Corporate spin-off, M&A: A conversation with Carrier CEO David Gitlin

The 100-year-old startup: A new era for Carrier

As a new and independent version of its former self, Carrier felt it had a once-in-a-lifetime opportunity to harness the energy and feel of a startup. Carrier established their capital allocation priorities in the context of maintaining a healthy balance sheet. They focused on organic and inorganic growth, a growing dividend and share buybacks. However, since Carrier spun in April 2020 and the COVID-19 pandemic shut down the world, the company had to be extremely judicious in its capital allocation. In its first quarter as a public company, sales fell 25%, cash was limited, and it had significant debt on the balance sheet. With this, Carrier shut down buybacks, set aside mergers and acquisitions (M&A), and focused on employees, customers, growing the business and improving cash flow and profitability. Carrier’s purposeful actions allowed the company to manage the effects of the pandemic on the business while laying the foundations for success.

Transformative transactions: Reshaping to Lead

As part of their corporate spin-off from United Technologies Corporation (UTC), Carrier had to copy its former parent’s functions — including a treasury department, internal audit, investor relations and other functions — and incur separation costs, at times creating excess costs in the system. Then, the expectation for functional leaders was to tenaciously cut costs and create efficiencies on a timeline with targeted goals to measure and manage costs.

Fast forward to 2023, Carrier announced a historic portfolio transformation to establish itself as a pure-play, global leader in intelligent climate and energy solutions. This included the acquisition of Viessmann Climate Solutions, the premier residential and light commercial HVAC provider in Europe. In addition, the company would sell its entire Fire and Security business, and roughly a third of its Refrigeration business. Carrier’s goal was to perform as it transformed. Working at record speed, alongside advisors, including the EY-Parthenon team, the result of the divestitures yielded more than $10b in gross proceeds.

Disruptive Growth strategy: Innovating for tomorrow

Focused on driving accelerated growth and creating customer value, Carrier has three strategic growth priorities:

1. Product, brand and channel differentiation and innovation. 
2. Sustained double-digit aftermarket growth.
3. System Solutions, which include complete Home Energy Management System (HEMS) solutions for its Residential business.

Watch the video for more from Carrier Chairman & Chief Executive Officer David Gitlin in conversation with Mitch Berlin, EY Americas Vice Chair, EY-Parthenon.