Carrier Global reports $2.59B net loss

Cover page 4 changes

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For the quarterly period ended June September 30, 2026

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As of July October 15, 2026, there were 824,325,057 818,160,206 shares of Common Stock outstanding.

2 unchanged paragraphs

Three and Six Months Ended June 30, 2026

Three and Nine Months Ended September 30, 2026

1 unchanged paragraph

Financial statements 176 changes

2 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Product sales $ 5,634 $ 5,477 $ 10,301 $ 10,129

Service sales 717 636 1,391 1,202

Total Net sales 6,351 6,113 11,692 11,331

Cost of products sold ( 4,081 ) ( 3,867 ) ( 7,672 ) ( 7,225 )

Cost of services sold ( 542 ) ( 477 ) ( 1,048 ) ( 892 )

Research and development ( 148 ) ( 161 ) ( 291 ) ( 314 )

Selling, general and administrative ( 810 ) ( 813 ) ( 1,672 ) ( 1,542 )

Total Costs and expenses ( 5,581 ) ( 5,318 ) ( 10,683 ) ( 9,973 )

Other income (expense), net ( 3 ) 30 ( 15 ) 52

Operating profit 825 903 1,083 1,532

Interest (expense) income, net ( 105 ) ( 91 ) ( 195 ) ( 173 )

Earnings before income taxes 721 812 890 1,360

Income tax (expense) benefit ( 180 ) ( 162 ) ( 84 ) ( 273 )

Earnings from continuing operations 541 650 806 1,087

Net earnings (loss) 541 633 806 1,070

Product sales $ 5,585 $ 4,906 $ 15,886 $ 15,035

Service sales 678 673 2,069 1,875

Total Net sales 6,263 5,579 17,955 16,910

Cost of products sold ( 4,083 ) ( 3,656 ) ( 11,755 ) ( 10,881 )

Cost of services sold ( 497 ) ( 474 ) ( 1,545 ) ( 1,366 )

Research and development ( 154 ) ( 151 ) ( 445 ) ( 465 )

Selling, general and administrative ( 758 ) ( 803 ) ( 2,430 ) ( 2,345 )

Total Costs and expenses ( 5,492 ) ( 5,084 ) ( 16,175 ) ( 15,057 )

Goodwill impairment ( 3,100 ) ( 3,100 )

Equity method investment net earnings 58 78 89 122 57 60 146 182

Other income (expense), net ( 1 ) ( 16 ) ( 16 ) 36

Operating profit (loss) ( 2,273 ) 539 ( 1,190 ) 2,071

Non-service pension benefit (expense) 1 2 1 3 ( 9 ) 5 ( 8 )

Interest (expense) income, net ( 93 ) ( 97 ) ( 288 ) ( 270 )

Earnings (loss) before income taxes ( 2,363 ) 433 ( 1,473 ) 1,793

Income tax (expense) benefit ( 177 ) 1 ( 261 ) ( 272 )

Earnings (loss) from continuing operations ( 2,540 ) 434 ( 1,734 ) 1,521

Discontinued operations, net of tax ( 17 ) ( 17 ) 21 4

Net earnings (loss) ( 2,540 ) 455 ( 1,734 ) 1,525

Less: Non-controlling interest in subsidiaries' 40 42 67 67 53 27 120 94

Net earnings (loss) attributable to common shareowners $ 501 ( 2,593 ) $ 591 428 $ 739 ( 1,854 ) $ 1,003 1,431

1 unchanged paragraph

Continuing operations $ 501 $ 608 $ 739 $ 1,020

Discontinued operations ( 17 ) ( 17 )

Continuing operations $ 0.61 $ 0.71 $ 0.89 $ 1.18

Net earnings (loss) $ 0.61 $ 0.69 $ 0.89 $ 1.17

Continuing operations $ 0.60 $ 0.70 $ 0.88 $ 1.17

Net earnings (loss) $ 0.60 $ 0.68 $ 0.88 $ 1.15

Continuing operations $ ( 2,593 ) $ 407 $ ( 1,854 ) $ 1,427

Discontinued operations 21 4

Net earnings (loss) attributable to common shareowners $ 501 ( 2,593 ) $ 591 428 $ 739 ( 1,854 ) $ 1,003 1,431

Earnings (loss) per share

Continuing operations $ ( 3.16 ) $ 0.48 $ ( 2.24 ) $ 1.67

Discontinued operations ( 0.02 ) ( 0.02 )

Net earnings (loss) $ ( 3.16 ) $ 0.50 $ ( 2.24 ) $ 1.67

Continuing operations $ ( 3.16 ) $ 0.47 $ ( 2.24 ) $ 1.64

Discontinued operations ( 0.02 ) ( 0.03 0.01 )

Net earnings (loss) $ ( 3.16 ) $ 0.50 $ ( 2.24 ) $ 1.65

1 unchanged paragraph

Basic 828.1 854.9 831.5 860.8

Diluted 836.5 866.3 839.6 872.3

Basic 821.8 848.8 828.3 856.8

Diluted 821.8 858.6 828.3 867.7

3 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Net earnings (loss) $ 541 $ 633 $ 806 $ 1,070

Net earnings (loss) $ ( 2,540 ) $ 455 $ ( 1,734 ) $ 1,525

1 unchanged paragraph

Comprehensive income (loss) 565 1,696 538 2,766

Foreign currency translation adjustments arising during period 24 1,070 ( 268 101 ) 1,704 47 ( 369 ) 1,751

Pension and post-retirement benefit plan adjustments 1 ( 5 ) 3 2 ( 5 2 )

Amortization of unrealized cash flow hedging gain (loss) ( 1 ) ( 2 1 ) ( 2 3 ) ( 3 4 )

Other comprehensive income (loss), net of tax 24 1,063 ( 268 102 ) 1,696 49 ( 370 ) 1,745

Comprehensive income (loss) ( 2,642 ) 504 ( 2,104 ) 3,270

Less: Comprehensive income (loss) attributable to non-controlling interest 41 45 67 70 53 28 120 98

Comprehensive income (loss) attributable to common shareowners $ 524 ( 2,695 ) $ 1,651 476 $ 471 ( 2,224 ) $ 2,696 3,172

3 unchanged paragraphs

(In millions) June 30,

Goodwill 15,267 15,501

Other assets 677 668

Total Assets $ 37,372 $ 37,190

(In millions) September 30,

Cash and cash equivalents $ 1,344 1,354 $ 1,555

Accounts receivable, net 3,246 3,499 2,639

Inventories, net 2,759 2,842 2,483

Assets held for sale 815 592

Other current assets 1,250 1,187 1,264

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and 96 more changes in the filing

Note 2: BASIS OF PRESENTATION 5 changes

2 unchanged paragraphs

On December 16, 2025, the Company entered into a stock purchase agreement to sell its Riello business ("Riello") to Ariston Group. with expected gross proceeds of approximately $ 430 million. Riello, predominantly reported in the Company's Climate Solutions Europe segment, is a leading international manufacturer that designs, produces and integrates a comprehensive portfolio of thermal solutions including burners, boilers, heat pumps, cooling systems and aftermarket services for residential, commercial and industrial applications, with a strong focus on energy efficiency, innovation and a global distribution network. As a result, the assets and liabilities of Riello are presented as held for sale in on the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026 and December 31, 2025, and recorded at the lower of their carrying value or fair value less estimated cost to sell. The sale of Riello was completed on July 1, 2026. See Note 15 - Divestitures for additional information.

Discontinued Operations

During 2024, the Company exited its Fire & Security segment in multiple transactions that represented a single disposal plan to separately divest multiple businesses over different reporting periods. As a result, the components of the Fire & Security segment in aggregate met the criteria to be presented as discontinued operations in the accompanying Unaudited Condensed Consolidated Statement of Operations and Unaudited Condensed Consolidated Statement of Cash Flows. Amounts reported as discontinued operations relate to retained obligations from these business divestitures.

1 unchanged paragraph

On April 3, 2020 (the "Distribution Date"), United Technologies Corporation ("UTC"), since renamed RTX Corporation ("Raytheon Technologies Corporation" or "RTX"), completed the spin-off of Carrier into an independent, publicly traded company (the "Separation") through a pro-rata distribution (the "Distribution") on a one -for-one basis of all of the outstanding shares of common stock of Carrier to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution. In addition, the Company entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship among the Company, UTC and Otis. As of June September 30, 2026, only certain portions of the Tax Matters Agreement ("TMA") remain in effect.

1 unchanged paragraph

The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the sole source of authoritative U.S. GAAP other than SEC issued 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.

2 unchanged paragraphs

Note 3: INVENTORIES, NET 8 changes

2 unchanged paragraphs

(In millions) June 30,

Raw materials $ 690 $ 666

(In millions) September 30,

Raw materials $ 719 $ 666

Work-in-process 276 289 245

Finished goods 1,793 1,834 1,572

Inventories, net $ 2,759 2,842 $ 2,483

The Company performs periodic assessments utilizing customer demand, production requirements and historical usage rates to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to the lower of cost or estimated net realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of $ 328 342 million and $ 337 million as of June September 30, 2026 and December 31, 2025, respectively.

Note 4: GOODWILL AND INTANGIBLE ASSETS 17 changes

4 unchanged paragraphs

Acquisitions 71 5 76

Impairment charges ( 3,100 ) ( 3,100 )

1 unchanged paragraph

Foreign currency translation ( 4 ) ( 219 ) 2 ( 10 ) ( 231 )

Foreign currency translation ( 3 ) ( 263 ) 26 ( 13 ) ( 253 )

Balance as of June September 30, 2026 $ 5,071 5,132 $ 7,586 4,447 $ 1,412 1,435 $ 1,198 1,195 $ 15,267 12,209 (1) See Note 15 - Divestitures for additional information.

1 unchanged paragraph

June September 30, 2026 December 31, 2025

1 unchanged paragraph

Customer relationships $ 5,992 5,963 $ ( 1,852 1,998 ) $ 4,140 3,965 $ 6,143 $ ( 1,573 ) $ 4,570

Patents and trademarks 937 943 ( 215 232 ) 722 711 945 ( 191 ) 754

Technology and other 1,633 1,644 ( 739 784 ) 894 860 1,692 ( 690 ) 1,002

Total intangible assets $ 8,562 8,550 $ ( 2,806 3,014 ) $ 5,756 5,536 $ 8,780 $ ( 2,454 ) $ 6,326

1 unchanged paragraph

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Amortization expense of Intangible assets $ 218 213 $ 221 228 $ 435 648 $ 429 657

Annual Impairment Testing

The Company tested its goodwill for impairment on July 1 as part of its annual assessment. For each test except the Climate Solutions Europe reporting unit, the Company qualitatively assessed all relevant events or circumstances that could impact the estimate of fair value and determined it was more likely than not that the fair value of each reporting unit substantially exceeded its carrying amount. For the remaining test, the Company's Climate Solutions Europe reporting unit, the Company performed a quantitative goodwill impairment test to determine if any impairment existed. Based on the results of the quantitative test, the carrying amount of the Climate Solutions Europe reporting unit exceeded its estimated fair value. As a result, a goodwill impairment charge of $ 3.1 billion was recorded in the third quarter of 2026 and is included in Goodwill impairment on the accompanying Unaudited Condensed Consolidated Statement of Operations.

The impairment was primarily driven by a reduction in projected operating results for the Climate Solutions Europe reporting unit, weaker market demand, driven in part by government policies and subsidies, a change in the pace of transition from boilers to heat pumps, an increase in interest rates and other challenging macroeconomic conditions. The resulting reductions in projected revenue and profitability, together with a longer expected recovery period and an increase in the discount rate, adversely affected the estimated fair value of the reporting unit. The Company estimated the fair value of the Climate Solutions Europe reporting unit using a discounted cash flow method under the income approach. Key assumptions used in estimating cash flows included the revenue growth rate, earnings before interest and income taxes margins, discount rate and long-term growth rates, among others, and explicitly addressed factors such as timing, growth and margins with due consideration given to forecasting, market and geographic risk. The determination of the fair value of the Climate Solutions Europe reporting unit requires significant judgment and estimates that are believed to be reasonable under the circumstances. These estimates are subject to uncertainty and changes in assumptions could result in a material change in the estimated fair value of the reporting unit.

The events and circumstances giving rise to the goodwill impairment also prompted the Company to assess the recoverability of long-lived assets, including identifiable intangible assets, within the Climate Solutions Europe reporting unit. The assessment indicated that the carrying amounts of these assets were recoverable and no impairment charge was recognized.

Note 5: BORROWINGS AND LINES OF CREDIT 21 changes

1 unchanged paragraph

(In millions) June 30,

Commercial paper $ 685 $ 325

(In millions) September 30,

Commercial paper $ 185 $ 325

1 unchanged paragraph

Current portion of long-term debt 916 1,260 108

Short-term borrowings and current portion of long-term debt $ 1,638 1,482 $ 468

1 unchanged paragraph

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 September 30, 2026, the Company had $ 685 185 million outstanding under its commercial paper facilities with a weighted average interest rate of 4.01 4.13 %.

1 unchanged paragraph

(In millions) June 30,

(In millions) September 30,

10 unchanged paragraphs

Total long-term notes 10,747 10,751 10,842

Japanese Term Loan Facility 334 345 (2)

Other debt (including project financing obligations and finance leases) 222 229 364

Discounts and debt issuance costs ( 73 71 ) ( 78 )

Total long-term debt 11,230 11,252 11,473

Less: current portion of long-term debt 916 1,260 108

Long-term debt, net of current portion $ 10,314 9,992 $ 11,365

(1) 2.493 % Notes due February 27, 15, 2027; reclassified to Current portion of long-term debt .

(2) Japanese Term Loan Facility due July 25, 2027, reclassified to Current portion of long-term debt.

1 unchanged paragraph

The Company maintains a $ 2.5 billion unsecured, unsubordinated revolving credit facility that matures in December 2029 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and can be used for other general corporate purposes. Borrowings are available in U.S. Dollars and Euros. U.S. Dollar borrowings bear interest at either a Term SOFR Rate plus 0.10 % and a ratings-based margin or, alternatively, at an alternate base rate plus a ratings-based margin. Euro borrowings bear interest at an adjusted EURIBOR rate plus a ratings-based margin. A ratings-based commitment fee is charged on unused commitments. As of June September 30, 2026, there were no borrowings outstanding under the Revolving Credit Facility.

1 unchanged paragraph

The Company is was involved in long-term construction contracts in which it arranges arranged project financing with certain customers. As a result, the Company issued $ 27 33 million and $ 10 22 million of debt during the six nine months ended June September 30, 2026 and 2025, respectively. Long-term debt repayments associated with these financing arrangements during the six nine months ended June September 30, 2026 and 2025, were $ 53 million and zero , respectively. Project financing obligations were derecognized in connection with a business divestiture completed during the third quarter of 2026.

The Revolving Credit Facility, the indenture for the long-term notes and the five-year , JPY 54 billion senior unsecured term loan facility ("Japanese Term Loan Facility") contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur certain liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of June September 30, 2026, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.

Note 6: FAIR VALUE MEASUREMENTS 2 changes

6 unchanged paragraphs

The Company enters into external cross currency swaps in order to manage foreign currency translation risk on assets denominated in a functional currency other than the U.S. Dollar. The swaps have an aggregate notional amount of $ 3.2 3.7 billion and are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates. The Company designates the cross currency swaps as a partial hedge of its investment in certain subsidiaries whose functional currency is not the U.S. Dollar. As a result, changes in the fair value of the swaps are recorded in Equity in the Unaudited Condensed Consolidated Balance Sheet.

10 unchanged paragraphs

June September 30, 2026 December 31, 2025

4 unchanged paragraphs

Note 7: EMPLOYEE BENEFIT PLANS 18 changes

2 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Defined benefit plans $ 6 $ 15 $ 11 $ 20

Defined contribution plans $ 30 $ 28 $ 62 $ 63

Defined benefit plans $ 5 $ 13 $ 16 $ 33

Defined contribution plans $ 28 $ 28 $ 90 $ 91

Multi-employer pension plans $ 4 $ 4 $ 8 12 $ 7 11

1 unchanged paragraph

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Service cost $ 3 $ 4 $ 6 $ 7

Interest cost 8 7 14 14

Service cost $ 2 $ 3 $ 8 $ 10

Interest cost 5 7 19 21

Expected return on plan assets ( 9 8 ) ( 8 9 ) ( 17 25 ) ( 16 25 )

Amortization of prior service cost 1 1

Recognized actuarial net (gain) loss 1 1 2 1

Net settlement, curtailment and special termination benefit (gain) loss ( 1 ) 10 ( 1 ) 10

Net periodic pension expense (benefit) $ 2 ( 1 ) $ 4 12 $ 4 3 $ 6 18

Note 8: STOCK-BASED COMPENSATION 4 changes

3 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Equity compensation costs - equity settled $ 12 7 $ 21 11 $ 33 40 $ 44 55

1 unchanged paragraph

Total stock-based compensation expense $ 13 6 $ 23 9 $ 35 41 $ 45 54

1 unchanged paragraph

Note 9: PRODUCT WARRANTIES 5 changes

4 unchanged paragraphs

Settlements made ( 132 ) ( 129 )

Balance as of June 30, $ 935 $ 862

Warranties, performance guarantees issued and changes in estimated liability 184 174 290 272

Settlements made ( 221 ) ( 218 )

Balance as of September 30, $ 956 $ 870

1 unchanged paragraph

Note 10: EQUITY 10 changes

The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $ 0.01 par value. As of June September 30, 2026 and December 31, 2025, 951,905,773 952,020,058 and 950,633,287 shares of common stock were issued, respectively, which includes 126,879,717 133,350,097 and 114,891,176 shares of treasury stock, respectively.

2 unchanged paragraphs

During the six nine months ended June September 30, 2026, the Company repurchased 12.0 18.5 million shares of common stock for an aggregate purchase price of $ 748 million. 1.1 billion. As a result, the Company had approximately $ 4.6 4.2 billion remaining under the current authorization at June September 30, 2026.

1 unchanged paragraph

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and six nine months ended June September 30, 2026, is as follows:

8 unchanged paragraphs

Other comprehensive income (loss) before reclassifications, net ( 101 ) ( 1 ) ( 102 )

Amounts reclassified, pre-tax 1 ( 1 )

Balance as of September 30, 2026 $ ( 594 ) $ ( 91 ) $ 46 $ ( 639 )

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three and six nine months ended June September 30, 2025, is as follows:

8 unchanged paragraphs

Other comprehensive income (loss) before reclassifications, net 46 2 48

Amounts reclassified, pre-tax 1 ( 1 )

Balance as of September 30, 2025 $ ( 306 ) $ ( 109 ) $ 50 $ ( 365 )

Note 11: REVENUE RECOGNITION 33 changes

2 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

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

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

Product $ 3,065 $ 2,393 $ 8,334 $ 7,682

Service 289 318 893 853

Climate Solutions Americas sales 3,354 2,711 9,227 8,535

Product 1,198 1,168 3,539 3,376

Service 137 122 413 336

Climate Solutions Europe sales 1,335 1,290 3,952 3,712

Product 653 659 2,007 2,016

Service 195 174 592 525

Climate Solutions Asia Pacific, Middle East & Africa sales 917 882 1,751 1,708 848 833 2,599 2,541

Product 669 686 2,006 1,961

Service 57 59 171 161

Climate Solutions Transportation sales 726 745 2,177 2,122

Net sales $ 6,263 $ 5,579 $ 17,955 $ 16,910

1 unchanged paragraph

(In millions) June 30,

(In millions) September 30,

2 unchanged paragraphs

Total contract assets 464 504 582

2 unchanged paragraphs

Total contract liabilities ( 1,033 1,118 ) ( 894 )

Net contract assets (liabilities) $ ( 569 614 ) $ ( 312 )

1 unchanged paragraph

The Company recognized revenue of $ 407 519 million during the six nine months ended June September 30, 2026, that related to contract liabilities as of January 1, 2026. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months.

Note 12: RESTRUCTURING COSTS 21 changes

2 unchanged paragraphs

June 30, Six Months Ended

September 30, Nine Months Ended

1 unchanged paragraph

Climate Solutions Americas $ $ 1 $ 3 $ 4

Climate Solutions Europe 3 26 89 26

Climate Solutions Transportation 2 1 4 2

Total Segment 9 35 103 40

Climate Solutions Americas $ 2 $ 8 $ 5 $ 12

Climate Solutions Europe 30 22 119 48

Climate Solutions Asia Pacific, Middle East & Africa 4 7 7 8 12 6 19 14

Climate Solutions Transportation 3 4 5

Total Segment 44 39 147 79

Corporate and other ( 1 ) 12 13 15 11 14 26

1 unchanged paragraph

Cost of sales $ 1 $ 8 $ 45 $ 10

Selling, general and administrative 7 39 71 45

Cost of sales $ 8 $ 11 $ 53 $ 22

Selling, general and administrative 37 39 108 83

5 unchanged paragraphs

Balance as of June 30, $ 111 $ 76

Net pre-tax restructuring costs 105 44 142 86

Utilization, foreign exchange and other ( 96 147 ) ( 37 73 )

Balance as of September 30, $ 97 $ 82

As of June September 30, 2026, the Company had $ 111 97 million accrued for costs associated with its announced restructuring initiatives. The balance relates to cost reduction efforts, primarily severance related across each of the Company's segments. The Company expects a majority of the balance to be utilized within 12 months.

Note 13: INCOME TAXES 3 changes

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 negative 7.5 % for the three months ended June September 30, 2026, compared with 20.0 negative 0.2 % for the three months ended June September 30, 2025. The year-over-year increase was negative effective tax rate in the current period reflected income tax expense recorded on a pretax loss, primarily driven by the $ 46 million non-deductible $ 3.1 billion goodwill impairment charge on Riello and a $ 10 million increase related to the Climate Solutions Europe reporting unit. In tax expense associated with a higher German effective tax rate during addition, the three months ended June September 30, 2026, included a tax charge of $ 12 million related to the disposition of Riello. The negative effective tax rate for the three months ended June September 30, 2025, included a state net tax benefit of $ 6 64 million related from changes to the utilization of a capital loss t he German effective rate and a statutory reduction to the German corporate tax benefit of rate and a $ 6 49 million benefit from the conclusion re-organization of the UTC 2020 U.S. Internal Revenue Service ("IRS") tax audit. a Japanese subsidiary.

The effective tax rate for the six nine months ended June September 30, 2026, was 9.4 negative 17.7 % compared with 20.1 positive 15.2 % for the six nine months ended June September 30, 2025. The year-over-year decrease was negative effective tax rate in the current period reflected income tax expense recorded on a pretax loss, primarily driven by the non-deductible $ 3.1 billion goodwill impairment charge related to the Climate Solutions Europe reporting unit and a $ 48 million non-deductible impairment charge on Riello. In addition, the nine months ended September 30, 2026 , included a net $ 99 million tax benefit from the partial release of a valuation allowance associated with our the Company's 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 a tax benefits were partially offset by the charge of $ 46 12 million non-deductible impairment charge on related to the disposition of Riello and a $ 10 million increase in tax expense associated with a higher German effective tax rate. both in The current period. The six nine months ended June September 30, 2025, included a $ 12 million net tax benefit generated by the purchase of investment tax credits $ 64 million from a third-party, changes to the German effective rate and a state statutory reduction to the German corporate tax benefit of rate, a $ 6 49 million related to benefit from the utilization re-organization of a capital loss Japanese subsidiary and a tax benefit of $ 6 16 million from tax benefit generated by the conclusion purchase of the UTC 2020 U.S. Internal Revenue Service ("IRS") investment tax audit. credits from a third-party.

2 unchanged paragraphs

In the ordinary course of business, there is inherent uncertainty in quantifying the Company's income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management s evaluation of the facts, circumstances and information available at the reporting date. The Company believes that it is reasonably possible that a net decrease in unrecognized tax benefits of $ 5 15 million to $ 95 105 million may occur within 12 months as a result of additional uncertain tax positions, the revaluation of uncertain tax positions arising from examinations, appeals, court decisions and/or the expiration of tax statutes.

1 unchanged paragraph

Note 14: EARNINGS PER SHARE 12 changes

June 30, Six Months Ended

Earnings (loss) per share is computed by dividing Net earnings (loss) attributable to common shareowners by the weighted-average number of shares of common stock outstanding during the period (excluding treasury stock). Diluted earnings (loss) per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of diluted earnings (loss) per share excludes the effect of the potential exercise of stock-based awards, including stock appreciation rights and stock options, when the effect of the potential exercise would be anti-dilutive.

The following table summarizes the weighted-average number of shares of common stock outstanding for basic and diluted earnings (loss) per share calculations:

September 30, Nine Months Ended

1 unchanged paragraph

Basic weighted-average number of shares outstanding 828.1 854.9 831.5 860.8

Diluted weighted-average number of shares outstanding 836.5 866.3 839.6 872.3

Antidilutive shares excluded from computation of diluted earnings per share 3.2 1.9 3.2 1.9

Net earnings (loss) attributable to common shareowners $ 501 ( 2,593 ) $ 591 428 $ 739 ( 1,854 ) $ 1,003 1,431

Basic weighted-average number of shares outstanding 821.8 848.8 828.3 856.8

Stock awards and equity units (share equivalent) 8.4 11.4 8.1 11.5 (1)

Diluted weighted-average number of shares outstanding 821.8 858.6 828.3 867.7

Antidilutive shares excluded from computation of diluted earnings (loss) per share 20.7 2.0 20.7 2.0 (1) During the three and nine months ended September 30, 2026, the Company reported a net loss attributable to common shareholders. As a result, potentially dilutive shares were excluded from the computation of diluted loss per share because their inclusion would have reduced the loss per share.

Note 15: DIVESTITURES 22 changes

On May 18, 2026, the Company entered into an agreement to sell its Noresco business ( Noresco ) to Opterra Energy Services, LLC, a subsidiary of LS Power Development, LLC. Noresco is historically reported in the Company's Climate Solutions America segment. As a result, the assets and liabilities of Noresco are presented as held for sale in the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026. This transaction is expected to close in the third quarter of 2026.

The following table summarizes assets and liabilities classified as held for sale:

(In millions) June 30, 2026 December 31, 2025

Cash and cash equivalents $ 95 $ 25

Accounts receivable, net 105 103

Inventories, net 114 98

Other current assets 95 2

Fixed assets, net 76 77

Intangible assets, net 22 18

Operating lease right-of-use assets 11 7

Impairment on held for sale assets ( 46 )

Total assets held for sale $ 815 $ 592

Accounts payable $ 148 $ 91

Accrued liabilities 88 48

Short-term borrowings and current portion of long-term debt 52

Future pension and post-retirement obligations 7 7

Future income tax obligations 11 9

Operating lease liabilities 6 4

Other long-term liabilities 11 11

Total liabilities held for sale $ 414 $ 170

On December 16, 2025, July 1, 2026, the Company entered into a stock purchase agreement to sell its completed the sale of Riello business to Ariston Group with expected gross for cash proceeds of approximately $ 430 438 million. Riello, predominantly reported in the Company's Climate Solutions Europe segment, is a leading international manufacturer that designs, produces and integrates a comprehensive portfolio of thermal solutions including burners, boilers, heat pumps, cooling systems and aftermarket services for residential, commercial and industrial applications, with a strong focus on energy efficiency, innovation and a global distribution network. As a result, The assets and liabilities of Riello are presented as held for sale in the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026 and December 31, 2025, and recorded at the lower of their carrying value or fair value less estimated cost to sell. The Company recognized an impairment charge a gross loss of $ 46 48 million recorded in Other income (expense), net on i n the accompanying Unaudited Condensed Consolidated Statement of Operations. during The three months ended June 30, gross loss included a $ 46 million impairment in the second quarter of 2026 and an additional $ 2 million loss recognized upon completion of the sale in the third quarter of Riello was completed on July 1, 2026. The net proceeds received are subject to adjustments provided in the stock purchase agreement governing the sale of Riello.

On August 3, 2026, the Company completed the sale of its Noresco business ( Noresco ) to Opterra Energy Services, LLC, a subsidiary of LS Power Development, LLC. Noresco has historically been reported in the Company's Climate Solutions Americas segment. The Company retained certain guarantees related to the sale of Noresco. See Note 18, Commitments and Contingent Liabilities, for additional information.

Note 16: SEGMENT FINANCIAL DATA 94 changes

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Three Months Ended June September 30, 2026

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Net sales $ 3,372 $ 1,324 $ 917 $ 738 $ 6,351

Cost of goods sold ( 2,227 ) ( 936 ) ( 714 ) ( 531 ) ( 4,408 )

Research and development ( 80 ) ( 22 ) ( 15 ) ( 15 ) ( 132 )

Selling, general and administrative ( 282 ) ( 273 ) ( 132 ) ( 75 ) ( 762 )

Other income (expense), net 9 2 27 ( 1 ) 37

Segment operating profit $ 823 $ 95 $ 108 $ 118 $ 1,144

Net sales $ 3,354 $ 1,335 $ 848 $ 726 $ 6,263

Cost of goods sold ( 2,314 ) ( 888 ) ( 637 ) ( 523 ) ( 4,362 )

Research and development ( 83 ) ( 23 ) ( 16 ) ( 16 ) ( 138 )

Selling, general and administrative ( 257 ) ( 253 ) ( 118 ) ( 68 ) ( 696 )

Equity method investment net earnings 31 25 2 58 40 22 ( 1 ) 61

Other income (expense), net 5 ( 3 ) 4 ( 1 ) 5

Segment operating profit $ 745 $ 168 $ 103 $ 117 $ 1,133

Three Months Ended June September 30, 2025

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Net sales $ 3,252 $ 1,253 $ 882 $ 726 $ 6,113

Cost of goods sold ( 2,061 ) ( 883 ) ( 654 ) ( 518 ) ( 4,116 )

Research and development ( 89 ) ( 19 ) ( 16 ) ( 17 ) ( 141 )

Selling, general and administrative ( 277 ) ( 260 ) ( 126 ) ( 72 ) ( 735 )

Other income (expense), net 11 7 19 5 42

Segment operating profit $ 879 $ 99 $ 135 $ 128 $ 1,241

Six Months Ended June 30, 2026

Net sales $ 2,711 $ 1,290 $ 833 $ 745 $ 5,579

Cost of goods sold ( 1,837 ) ( 888 ) ( 630 ) ( 541 ) ( 3,896 )

Research and development ( 83 ) ( 19 ) ( 15 ) ( 16 ) ( 133 )

Selling, general and administrative ( 273 ) ( 264 ) ( 122 ) ( 74 ) ( 733 )

Equity method investment net earnings 43 1 30 4 78 33 28 61

Other income (expense), net ( 18 ) 1 3 1 ( 13 )

Segment operating profit $ 533 $ 120 $ 97 $ 115 $ 865

Nine Months Ended September 30, 2026

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Net sales $ 5,873 $ 2,617 $ 1,751 $ 1,451 $ 11,692

Cost of goods sold ( 3,998 ) ( 1,839 ) ( 1,354 ) ( 1,055 ) ( 8,246 )

Research and development ( 156 ) ( 43 ) ( 30 ) ( 30 ) ( 259 )

Selling, general and administrative ( 562 ) ( 553 ) ( 249 ) ( 150 ) ( 1,514 )

Equity method investment net earnings 44 ( 2 ) 42 5 89

Other income (expense), net ( 5 ) 4 29 ( 2 ) 26

Segment operating profit $ 1,196 $ 184 $ 189 $ 219 $ 1,788

Six Months Ended June 30, 2025

Net sales $ 9,227 $ 3,952 $ 2,599 $ 2,177 $ 17,955

Cost of goods sold ( 6,312 ) ( 2,727 ) ( 1,991 ) ( 1,578 ) ( 12,608 )

Research and development ( 239 ) ( 66 ) ( 46 ) ( 46 ) ( 397 )

Selling, general and administrative ( 819 ) ( 806 ) ( 367 ) ( 218 ) ( 2,210 )

Equity method investment net earnings 84 ( 2 ) 64 4 150

Other income (expense), net 1 33 ( 3 ) 31

Segment operating profit $ 1,941 $ 352 $ 292 $ 336 $ 2,921

Nine Months Ended September 30, 2025

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Net sales $ 5,824 $ 2,422 $ 1,708 $ 1,377 $ 11,331

Cost of goods sold ( 3,761 ) ( 1,671 ) ( 1,263 ) ( 990 ) ( 7,685 )

Research and development ( 175 ) ( 37 ) ( 31 ) ( 33 ) ( 276 )

Selling, general and administrative ( 527 ) ( 517 ) ( 238 ) ( 141 ) ( 1,423 )

Equity method investment net earnings 69 ( 1 ) 48 6 122

Other income (expense), net 19 8 32 6 65

Segment operating profit $ 1,449 $ 204 $ 256 $ 225 $ 2,134

June 30, Six Months Ended

Net sales $ 8,535 $ 3,712 $ 2,541 $ 2,122 $ 16,910

Cost of goods sold ( 5,598 ) ( 2,559 ) ( 1,893 ) ( 1,531 ) ( 11,581 )

Research and development ( 258 ) ( 56 ) ( 46 ) ( 49 ) ( 409 )

Selling, general and administrative ( 800 ) ( 781 ) ( 360 ) ( 215 ) ( 2,156 )

Equity method investment net earnings 102 ( 1 ) 76 6 183

Other income (expense), net 1 9 35 7 52

Segment operating profit $ 1,982 $ 324 $ 353 $ 340 $ 2,999

September 30, Nine Months Ended

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Segment operating profit $ 1,144 $ 1,241 $ 1,788 $ 2,134

Corporate and other ( 49 ) ( 75 ) ( 99 ) ( 120 )

Restructuring costs ( 8 ) ( 47 ) ( 116 ) ( 55 )

Acquisition/divestiture-related costs ( 8 ) ( 6 ) ( 18 ) ( 11 )

Riello impairment ( 46 ) ( 46 )

Interest (expense) income, net ( 105 ) ( 91 ) ( 195 ) ( 173 )

Earnings before income taxes $ 721 $ 812 $ 890 $ 1,360

Reconciliation to Earnings (loss) before income taxes

Segment operating profit $ 1,133 $ 865 $ 2,921 $ 2,999

Corporate and other ( 42 ) ( 42 ) ( 141 ) ( 162 )

Restructuring costs ( 45 ) ( 50 ) ( 161 ) ( 105 )

Amortization of acquired intangible assets ( 213 210 ) ( 214 221 ) ( 426 636 ) ( 415 636 )

Acquisition/divestiture-related costs ( 2 ) ( 10 ) ( 20 ) ( 21 )

Riello impairment and loss ( 2 ) ( 48 )

Goodwill impairment ( 3,100 ) ( 3,100 )

Other ( 5 ) ( 3 ) ( 5 ) ( 11 )

Non-service pension (expense) benefit 1 2 1 3 ( 9 ) 5 ( 8 )

Interest (expense) income, net ( 93 ) ( 97 ) ( 288 ) ( 270 )

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Note 17: RELATED PARTIES 4 changes

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June 30, Six Months Ended

September 30, Nine Months Ended

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(In millions) June 30,

(In millions) September 30,

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Note 18: COMMITMENTS AND CONTINGENT LIABILITIES 16 changes

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(In millions) June 30,

(In millions) September 30,

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Total Environmental reserves $ 200 201 $ 200

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(In millions) June 30,

(In millions) September 30,

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Total Asbestos liabilities $ 209 203 $ 218

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Total Asbestos-related recoveries $ 89 87 $ 92

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As of June September 30, 2026, the Company, Kidde-Fenwal, Inc. ("KFI") and others have been named as defendants in more than 18,000 lawsuits filed in United States state or federal courts and a single case in Canada alleging that the historic use of Aqueous Film Forming Foam ("AFFF") caused personal injuries and damage to property and water supplies. In December 2018, the U.S. Judicial Panel on Multidistrict Litigation transferred and consolidated all AFFF cases pending in the U.S. federal courts against the Company, KFI and others to the U.S. District Court for the District of South Carolina (the "MDL Proceedings"). In 2013, KFI divested the AFFF businesses to an unrelated third party. The Company acquired KFI as part of the Separation in April 2020.

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The first of the Proposed Settlement Agreements relates to claims that the Company is responsible for liabilities arising from KFI s manufacture or sale of AFFF ( Estate Claims Settlement ). Upon Bankruptcy Court approval, the Estate Claims Settlement will permanently resolve all present and future claims that the Company is responsible for any liabilities of KFI, including all liabilities arising from KFI s manufacture and sale of AFFF. The second and third of the Proposed Settlement Agreements release a very substantial amount of current and future direct claims against the Company (the Direct Claims Settlements ). Direct claims allege that UTC, which indirectly owned KFI s AFFF business for eight years , engaged in conduct independent of KFI that caused harm to AFFF claimants. The Company agreed to indemnify UTC for these direct claims when it was spun-off from UTC. Upon approval by the MDL Court, the Direct Claims Settlements resolve and enjoin all current and future AFFF-related direct claims against the Company by participating public water providers and airports. Non-settling parties may still assert direct AFFF-related claims, although we expect the Company expects a vast majority of public water providers and airports will participate in the Direct Claims Settlements. The process of seeking court approval for the public water provider Direct Claims Settlements with water providers will begin Settlement began in the third quarter of 2026. On September 10, 2026, the court in the MDL Proceedings preliminarily approved the public water provider Direct Claims Settlement. The court approval process for the airport Direct Claims Settlement has not yet begun.

As part of the Proposed Settlement Agreements, the Company will pay $ 615 million in cash over five years , 100 % of the net sale proceeds from its sale of KFI s assets to Pacific Avenue Capital Partners, which are estimated to be $ 115 million, and contribute the right to recover proceeds under certain of its insurance policies. The Company will be entitled to receive up to $ 2.4 billion of proceeds from those insurance policies and will contribute the first $ 125 million of such proceeds as additional consideration in the Direct Claims Settlements. The Company also will be entitled to any earnouts payable to KFI under the KFI sale agreement. The Company expects insurance payments it receives in the future, in the aggregate, to cover the amount paid under the Proposed Settlement Agreements. As a result of the Proposed Settlement Agreements, the Company recorded a liability in the amount of $ 565 million during 2024. The amount recognized is in addition to liabilities of $ 50 million that the Company recorded upon the deconsolidation of KFI on May 14, 2023, as further discussed below. During the third quarter of 2026, the Company made a $ 45 million cash payment in connection with the public water provider Direct Claims Settlement, which reduced the recorded liability. As of June September 30, 2026, the Company had liabilities of $ 67 million and $ 503 million included on the accompanying Unaudited Condensed Consolidated Balance Sheet within Accrued liabilities and Other long-term liabilities , respectively. In addition, the Company has not recorded any amounts associated with expected insurance proceeds.

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Beginning in March 2026, the Company, along with several other HVAC manufacturers, has been named as a defendant in putative class-action lawsuits alleging violations of federal and state antitrust laws on behalf of direct and indirect purchasers of HVAC equipment. These lawsuits are currently pending in the United States District Court for the Eastern District of Michigan and generally allege that the Company and other industry participants have engaged in an unlawful agreement to fix or raise the prices of certain HVAC products in the United States since January 1, 2020. The lawsuits seek damages, including treble damages under federal and state antitrust statutes, as well as injunctive relief and attorneys fees. The Company believes the allegations in these lawsuits lack merit and that it has meritorious defenses to the alleged claims. At this time, the Company is unable to assess the probability of liability or to reasonably estimate a range of possible loss. There can be no assurance that any future exposure will not be material in any period.

On October 9, 2026, the Company moved to dismiss the lawsuits and expects briefing on the motions to extend into 2027.

At this time, the Company is unable to assess the probability of liability or to reasonably estimate a range of possible loss. There can be no assurance that any future exposure will not be material in any period.

The Company has outstanding guarantees associated with certain obligations of Noresco arising from contractual commitments made in connection with the business prior to its divestiture. These guarantees primarily support obligations under energy savings performance contracts and related financing arrangements and generally remain in effect until the underlying obligations are satisfied or otherwise released.

Further, Noresco and the purchaser have indemnified the Company for amounts payable under these guarantees such that the Company will only be required to make payments pursuant to the guarantees to the extent that each of Noresco and its buyer are each unable to perform. The Company believes the likelihood that it will ultimately be required to make payments is remote based on these indemnification arrangements, the historical performance of the related financing obligations and Noresco s history of fulfilling its energy savings performance commitments. In addition, no parent guarantee has been called for payment, either before or since the divestiture. Accordingly, no liability has been recorded.

As of September 30, 2026, the maximum potential amount of future payments under these guarantees was approximately $ 1.0 billion. The exposure under these guarantees reduces as repayment obligations are satisfied and the remaining terms of the underlying energy savings performance commitments expire.

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MD&A 299 changes

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To date, neither the IEEPA tariffs implemented during 2025 nor the Section 232 tariffs have had a material impact on our business, and we will continue to monitor developments in U.S. tariff policy and assess the impact of any changes on our business.

Sale of Riello Business

In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were unauthorized. We were the importer of record for certain products previously subject to IEEPA tariffs. In March 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to refund IEEPA tariffs previously collected. As During the third quarter of June 30, 2026, , we have not recorded any recognized a benefit of $133 million related to potential refunds of IEEPA tariffs previously paid as such amounts were not considered that we determined are probable and reasonably estimable . The benefit was recorded primarily as a reduction to Cost of products sold on the accompanying Unaudited Condensed Consolidated Statement of Operations.

On April 2, 2026, updated Section 232 tariffs applicable to steel, aluminum and copper were announced. We expect to partially mitigate the 2026 impact by leveraging similar strategies deployed during 2025 including supply chain changes, operational cost reduction and pricing actions. We will continue to monitor developments in U.S. tariff policy and assess the impact of any changes on our business and results of operations.

On December 16, 2025, July 1, 2026, we entered into a purchase agreement to sell completed the sale of our Riello business ("Riello") to Ariston Group with expected gross for cash proceeds of approximately $430 $438 million. Riello, predominantly reported in our Climate Solutions Europe segment, is a leading international manufacturer that designs, produces and integrates a comprehensive portfolio of thermal solutions including burners, boilers, heat pumps, cooling systems and aftermarket services for residential, commercial and industrial appl ications, with a strong focus on energy efficiency, innovation and a global distribution network. We recognized an impairment charge a gross loss on the sale of $46 $48 million, which is recorded in Other income (expense), net on the accompanying Unaudited Condensed Consolidated Statement of Operations. during The three months ended June 30, gross loss included a $46 million impairment in the second quarter of 2026 and an additional $2 million loss recognized upon completion of the sale in the third quarter of Riello was completed on July 1, 2026. The net proceeds received are subject to working capital and other adjustments provided in the stock purchase agreement.

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Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses. We believe that the most complex and sensitive judgments, because of their potential significance to the accompanying Unaudited Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. In " Management s Discussion and Analysis of Financial Condition and Results of Operations" of our 2025 Form 10-K, we describe the significant accounting estimates and policies used in the preparation of the accompanying Unaudited Condensed Consolidated Financial Statements. Except as noted below, there have been no significant changes in our critical accounting estimates.

In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other ("ASC 350"), 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.

ASC 350 provides entities with an option to perform a qualitative assessment (commonly referred to as step zero ) to determine whether a quantitative analysis for impairment is necessary. In performing step zero for our impairment test, we are required to make assumptions and judgments, including but not limited to the following: the evaluation of macroeconomic conditions as related to our business, industry and market trends, and the overall future financial performance of our reporting units and future opportunities in the markets in which they operate. If impairment indicators are present after performing step zero, we would perform a quantitative impairment analysis to estimate fair value.

For our 2026 goodwill impairment tests, we elected to perform qualitative step zero assessments for all tests, except for our Climate Solutions Europe reporting unit, to determine if the fair values of our reporting units were below carrying value. This constitutes the entire Climate Solutions Europe segment. We considered macroeconomic factors including global economic growth, general macroeconomic trends for the markets in which our reporting units operate and the forecasted growth of the global industrial products industry. In addition to these macroeconomic factors, among other things, we considered the reporting units current results and forecasts, changes in the nature of each business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry and competitive environment, changes in the composition or carrying value of net assets and any intention to sell or dispose of a reporting unit or a significant portion of a reporting unit. Based upon our qualitative analysis, we determined that our goodwill was not impaired for these reporting units.

For the remaining goodwill test, we elected to perform a quantitative test to determine if the fair value of our Climate Solutions Europe reporting unit was below carrying value. We utilized a discounted cash flow method under the income approach to estimate the fair value of the reporting unit. Key assumptions used in estimating future cash flows included the revenue growth rate, earnings before interest and income taxes margin, discount rate and long-term growth rate, among others and explicitly addressed factors such as timing, growth and margins with due consideration given to forecasting, market and geographic risk. Based on the results of the quantitative test, the carrying amount of the Climate Solutions Europe reporting unit exceeded its estimated fair value by approximately 23%. As a result, we recognized a goodwill impairment charge of $3.1 billion in the third quarter of 2026.

The impairment was primarily driven by a reduction in projected operating results for the Climate Solutions Europe reporting unit, weaker market demand, driven in part by government policies and subsidies, a change in the pace of transition from boilers to heat pumps, an increase in interest rates and other challenging macroeconomic conditions. The resulting reductions in projected revenue and profitability, together with a longer expected recovery period and an increase in the discount rate, adversely affected the estimated fair value of the reporting unit. The estimated fair value of the Climate Solutions Europe reporting unit is particularly sensitive to changes in the discount rate and projected operating results. A reasonably possible change in these assumptions could result in a material change in the estimated fair value of the reporting unit and could result in additional goodwill impairment. For example, a 50 basis point increase in the discount rate would decrease the estimated fair value by approximately $630 million, while a 1% decrease in long-term growth rate used to project operating results would decrease the estimated fair value by approximately $750 million.

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Three Months Ended June September 30, 2026 Compared with the Three Months Ended June September 30, 2025

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Three Months Ended June September 30,

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Net sales $ 6,351 $ 6,113 $ 238 4 %

Gross margin 1,728 1,769 (41) (2) %

Operating expenses (903) (866) (37) 4 %

Operating profit 825 903 (78) (9) %

Earnings (loss) before income taxes 721 812 (91) (11) %

Income tax expense (180) (162) (18) 11 %

Earnings (loss) from continuing operations 541 650 (109) (17) %

Net earnings (loss) 541 633 (92) (15) %

Foreign currency translation 1 %

Net sales $ 6,263 $ 5,579 $ 684 12 %

Cost of products and services sold (4,623) (4,344) (279) 6 (4,580) (4,130) (450) 11 %

Gross margin 1,683 1,449 234 16 %

Operating expenses (3,956) (910) (3,046) N.M.

Operating profit (loss) (2,273) 539 (2,812) N.M.

Non-operating income (expense), net (104) (91) (13) 14 (90) (106) 16 (15) %

Earnings (loss) before income taxes (2,363) 433 (2,796) N.M.

Income tax (expense) benefit (177) 1 (178) N.M.

Earnings (loss) from continuing operations (2,540) 434 (2,974) N.M.

Discontinued operations, net of income taxes (17) 17 (100) % 21 (21) N.M.

Net earnings (loss) (2,540) 455 (2,995) N.M.

Less: Non-controlling interest in subsidiaries' earnings from operations 40 42 (2) (5) 53 27 26 96 %

Net earnings (loss) attributable to common shareowners $ 501 (2,593) $ 591 428 $ (90) (15) % (3,021) N.M.

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Market risk 1 change

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Controls and procedures 2 changes

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Unregistered sales of stock 9 changes

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Other information 8 changes

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Exhibits 9 changes

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