,359 million), followed by a more substantial rise to 7,480 million in 2022. The continued growth in equity suggests strengthening shareholder value and retained earnings accumulation.

Net income attributable to common shareowners presents a somewhat volatile pattern. The reported net income declined from 1,982 million in 2020 to 1,664 million in 2021, then sharply increased to 3,534 million in 2022. Adjusted net income experienced a similar pattern, decreasing from 2,079 million in 2020 to 1,590 million in 2021 before rebounding to 3,410 million in 2022. This significant increase in net income in 2022 signals improved profitability, potentially driven by operational efficiencies, revenue growth, or favorable tax adjustments.

Overall, the financial data reflects moderate asset growth, controlled liabilities with reduction in the most recent period, continuous strengthening of equity, and a notable recovery and expansion in net income. The deferred income tax adjustments show consistent reductions in assets and liabilities figures, resulting in slightly lower adjusted values compared to reported numbers, which is customary. The pronounced recovery in profitability in 2022 is the most significant financial highlight over the three years analyzed.

Total Assets

Gradual increase from 2020 to 2021, slight decrease in 2022.

Total Liabilities

Increase from 2020 to 2021, followed by a substantial decrease in 2022.

Equity Attributable to Common Shareowners

Consistent and steady growth across all years analyzed.

Net Income Attributable to Common Shareowners

Declined in 2021 compared to 2020, then increased significantly in 2022 indicating improved profitability.

The financial data reflects variations in key profitability and efficiency ratios over the three-year period, highlighting evolving operational performance and capital structure dynamics.

Net Profit Margin

Both reported and adjusted net profit margins demonstrate a declining trend from 2020 to 2021, followed by a significant increase in 2022. Specifically, reported net profit margin dropped from 11.35% in 2020 to 8.07% in 2021, then escalated sharply to 17.31% in 2022. The adjusted net profit margin mirrors this pattern, declining from 11.91% to 7.71% before rising to 16.7%. This suggests an initial reduction in profitability that reversed substantially in the most recent year.

Total Asset Turnover

The reported total asset turnover ratio rose from 0.7 in 2020 to 0.79 in 2021, indicating improved asset utilization, and slightly decreased to 0.78 in 2022. The adjusted turnover ratio shows a more consistent improvement, increasing from 0.71 to 0.8 by 2022. These patterns indicate enhanced efficiency in using assets to generate revenue, especially after adjusting for deferred income taxes.

Financial Leverage

Financial leverage ratios show a decreasing trend over the period. Reported leverage decreased from 4.01 in 2020 to 3.36 in 2022, while adjusted leverage remained nearly steady from 4.0 to 4.03 between 2020 and 2021 before falling to 3.41 in 2022. This decline reflects a reduction in the company's reliance on debt relative to equity, which may affect risk and return profiles.

Return on Equity (ROE)

ROE figures experienced a dip from 2020 to 2021 but then rose markedly in 2022. The reported ROE decreased from 31.7% to 24.59% before increasing to 45.55%, while the adjusted ROE fluctuated similarly, moving from 33.74% down to 25% and then surging to 45.59%. This suggests that despite a temporary setback, shareholder returns improved substantially in the latest period.

Return on Assets (ROA)

Reported ROA followed a similar trajectory to ROE and net profit margin, decreasing from 7.9% in 2020 to 6.36% in 2021, then increasing sharply to 13.55% in 2022. Adjusted ROA trends are comparable, with a small initial decline followed by a strong recovery. This indicates enhanced efficiency in generating profits from assets after an interim decline.

Overall, the data reveals that the company experienced reduced profitability and returns in 2021 relative to 2020, accompanied by slightly improved asset turnover and steady financial leverage. In 2022, there was marked improvement in profitability measures and returns, with continued efficient asset use and reduced leverage, reflecting potentially stronger operational performance and a more conservative capital structure.

Reported net income attributable to common shareowners

The reported net income shows a decrease from 1982 million USD in 2020 to 1664 million USD in 2021, representing a downward trend. However, in 2022, there is a significant increase to 3534 million USD, indicating a strong recovery and growth in profitability over the three-year period.

Adjusted net income attributable to common shareowners

Adjusted net income follows a similar pattern to the reported figures, starting at 2079 million USD in 2020 and decreasing to 1590 million USD in 2021. In 2022, the adjusted net income rises sharply to 3410 million USD, reflecting an overall positive trajectory after the initial decline.

Reported net profit margin

The reported net profit margin declines from 11.35% in 2020 to 8.07% in 2021, suggesting reduced profitability relative to revenue during that year. In 2022, the margin substantially improves to 17.31%, more than doubling from the previous year, signaling enhanced operational efficiency or favorable financial conditions.

Adjusted net profit margin

Consistent with reported margins, the adjusted net profit margin decreases from 11.91% in 2020 to 7.71% in 2021. It then rises to 16.7% in 2022, indicating restoration and strengthening of profitability after a period of contraction.

Reported Total Assets

The reported total assets show a gradual increase from 25,093 million USD in 2020 to 26,172 million USD in 2021, followed by a slight decrease to 26,086 million USD in 2022. This indicates a generally stable asset base over the three-year period, with a minor dip in the final year.

Adjusted Total Assets

Adjusted total assets also follow a similar trend, rising from 24,644 million USD in 2020 to 25,609 million USD in 2021 before decreasing slightly to 25,474 million USD in 2022. The adjustment appears to consistently lower the total asset values compared to reported figures, but the overall trend mirrors the reported data with a small decline in the last year.

Reported Total Asset Turnover

Reported total asset turnover increased from 0.70 in 2020 to 0.79 in 2021, indicating improved efficiency in generating revenue from assets. However, there was a marginal decrease to 0.78 in 2022, suggesting a slight decline in operational efficiency.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio rose from 0.71 in 2020 to 0.80 in 2021 and remained steady at 0.80 in 2022. This stability in adjusted turnover ratio in the last two years suggests consistent asset utilization efficiency when accounting for tax adjustments.

The financial data over the three-year period shows a moderate increase in both reported and adjusted total assets from 2020 to 2021, followed by a slight decrease in 2022. Specifically, reported total assets increased from 25,093 million US dollars in 2020 to 26,172 million US dollars in 2021 and then declined marginally to 26,086 million US dollars in 2022. A similar pattern is observed in adjusted total assets, which rose from 24,644 million to 25,609 million US dollars between 2020 and 2021 and then decreased slightly to 25,474 million US dollars in 2022.

Equity attributable to common shareowners presents a consistent upward trend in both reported and adjusted figures. Reported equity increased significantly from 6,252 million US dollars in 2020 to 6,767 million US dollars in 2021, with a more pronounced rise to 7,758 million US dollars in 2022. Adjusted equity shows a comparable trend, increasing from 6,161 million US dollars in 2020 to 6,359 million US dollars in 2021 and then to 7,480 million US dollars in 2022. The increasing equity values indicate strengthening shareholder interests and potentially improved company retention of earnings or capital inflows.

In terms of financial leverage, both reported and adjusted ratios decreased over the period. Reported financial leverage declined from 4.01 in 2020 to 3.87 in 2021 and further down to 3.36 in 2022. Adjusted financial leverage initially increased slightly from 4.00 to 4.03 between 2020 and 2021 but then dropped significantly to 3.41 by 2022. This reduction in leverage suggests a decreasing reliance on debt relative to equity, reflecting a potentially more conservative capital structure and reduced financial risk.

Key Trends:

- Total assets grew modestly in 2021 before a minor decline in 2022.

- Equity attributable to common shareowners showed consistent and substantial growth across all periods.

- Financial leverage ratios declined overall, indicating reduced debt usage relative to equity by the end of the period.

- Adjusted figures closely track the reported numbers, reinforcing the observed trends.

The financial data reveals several notable trends in the performance and equity position over the three-year period ending December 31, 2022. Net income figures, both reported and adjusted for deferred income tax impacts, exhibit a fluctuation with an initial decline followed by a substantial increase. Reported net income decreased from 1,982 million US dollars in 2020 to 1,664 million US dollars in 2021, then surged to 3,534 million US dollars in 2022. Adjusted net income followed a comparable pattern, dropping from 2,079 million US dollars in 2020 to 1,590 million US dollars in 2021, before climbing to 3,410 million US dollars in 2022.

Equity attributable to common shareholders shows consistent growth throughout the examined timeframe. Reported equity rose steadily from 6,252 million US dollars in 2020 to 6,767 million US dollars in 2021, reaching 7,758 million US dollars in 2022. The adjusted equity figures similarly increased, though at a slightly slower pace in the earlier years, moving from 6,161 to 6,359 million US dollars between 2020 and 2021, then significantly to 7,480 million US dollars in 2022.

Return on equity (ROE) metrics, which indicate profitability relative to common equity, reflect the income trends with a dip in 2021 and a sharp improvement in 2022. Reported ROE decreased from 31.7% in 2020 to 24.59% in 2021, then escalated to 45.55% in 2022. The adjusted ROE has a similar trajectory, with figures at 33.74% in 2020, falling slightly to 25% in 2021, and rising markedly to 45.59% in 2022.

Net Income Trends:

Both reported and adjusted net incomes showed a decline in 2021 relative to 2020, followed by a sharp recovery in 2022, surpassing the 2020 levels significantly.

Equity Growth:

Equity attributable to common shareowners displayed consistent annual growth throughout the period, indicating strengthening shareholder value.

Return on Equity:

ROE decreased noticeably in 2021 but rebounded strongly in 2022, reaching the highest point in the three years for both reported and adjusted figures, suggesting improved efficiency in deploying equity to generate profits.

Overall, the data suggests a year of challenge in 2021 with reduced profitability, followed by a robust performance in 2022 that resulted in record net income and ROE, alongside steady growth in equity base. The alignment between reported and adjusted figures indicates that deferred income tax adjustments had a relatively modest impact on the company's reported financial results over the period analyzed.

Net Income Attributable to Common Shareowners

The reported net income displayed a decrease from 1982 million US dollars in 2020 to 1664 million in 2021, followed by a substantial increase to 3534 million in 2022. Similarly, the adjusted net income decreased from 2079 million in 2020 to 1590 million in 2021, then rose significantly to 3410 million in 2022. This pattern indicates a temporary dip in profitability in 2021 before a strong recovery and growth in 2022.

Total Assets

Reported total assets increased moderately from 25093 million US dollars in 2020 to 26172 million in 2021, then slightly declined to 26086 million in 2022. Adjusted total assets followed a similar trajectory, rising from 24644 million in 2020 to 25609 million in 2021, and then declining modestly to 25474 million in 2022. The asset base remained relatively stable overall, with minor fluctuations over the three-year period.

Return on Assets (ROA)

The reported ROA experienced a decline from 7.9% in 2020 to 6.36% in 2021, then sharply increased to 13.55% in 2022. Adjusted ROA also decreased from 8.44% in 2020 to 6.21% in 2021 and subsequently rose substantially to 13.39% in 2022. The trends in ROA parallel the net income patterns, reflecting reduced efficiency in asset utilization in 2021 followed by significant improvement in 2022.

Overall Insights

Throughout the period, both reported and adjusted figures showed a consistent pattern of decline in 2021, followed by robust growth in 2022. The company's profitability and return on assets were notably impacted in 2021, but the recovery in 2022 was strong enough to more than compensate for the prior year’s dip. Total assets remained comparatively steady, suggesting that the variations in income and ROA were primarily driven by operational performance rather than significant changes in asset size.