Carrier Global Corp. (NYSE:CARR)

The inventory levels of the company have displayed a clear increasing trend over the three-year period ending December 31, 2022.

Raw materials

The raw materials inventory has seen a substantial rise from US$363 million in 2020 to US$884 million in 2022. This represents more than doubling over the two years, suggesting increased procurement or stockpiling of materials, potentially in anticipation of higher production or to mitigate supply chain disruptions.

Work-in-process

The work-in-process category showed a steady increase from US$143 million in 2020 to US$230 million in 2022. This growth indicates a higher volume of goods undergoing production, which may correspond with increased production activity or longer production cycles.

Finished goods

The finished goods inventory rose from US$1,123 million in 2020 to US$1,526 million in 2022, reflecting a significant buildup of completed products ready for sale. This trend may imply either expanding sales capacity or potential challenges in moving finished stock efficiently.

Inventories, net

The net inventories, aggregating all components, increased consistently from US$1,629 million in 2020 to US$2,640 million in 2022. This overall increase underlines a considerable expansion in total inventory holdings, which could impact working capital needs and inventory management strategies.

In summary, the data indicates a consistent upward trend across all inventory categories, highlighting a growth in the company's inventory investment over the analyzed period. Such increases warrant attention to inventory turnover and efficiency to avoid potential liquidity constraints or obsolescence risks.

The analysis of the adjusted and reported financial data over the three-year period reveals several noteworthy trends concerning inventories, current assets, total assets, equity, and net income.

Inventories

Both reported and adjusted inventories have consistently increased year-over-year. Reported inventories rose from $1,629 million in 2020 to $2,640 million in 2022, while adjusted inventories similarly grew from $1,747 million to $2,839 million. The increase in adjusted inventories relative to reported inventories indicates the impact of LIFO reserve adjustments, which expanded over the period, reflecting accumulation of inventory layers or inflation effects on inventory valuation.

Current Assets

Reported current assets exhibited growth from $8,524 million in 2020 to a peak of $11,407 million in 2021, followed by a decline to $9,879 million in 2022. Adjusted current assets followed the same pattern but at slightly higher levels due to inventory adjustments, reaching $11,548 million in 2021 before decreasing to $10,078 million in 2022. This pattern suggests a temporary buildup of current assets in 2021 which partially reversed in 2022.

Total Assets

Total assets reported a modest increase from $25,093 million in 2020 to $26,172 million in 2021, then a marginal decline to $26,086 million in 2022. Adjusted totals closely mirrored these fluctuations but remained slightly higher due to inventory adjustments. The relatively stable total assets point towards limited growth or asset rebalancing in the latest year.

Equity Attributable to Common Shareowners

Reported equity demonstrated steady growth, rising from $6,252 million in 2020 to $7,758 million in 2022. Adjusted equity figures were slightly higher, moving from $6,370 million to $7,957 million over the same period. This upward trend indicates an accumulation of shareholder value, which may be supported by earnings performance and potentially the effects of LIFO adjustments on retained earnings.

Net Income Attributable to Common Shareowners

Reported net income declined from $1,982 million in 2020 to $1,664 million in 2021, then substantially increased to $3,534 million in 2022. Adjusted net income follows a similar pattern but with slight upward adjustments, ending at $3,592 million in 2022. The significant spike in net income in 2022 suggests a strong operational or non-operational improvement during that year, which had a materially positive impact on profitability.

Overall, the data indicate a general expansion in inventory levels and shareholder equity, coupled with a notable earnings rebound in 2022. Inventory adjustments via LIFO reserves have consistently increased reported balances, slightly elevating current assets, total assets, and equity. The fluctuations in current assets and total assets, along with the income volatility, suggest some variability in operational dynamics or external economic factors affecting the company during the reviewed periods.

The financial data portrays several key trends over the three-year period ending December 31, 2022. Both reported and inventory LIFO reserve adjusted figures suggest consistent patterns with marginal differences in values, indicating the impact of LIFO adjustments is relatively moderate.

Liquidity (Current Ratio)

The reported current ratio rose from 1.67 in 2020 to 1.72 in 2021, before slightly declining to 1.64 in 2022. Similarly, the adjusted current ratio followed the same trend, increasing from 1.69 to 1.74 and then decreasing to 1.67. This indicates a stable but slightly weakening short-term liquidity position in 2022 compared to the prior year.

Profitability (Net Profit Margin)

The net profit margin exhibited a marked increase in 2022 after a dip in 2021. Reported net profit margin decreased significantly from 11.35% in 2020 to 8.07% in 2021, then sharply increased to 17.31% in 2022. Adjusted figures mirror this pattern, with an increase from 8.18% in 2021 to 17.59% in 2022. This indicates a strong recovery and improvement in profitability in the latest year.

Efficiency (Total Asset Turnover)

The reported total asset turnover improved from 0.7 in 2020 to 0.79 in 2021 but then held relatively steady at 0.78 in 2022. Adjusted ratios show a similar pattern with a slight increase followed by stability. This suggests that asset utilization efficiency improved initially and stabilized thereafter.

Leverage (Financial Leverage Ratio)

Financial leverage consistently decreased over the period. The reported ratio declined from 4.01 in 2020 to 3.87 in 2021 and further to 3.36 in 2022. Adjusted leverage measures followed the same downtrend. This indicates a reduction in reliance on debt over the period, reflecting a lower risk profile and potentially increased equity financing.

Return on Equity (ROE)

ROE moves in alignment with net profit margin and leverage trends. The reported ROE decreased considerably from 31.7% in 2020 to 24.59% in 2021 before sharply improving to 45.55% in 2022. Adjusted ROE reflects similar changes. The substantial increase in 2022 suggests enhanced profitability and efficient capital use despite lower leverage.

Return on Assets (ROA)

ROA also follows similar patterns to profitability and efficiency ratios. It decreased from 7.9% in 2020 to 6.36% in 2021, then increased markedly to 13.55% in 2022 in reported terms. The adjusted ROA data confirm this trend. This points to improved asset profitability in the latest year, likely driven by increased margins and stable asset turnover.

Overall, the data indicate a temporary decline in profitability and efficiency during 2021, followed by a strong recovery and improved financial performance in 2022. Liquidity remained fairly stable but weakened slightly in the last year, while leverage consistently declined, reflecting a more conservative capital structure. The adjusted figures, accounting for inventory valuation adjustments, closely track the reported metrics, underlining consistent financial trends with minor variations due to inventory accounting methods.

The analysis of the presented financial data reveals several notable trends over the three-year period ending December 31, 2022.

Current Assets

Both reported and inventory LIFO reserve adjusted current assets demonstrated a general increase in 2021 compared to 2020, followed by a decline in 2022. Specifically, reported current assets rose from 8,524 million US dollars in 2020 to 11,407 million in 2021, then decreased to 9,879 million in 2022. Adjusted current assets, which account for LIFO reserve adjustments, followed a similar pattern: increasing from 8,642 million in 2020 to 11,548 million in 2021, before declining to 10,078 million in 2022.

Current Ratio

The reported current ratio showed improvement from 1.67 in 2020 to 1.72 in 2021 but then declined to 1.64 in 2022. The adjusted current ratio, which incorporates inventory valuation adjustments, closely mirrored this trend, rising from 1.69 in 2020 to 1.74 in 2021, then falling to 1.67 in 2022. This indicates a slight weakening in liquidity from 2021 to 2022 despite being higher in 2022 than in 2020.

Insights on Inventory LIFO Reserve Adjustments

The LIFO reserve adjustment marginally increases the current asset values and current ratios across all three periods. This suggests that the inventory valuation under LIFO accounting has a modest impact on the liquidity metrics, slightly enhancing the appearance of the company’s current asset base and short-term liquidity ratios.

In summary, the data highlights a peak in liquidity and current asset levels in 2021 followed by a moderate reduction in 2022, while the LIFO reserve adjustment consistently provides a modest uplift to both current assets and current ratio measures.

The financial data over the three-year period reveals notable fluctuations in both reported and adjusted net income as well as their corresponding profit margins.

Net Income Trends

The reported net income attributable to common shareowners decreased from $1,982 million in 2020 to $1,664 million in 2021, representing a decline in profitability during this period. However, in 2022, there was a substantial rebound with reported net income increasing sharply to $3,534 million, effectively more than doubling the previous year's figure. The adjusted net income followed a similar pattern, slightly diverging from the reported values. It declined marginally from $1,980 million in 2020 to $1,687 million in 2021, then rose significantly to $3,592 million in 2022. This suggests that adjustments had a positive effect on the reported results, especially noticeable in 2022.

Net Profit Margin Dynamics

The reported net profit margin demonstrated a significant dip from 11.35% in 2020 to 8.07% in 2021, indicating reduced profitability or potential cost pressures during that year. In 2022, the margin improved dramatically to 17.31%, reflecting enhanced profit generation or operational efficiency. The adjusted net profit margin mirrored these movements with slightly higher values: declining from 11.34% to 8.18% between 2020 and 2021, and then increasing to 17.59% in 2022. The upward trends in 2022 suggest recovery and strong financial performance following the prior year's challenges.

Overall Insights

The data illustrates a clear dip in profitability and income in 2021 followed by a robust recovery in 2022. The adjustments made to net income and profit margin slightly increase the reported measures, indicating the adjustments likely excluded certain items detracting from core performance. The significant growth in 2022 may be attributed to enhanced operational efficiency, improved market conditions, or successful strategic initiatives. The consistent pattern between reported and adjusted figures confirms the reliability of the underlying positive trend. This performance trajectory emphasizes the company’s ability to recover from adverse periods and achieve strong financial results subsequently.

The analysis of the financial data over the three-year period reveals several notable trends in the company's asset base and asset utilization efficiency.

Total Assets

There is a gradual increase in reported total assets from 25,093 million US dollars at the end of 2020 to 26,172 million US dollars in 2021, followed by a slight decline to 26,086 million US dollars in 2022. When adjusted for the inventory LIFO reserve, total assets follow a similar pattern but are marginally higher across all years, moving from 25,211 million US dollars in 2020 to 26,313 million US dollars in 2021 and 26,285 million US dollars in 2022. This suggests relatively stable asset levels overall, with only minor fluctuations after adjustments.

Total Asset Turnover

Reported total asset turnover shows a clear upward trend from 0.7 in 2020 to 0.79 in 2021, indicating improved efficiency in generating revenue from assets during that period, followed by a very slight decrease to 0.78 in 2022. The adjusted total asset turnover mirrors this pattern closely, starting from 0.69 in 2020, rising to 0.78 in 2021, and remaining stable at 0.78 in 2022. This reflects consistent operational efficiency and suggests the inventory LIFO reserve adjustment does not materially alter the interpretation of asset utilization performance.

Overall Insights

The combination of slightly increasing asset values and improving asset turnover ratios over the initial two years, with stabilization in the third year, indicates that the company has effectively maintained and utilized its asset base. The adjustments for the inventory LIFO reserve have a minimal impact on total assets and turnover, suggesting that LIFO inventory accounting methods do not significantly distort the analysis of asset efficiency for this company.

The financial data displays trends over a three-year period from the end of 2020 to the end of 2022. Overall, there are observable changes in asset values, equity figures, and financial leverage ratios, both on a reported basis and adjusted for inventory LIFO reserve.

Assets

The total assets reported show a slight increase from 25,093 million US dollars at the end of 2020 to 26,172 million in 2021, followed by a marginal decline to 26,086 million in 2022. The LIFO reserve adjusted total assets present a similar trend but consistently register slightly higher values compared to reported assets, indicative of the adjustment impact. The adjusted total assets rise from 25,211 million in 2020 to 26,313 million in 2021, then experience a decrease to 26,285 million by 2022.

Equity

Equity attributable to common shareowners reflects a consistent upward movement across the three years. Reported equity grows from 6,252 million in 2020 to 6,767 million in 2021, and further to 7,758 million in 2022, marking a substantial increase especially in the last year. Adjusted equity follows the same trajectory, with values rising from 6,370 million in 2020 to 6,908 million in 2021 and reaching 7,957 million in 2022. The adjustments imply a slightly higher equity base due to LIFO reserve effects but do not alter the positive growth trend.

Financial Leverage

Both reported and adjusted financial leverage ratios demonstrate a downward trend over the period. Reported financial leverage decreases from 4.01 in 2020 to 3.87 in 2021, then drops more sharply to 3.36 in 2022. Adjusted financial leverage mirrors this pattern, declining from 3.96 in 2020 to 3.81 in 2021 and further to 3.3 in 2022. The consistent reduction in leverage suggests a strengthening equity position relative to debt, indicating improved financial stability or potentially deleveraging activities.

In summary, the data reveals that while total assets experienced minor fluctuations, equity notably increased over the three years, contributing to a reduction in financial leverage. The LIFO reserve adjustments affect the absolute figures slightly but do not alter the overall trends. The upward equity trend combined with decreasing leverage ratios points to a strengthening balance sheet and potentially enhanced financial resilience.

The financial data reveals notable trends in profitability and equity metrics over the three years analyzed.

Net Income Attributable to Common Shareowners

Reported net income exhibited a decline from 1982 million USD in 2020 to 1664 million USD in 2021, followed by a significant increase to 3534 million USD in 2022. The adjusted net income mirrored this pattern closely, showing a minor divergence with figures slightly lower or higher but following the same trend: a dip in 2021 and a sharp rise in 2022.

Equity Attributable to Common Shareowners

Reported equity displayed a steady upward trend throughout the period, increasing from 6252 million USD in 2020 to 6767 million USD in 2021, and further to 7758 million USD by the end of 2022. Adjusted equity figures were consistently higher than reported equity each year, also showing a consistent growth trajectory: 6370 million USD in 2020, 6908 million USD in 2021, and 7957 million USD in 2022.

Return on Equity (ROE)

Both reported and adjusted ROE showed a similar pattern, beginning at relatively high levels in 2020 (31.7% reported, 31.08% adjusted), declining substantially in 2021 (24.59% reported, 24.42% adjusted), and then rising markedly in 2022 to over 45% (45.55% reported, 45.14% adjusted). This indicates improved profitability relative to equity in the most recent year, despite the temporary reduction in 2021.

Overall, the data suggests that while there was a temporary weakening in profitability and returns in 2021, the company experienced a robust recovery in 2022 with both net income and return on equity rising significantly. Equity levels consistently increased, supporting enhanced capacity for earnings generation. The close alignment between reported and adjusted figures indicates that adjustments for inventory LIFO reserve have minimal impact on the overall financial trends observed.

The financial data reflects a series of trends in net income, total assets, and return on assets (ROA) over the three-year period from 2020 to 2022. Both reported and adjusted figures are included, providing a comparison that incorporates inventory LIFO reserve adjustments.

Net Income

The reported net income attributable to common shareowners decreased from 1,982 million US dollars in 2020 to 1,664 million US dollars in 2021, representing a decline of approximately 16%. However, in 2022, there was a notable increase to 3,534 million US dollars, more than doubling the previous year's figure. The adjusted net income follows a similar pattern, decreasing slightly less sharply in 2021 (to 1,687 million US dollars) and then rising to 3,592 million US dollars in 2022. This suggests that the adjustment for inventory LIFO reserves slightly increases net income figures but does not materially alter the overall trend.

Total Assets

Reported total assets show a modest increase from 25,093 million US dollars in 2020 to 26,172 million US dollars in 2021, before leveling off slightly to 26,086 million US dollars in 2022. Similarly, adjusted total assets, which account for inventory LIFO reserve adjustments, exhibit a slight increase from 25,211 million US dollars in 2020 to 26,313 million US dollars in 2021, followed by a minor decrease to 26,285 million US dollars in 2022. The overall trend in total assets is relatively stable with marginal growth in the middle year followed by a slight retreat.

Return on Assets (ROA)

The reported ROA declined from 7.9% in 2020 to 6.36% in 2021, then more than doubled to 13.55% in 2022. The adjusted ROA presents a nearly identical pattern, starting at 7.85% in 2020, declining to 6.41% in 2021, and then increasing to 13.67% in 2022. The ROA trends are consistent with the net income data, indicating reduced profitability in 2021 followed by a substantial improvement in 2022. The adjustment for LIFO reserves has a marginal impact on ROA percentages, reflecting a slight upward correction in all periods.

In summary, the data reveals a dip in profitability and return on assets in 2021 despite a small increase in total assets, followed by a strong recovery and significant earnings growth in 2022. Adjusted figures that account for inventory LIFO reserves closely mirror the reported results, implying that LIFO adjustments do not drastically change the financial performance interpretation. The overall dynamics suggest improved operational efficiency or other positive factors impacting net income and asset utilization in the most recent year.