Financial Analysis

"COMMITMENTS AND CONTINGENT LIABILITIES The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters. In accordance with ASC 450, Contingencies , the Company records accruals for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals are generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In addition, these estimates are reviewed periodically and adjusted to reflect additional information when it becomes available. The Company is unable to predict the final outcome of the following matters based on the information currently available, except as otherwise noted. However, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon its results of operations or financial condition. Environmental Matters The Companys operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance guarantees. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to individual sites, including the techn …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"BORROWINGS AND LINES OF CREDIT Short-term borrowings and current portion of long-term debt consisted of the following: (In millions) June 30, 2026 December 31, 2025 Commercial paper $ 685 $ 325 Short-term borrowings 37 35 Current portion of long-term debt 916 108 Short-term borrowings and current portion of long-term debt $ 1,638 $ 468 Commercial Paper Program The Company has a $2.0 billion USD-denominated facility and a $500 million Euro-denominated facility as part of an unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes including the funding of working capital and potential acquisitions. At June 30, 2026, the Company had $685 million outstanding under its commercial paper facilities with a weighted average interest rate of 4.01%. Long-term debt consisted of the following: (In millions) June 30, 2026 December 31, 2025 2.493% Notes due 2027 (1) $ 900 $ 900 4.125% Notes due 2028 853 883 2.722% Notes due 2030 2,000 2,000 2.700% Notes due 2031 750 750 4.500% Notes due 2032 966 1,001 5.900% Notes due 2034 875 875 3.625% Notes due 2037 853 883 3.377% Notes due 2040 1,500 1,500 3.577% Notes due 2050 1,400 1,400 6.200% Notes due 2054 650 650 Total long-term notes 10,747 10,842 Japanese Term Loan Facility 334 345 Other debt (including project financing obligations and finance leases) 222 364 Discounts and debt issuance costs (73) (78) Total long-term debt 11,230 11,473 Less: current portion of long-term debt 916 108 Long-term debt, …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

External segment sales disaggregated by product and service are as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Sales Type Product $ 3,055 $ 2,970 $ 5,269 $ 5,289 Service 317 282 604 535 Climate Solutions Americas sales 3,372 3,252 5,873 5,824 Product 1,187 1,137 2,341 2,208 Service 137 116 276 214 Climate Solutions Europe sales 1,324 1,253 2,617 2,422 Product 712 697 1,354 1,357 Service 205 185 397 351 Climate Solutions Asia Pacific, Middle East & Africa sales 917 882 1,751 1,708 Product 680 673 1,337 1,275 Service 58 53 114 102 Climate Solutions Transportation sales 738 726 1,451 1,377 Net sales $ 6,351 $ 6,113 $ 11,692 $ 11,331 Geographic external sales are attributed to the geographic regions based on their location of origin. With the exception of the United States as presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the three and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 United States $ 3,536 $ 3,429 $ 6,192 $ 6,168 International: Europe 1,581 1,520 3,130 2,920 Asia Pacific 1,029 981 2,016 1,922 Other 205 183 354 321 Net sales $ 6,351 $ 6,113 $ 11,692 $ 11,331

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STOCK-BASED COMPENSATION The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation - Stock Compensation , which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured at the date of grant and is generally not adjusted for subsequent changes. The Company's stock-based compensation plans include programs for stock appreciation rights, restricted stock units and performance share units. Stock-based compensation expense, net of estimated forfeitures, is included in Cost of products sold , Selling, general and administrative and Research and development in the accompanying Unaudited Condensed Consolidated Statement of Operations. Stock-based compensation cost by award type was as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Equity compensation costs - equity settled $ 12 $ 21 $ 33 $ 44 Equity compensation costs - cash settled (1) 1 2 2 1 Total stock-based compensation expense $ 13 $ 23 $ 35 $ 45 (1) The cash settled awards are classified as liability awards and are measured at fair value at each balance sheet date.

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"FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement (""ASC 820""), defines fair value as the price that would be received if an asset is sold or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal mode …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

GOODWILL AND INTANGIBLE ASSETS The Company records goodwill as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is tested and reviewed annually for impairment on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the reporting unit may be less than its carrying value. The changes in the carrying value of goodwill were as follows: (In millions) Climate Solutions Americas Climate Solutions Europe Climate Solutions Asia Pacific, Middle East & Africa Climate Solutions Transportation Total Balance as of December 31, 2025 $ 5,075 $ 7,808 $ 1,410 $ 1,208 $ 15,501 Acquisitions 10 10 Reclassified to held for sale (1) (10) (3) (13) Foreign currency translation (4) (219) 2 (10) (231) Balance as of June 30, 2026 $ 5,071 $ 7,586 $ 1,412 $ 1,198 $ 15,267 (1) See Note 15 - Divestitures for additional information. Identifiable intangible assets are amortized over their estimated useful lives and consisted of the following: June 30, 2026 December 31, 2025 (In millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Customer relationships $ 5,992 $ (1,852) $ 4,140 $ 6,143 $ (1,573) $ 4,570 Patents and trademarks 937 (215) 722 945 (191) 754 Technology and other 1,633 (739) 894 1,692 (690) 1,002 Total intangible assets $ 8,562 $ (2,806) $ 5,756 $ 8,780 $ (2,454) $ 6,326 Amortization of intangible assets was as follow …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

"INCOME TAXES The Company accounts for income tax expense in accordance with ASC 740, Income Taxes (""ASC 740""), which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts, projected results for the full year, and tax items recorded discretely in the period. The effective tax rate was 25.0% for the three months ended June 30, 2026, compared with 20.0% for the three months ended June 30, 2025. The year-over-year increase was primarily driven by the $46 million non-deductible impairment charge on Riello and a $10 million increase in tax expense associated with a higher German effective tax rate during the three months ended June 30, 2026. The three months ended June 30, 2025, included a state tax benefit of $6 million related to the utilization of a capital loss and a tax benefit of $6 million from the conclusion of the UTC 2020 U.S. Internal Revenue Service (""IRS"") tax audit. The effective tax rate for the six months ended June 30, 2026, was 9.4% compared with 20.1% for the six months ended June 30, 2025. The year-over-year decrease was primarily driven by a net $99 million tax benefit from the partial release of a valuation allowance associated with our operations in a Swiss subsidiary and a favorable settlement of $18 million related to a state income tax audit in the six months ended June 30, 2026. These tax benefits were partially offset by the $46 million …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"The Financial Accounting Standards Board (""FASB"") Accounting Standards Codification (""ASC"") is the sole source of authoritative U.S. GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates (""ASU"") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. ASUs pending adoption were assessed and determined to be either not applicable or are not expected to have a material impact on the accompanying Unaudited Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) (""ASU 2024-03""), which requires public entities to disclose disaggregated information about expenses by nature on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact of this ASU on its financial statements."

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EMPLOYEE BENEFIT PLANS The Company sponsors U.S. and international defined benefit pension and defined contribution plans. In addition, the Company contributes to various U.S. and international multi-employer defined benefit pension plans. Contributions to the plans were as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Defined benefit plans $ 6 $ 15 $ 11 $ 20 Defined contribution plans $ 30 $ 28 $ 62 $ 63 Multi-employer pension plans $ 4 $ 4 $ 8 $ 7 The components of net periodic pension expense (benefit) for the defined benefit pension plans are as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Service cost $ 3 $ 4 $ 6 $ 7 Interest cost 8 7 14 14 Expected return on plan assets (9) (8) (17) (16) Recognized actuarial net (gain) loss 1 1 1 Net periodic pension expense (benefit) $ 2 $ 4 $ 4 $ 6 …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

RELATED PARTIES Equity Method Investments The Company sells products to and purchases products from unconsolidated entities accounted for under the equity method and, therefore, these entities are considered to be related parties. Amounts attributable to equity method investees are as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Sales to equity method investees included in Product sales $ 951 $ 845 $ 1,637 $ 1,625 Purchases from equity method investees included in Cost of products sold $ 59 $ 57 $ 110 $ 104 The Company had receivables from and payables to equity method investees as follows: (In millions) June 30, 2026 December 31, 2025 Receivables from equity method investees included in Accounts receivable, net $ 396 $ 220 Payables to equity method investees included in Accounts payable $ 31 $ 40

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RESTRUCTURING COSTS The Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and working capital levels. Actions associated with these initiatives may include improving productivity, workforce reductions and the consolidation of facilities. Due to the size, nature and frequency of these discrete plans, they are fundamentally different from the Company's ongoing productivity actions. The Company recorded net pre-tax restructuring costs for new and ongoing restructuring initiatives as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Climate Solutions Americas $ $ 1 $ 3 $ 4 Climate Solutions Europe 3 26 89 26 Climate Solutions Asia Pacific, Middle East & Africa 4 7 7 8 Climate Solutions Transportation 2 1 4 2 Total Segment 9 35 103 40 Corporate and other (1) 12 13 15 Total restructuring costs (1) $ 8 $ 47 $ 116 $ 55 Cost of sales $ 1 $ 8 $ 45 $ 10 Selling, general and administrative 7 39 71 45 Total restructuring costs (1) $ 8 $ 47 $ 116 $ 55 (1) Restructuring costs include period-related charges. The following table summarizes changes in the restructuring reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet: Six Months Ended June 30, (In millions) 2026 2025 Balance as of January 1, $ 102 $ 69 Net pre-tax restructuring costs 105 44 Utilization, foreign exchange and other (96) (37) Balance as of June 30, $ 11 …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

REVENUE RECOGNITION The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers . Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Companys performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment. External segment sales disaggregated by product and service are as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2026 2025 2026 2025 Sales Type Product $ 3,055 $ 2,970 $ 5,269 $ 5,289 Service 317 282 604 535 Climate Solutions Americas sales 3,372 3,252 5,873 5,824 Product 1,187 1,137 2,341 2,208 Service 137 116 276 214 Climate Solutions Europe sales 1,324 1,253 2,617 2,422 Product 712 697 1,354 1,357 Service 205 185 397 351 Climate Solutions Asia Pacific, Middle East & Africa sales 917 882 1,751 1,708 Product 680 673 1,337 1,275 Service 58 5 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"SEGMENT FINANCIAL DATA The Company conducts its operations through four reportable operating segments. In accordance with ASC 280 - Segment Reporting , the Company's segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company's CODM in deciding how to allocate resources and in assessing performance. Climate Solutions Americas (""CSA"") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in North and South America while enhancing building performance, health, energy efficiency and sustainability. Climate Solutions Europe (""CSE"") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Europe while enhancing building performance, health, energy efficiency and sustainability. Climate Solutions Asia Pacific, Middle East & Africa (""CSAME"") provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Asia Pacific, the Middle East and Africa while enhancing building performance, health, energy efficiency and sustainability. Climate Solutions Transportation (""CST"") includes global transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail. The Corporate and other …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

EQUITY The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of June 30, 2026 and December 31, 2025, 951,905,773 and 950,633,287 shares of common stock were issued, respectively, which includes 126,879,717 and 114,891,176 shares of treasury stock, respectively. Share Repurchase Program The Company may repurchase its outstanding common stock from time to time subject to market conditions and at the Company's discretion. Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act. Shares acquired are recognized at cost and presented separately on the balance sheet as a reduction to Equity . Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $12.1 billion of the Company's outstanding common stock. During the six months ended June 30, 2026, the Company repurchased 12.0 million shares of common stock for an aggregate purchase price of $748 million. As a result, the Company had approximately $4.6 billion remaining under the current authorization at June 30, 2026. Accumulated Other Comprehensive Income (Loss) A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2026, is as follows: (In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing