Carrier Global Q3 2026: adjusted EPS +30% to $0.87, half of it tariff refunds; $3.1B Europe writedown

Carrier's third quarter had two very different headlines. Sales rose 12% to $6.26 billion and adjusted operating profit jumped 33% to $1.09 billion, after a first half in which adjusted operating profit fell. But the company also wrote down $3.1 billion of goodwill in its Europe business, so on a GAAP basis (the standard accounting rules) it lost $2.59 billion, or $3.16 a share. And about half of the $0.20 rise in adjusted EPS came from roughly $130 million of refunded IEEPA tariffs, money that will not recur.

n.m. = not meaningful (a swing from profit to loss). Operating margin is the share of sales left after running the business, before interest and tax. Carrier's "adjusted" figures exclude restructuring costs ($45 million), amortization of acquired intangible assets ($210 million, a non-cash accounting charge left over from past acquisitions such as Viessmann), the goodwill impairment and a few small items.

Takeaway: Demand is no longer the question at Carrier: orders, backlog and organic sales are all growing fast. The question is margin. Strip out about $120 million of tariff refunds and the Americas segment's margin was about 18.6%, below last year's 19.7%, so the input-cost and tariff squeeze flagged in Q2 has not gone away. Management raised full-year sales guidance by about $1 billion but left adjusted operating profit unchanged at ~$3.5 billion, which says the same thing.

What drove the quarter

Climate Solutions Americas (54% of sales). Sales rose 24% to $3.35 billion, 25% organically. Residential sales (home air conditioners and heat pumps) were up more than 30% and commercial (excluding NORESCO) about 25%. Segment operating profit rose 40% to $745 million and margin rose 250 basis points (2.5 percentage points) to 22.2%. The release says the margin gain came "from the benefit of ~$120 million of IEEPA refunds and organic growth, partially offset by increased input costs and tariffs." The year-ago quarter was weak: Q3 2025 Americas margin was 19.7%, against 23.2% for the first nine months of 2025. For the first nine months of 2026 the segment's organic growth is 8% and its margin 21.0%, still below 2025's 23.2%.

Climate Solutions Europe (21%). Reported sales rose only 3% to $1.34 billion, because the Riello sale (completed July 1) took off 7 points and currency 2 points; organic growth was 12%. Heat pump and air conditioning sales each rose about 35%, while boiler sales fell by a high-single-digit percentage. Margin rose 330 basis points to 12.6%, but about 100 basis points of that was a net benefit from correcting a prior-period accounting item, partly offset by higher inventory reserves. Excluding that, the margin gain was closer to 230 basis points.

Climate Solutions Asia Pacific, Middle East & Africa (14%). Sales rose 2% (3% organic). Commercial grew 10%, residential and light commercial fell by a mid-single-digit percentage. Margin rose 50 basis points to 12.1%.

Climate Solutions Transportation (12%). Truck, trailer and container refrigeration sales fell 3%: container grew, truck and trailer fell. Margin rose 70 basis points to 16.1%, which the release attributes to IEEPA refunds partly offset by lower volumes, so without the refund this segment's margin likely fell.

Data centers. The release does not give data-center sales. It reports data-center orders up about 300% and commercial HVAC orders up about 60% (excluding NORESCO), and says Carrier signed long-term agreements (LTAs) "valued at multiple billions of dollars with minimum volume commitments." It does not name customers or give the total value, and says the LTA minimums are additional to the $8.5 billion backlog.

What the headline numbers hide

• The $3.1 billion goodwill impairment. Goodwill is the premium paid over the book value of an acquired business. Carrier wrote down $3.1 billion of it in the Climate Solutions Europe reporting unit, the unit that includes the 2024 Viessmann Climate Solutions acquisition. The charge is non-cash and does not affect this quarter's operations, but it is an admission that Europe will earn less than assumed at the purchase price; goodwill on the balance sheet fell to $12.2 billion from $15.5 billion at year-end. It is the main reason GAAP results are a loss.
• Tariff refunds did half the adjusted EPS work. Carrier booked about $130 million of operating profit from refunds of IEEPA tariffs (tariffs the Supreme Court ruled unauthorized in February 2026). The release says adjusted EPS includes a ~$0.10 benefit from them, net of ~$0.02 that goes to minority partners. Without it, adjusted operating profit would have been about $961 million (up ~17% rather than 33%), adjusted margin about 15.3% (up ~0.5 points rather than 2.6), and adjusted EPS about $0.77 (up ~15% rather than 30%). Carrier does not exclude the refunds from its adjusted figures.
• Tax and minority interest worked against EPS. The adjusted tax rate was 23.5%, up from 17.2% a year ago, and profit owed to minority partners rose to $53 million from $27 million. Both reduced adjusted EPS growth.
• Buybacks helped. Diluted weighted-average shares fell 4.3% to 821.8 million. That figure flatters the comparison slightly: because of the GAAP loss, dilutive shares such as stock options were excluded this quarter; basic shares fell 3.2%. Either way, roughly 3 to 4 points of the 30% adjusted EPS growth came from the smaller share count. Carrier bought back $399 million of stock in the quarter, about half last year's $785 million.
• Cash conversion was good. Operating cash flow was $813 million ($752 million from continuing operations) against $713 million of adjusted net earnings, and free cash flow (operating cash flow minus capital spending) tripled to $674 million. Year to date, free cash flow is $1.47 billion against guidance of about $2 billion.
• Receivables are rising faster than sales. Accounts receivable stood at $3.50 billion, up 33% from year-end, while nine-month sales are up 6%. Some of that is seasonal and reflects the sharp Q3 sales jump, but receivables absorbed $320 million of cash in the quarter versus releasing $212 million a year earlier. Worth checking in the 10-Q.

On balance the quarter's reported figures are understated: the $3.1 billion goodwill write-down turns an adjusted profit of $0.87 a share into a GAAP loss of $3.16. The adjusted figures go the other way, with tariff refunds supplying about half of their growth.

Did last time's read hold up?

Our Q2 2026 report said demand had come back but margins had not followed, and that the raised outlook required about $1.8 billion of adjusted operating profit in the second half. It named Americas commercial deliveries and China as the items to watch, and noted that IEEPA refunds were not in the numbers. Volume did arrive: Americas commercial grew about 25%, and organic growth of 15% beat what the guidance required. The refunds also arrived, and they are the main reason margins improved. Q3 delivered $1.09 billion of adjusted operating profit, leaving about $0.72 billion needed in Q4 to reach ~$3.5 billion. Underlying Americas margin, ex-refund, was still down from a year earlier. The release does not break out China; Asia Pacific, Middle East & Africa residential sales fell.

Guidance and outlook

Carrier also expects to return about $2.3 billion to shareholders through dividends and buybacks this year; it has returned $1.74 billion in the first nine months ($1,144 million of buybacks and $598 million of dividends).

Our read: sales guidance went up by about $1 billion, but the profit guidance did not move and the EPS range now reaches below the old ~$2.90, even though Q3 included roughly $0.10 of refund benefit. The extra sales are coming at low incremental margin, which matches the tariff and input-cost pressure the release describes. The implied fourth quarter is sales of about $5.85–6.05 billion and adjusted EPS of about $0.54–0.59 (full-year guidance minus the $2.31 earned through September). Two things to watch in Q4 and early 2027: whether the Americas margin recovers without refunds, and whether the data-center orders and LTA commitments convert to revenue at margins above the company average. Europe is the other open question: the impairment says management has cut its long-term expectations for that business even as heat pump sales recover. The full 10-Q, with more segment and MD&A detail, has not yet been filed.