Reportable Business Segments

12 Months Ended

Dec. 31, 2024

Segment Reporting, Measurement Disclosures [Abstract]

Reportable Business Segments

3. Reportable Business Segments:

Description of Segments

We operate in two reportable business segments of the HVACR industry. Our segments are organized primarily by the nature of the products and services we provide. The following table describes each segment:

Segment	Products or Services	Markets Served	Geographic Areas
Home Comfort Solutions	Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies	Residential Replacement; Residential New Construction	United States Canada
Building Climate Solutions	Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products, curb, curb adapters, drop box diffusers, HVAC recycling and salvage service, condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks	Light Commercial; Food Preservation; Non-Food Industry	United States Canada

Prior to January 1, 2023, we operated in three reportable business segments. In November 2022, we announced the decision to explore strategic alternatives for our European commercial HVAC and refrigeration businesses. We continue to invest in our Heatcraft Worldwide Refrigeration business which is included in the Building Climate Solutions segment. The consolidation of our Heatcraft business within the Building Climate Solutions segment provides the opportunity to leverage synergies and create long-term growth opportunities by integrating entities with similar products, end consumers and financial performance metrics under the same management. The change in segment reporting better aligns with how the businesses are managed and evaluated given the change in portfolio.

In the fourth quarter of 2023, we successfully completed the divestiture of our European operations, which until that time, were presented with the Corporate and Other segment.

Segment Data

We use segment profit or loss as the primary measure of profitability to evaluate operating performance and to allocate capital resources. We define segment profit or loss as a segment’s income or loss from continuing operations before income taxes included in the accompanying Consolidated Statements of Operations, excluding certain items. The reconciliation in the table below details the items excluded.

Our corporate costs include those costs related to corporate functions such as legal, internal audit, treasury, human resources, tax compliance and senior executive staff. Any intercompany sales and associated profit (and any other intercompany items) are eliminated from segment results. There were no significant intercompany eliminations for the periods presented.

The chief operating decision maker uses segment profit or loss from operations before interest and income taxes, excluding certain items, to allocate resources (including employees, financial, or capital resources) for each segment predominantly in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances in segment profit or loss and its individual components on a monthly basis when evaluating segment performance and making decisions about allocating resources to the segments.

The Company’s chief operating decision maker is Alok Maskara, Chief Executive Officer.

Key financial information for each segment is shown below (in millions):

	Home Comfort Solutions		Business Climate Solutions		Corporate and Other (1)		Total
For the Year Ended December 31, 2024
Net Sales(2)	$	3,577.1	$	1,764.2	$	—	$	5,341.3
Cost of Goods Sold	2,426.2		1,142.5		0.7		3,569.4
Selling, general and administrative	393.8		229.9		107.0		730.6
Other (income) expense(3)	(2.5)		(5.2)		12.7		5.0
Segment profit (loss)(4)	$	759.7	$	396.9	$	(120.3)	$	1,036.3
For the Year Ended December 31, 2023
Net Sales(2)	$	3,222.9	$	1,511.4	$	247.6	$	4,981.9
Cost of Goods Sold	2,277.3		977.9		178.9		3,434.1
Selling, general and administrative	350.2		197.5		157.8		705.5
Other (income) expense(3)	(14.8)		(4.8)		4.8		(14.8)
Segment profit (loss)(4)	$	610.2	$	340.8	$	(93.9)	$	857.1
For the Year Ended December 31, 2022
Net Sales(2)	$	3,198.3	$	1,286.4	$	233.7	$	4,718.4
Cost of Goods Sold	2,302.2		948.5		183.0		3,433.7
Selling, general and administrative	303.3		179.7		144.2		627.2
Other (income) expense(3)	(4.1)		(4.7)		0.5		(8.3)
Segment profit (loss)(4)	$	596.9	$	162.9	$	(94.0)	$	665.8

(1) The Corporate and Other segment included our European portfolio. In the fourth quarter of 2023, we completed the divestiture of our European operations.

(2) On a consolidated basis, no revenue from transactions with a single customer were 10% or greater of our consolidated net sales for any of the periods presented.

(3) Other (income) expense is primarily comprised of (income) loss from equity method investments and other (gains) loss, net.

(4) We define segment profit (loss) as a segment's operating income (loss) included in the accompanying Consolidated Statements of Operations, excluding:

•The following items in Losses and other expenses, net:

◦Net change in unrealized losses (gains) on unsettled futures contracts,

◦Environmental liabilities and special litigation charges, and

◦Other items, net

•Restructuring charges;

•Impairment on assets held for sale; and

•Loss (gain) on sale from previous dispositions.

The reconciliations of segment profit to Operating income and Net income before income taxes are presented below (in millions):

	For the Years Ended December 31,
	2024		2023		2022
Total segment profit	$	1,036.3	$	857.1	$	665.8
Reconciliation to Operating income:
Loss (gain) on sale from previous dispositions	1.5		(14.1)		—
Impairment of net assets held for sale	—		63.2		—
Items in Losses and other expenses, net that are excluded from segment profit (loss) (1)	—		14.8		8.1
Restructuring charges	—		3.1		1.5
Operating income	1,034.8		790.1		656.2
Reconciliation to income before income taxes:
Pension settlements	0.4		0.8		(0.2)
Interest expense, net	38.7		51.7		38.7
Other expense, net	1.9		0.1		1.9
Income before income taxes	$	993.8	$	737.5	$	615.8

(1) We define segment profit (loss) as a segment's operating income (loss) included in the accompanying Consolidated Statements of Operations, excluding:

•The following items in Losses and other expenses, net:

◦Net change in unrealized losses (gains) on unsettled futures contracts,

◦Environmental liabilities and special litigation charges, and;

◦Other items, net

•Restructuring charges;

•Special product quality adjustments;

•Impairment on assets held for sale; and

•Loss (gain) on sale of businesses.

Total assets by segment are shown below (in millions):

	As of December 31,
	2024		2023		2022
Total Assets:
Home Comfort Solutions	$	1,626.0	$	1,449.4	$	1,456.4
Building Climate Solutions	1,052.6		989.2		730.3
Corporate and Other	793.2		359.7		380.9
Total assets	$	3,471.8	$	2,798.3	$	2,567.6

The assets in the Corporate and Other segment primarily consist of cash, property, plant and equipment and short-term investments and deferred tax assets as well as the assets in the European portfolio which was disposed of in the fourth quarter of 2023. Assets recorded in the operating segments represent those assets directly associated with those segments.

Total capital expenditures by segment are shown below (in millions):

	For the Years Ended December 31,
	2024		2023		2022
Capital Expenditures:
Home Comfort Solutions	$	78.1	$	59.1	$	42.4
Building Climate Solutions	57.8		119.6		29.7
Corporate and Other	27.7		71.5		29.0
Total capital expenditures	$	163.6	$	250.2	$	101.1

Depreciation and amortization expenses by segment are shown below (in millions):

	For the Years Ended December 31,
	2024		2023		2022
Depreciation and Amortization:
Home Comfort Solutions	$	39.0	$	35.3	$	31.5
Building Climate Solutions	25.6		19.4		17.9
Corporate and Other	30.5		31.3		28.5
Total depreciation and amortization	$	95.1	$	86.0	$	77.9

The income from equity method investments is shown below (in millions):

	For the Years Ended December 31,
	2024		2023		2022
Income from Equity Method Investments:
Home Comfort Solutions	$	4.4	$	5.5	$	0.9
Building Climate Solutions	3.5		3.0		4.2
Total income from equity method investments	$	7.9	$	8.5	$	5.1

Geographic Information

Property, plant and equipment, net for each major geographic area in which we operate, based on the domicile of our operations, are shown below (in millions):

	As of December 31,
	2024		2023		2022
Property, Plant and Equipment, net:
United States	$	537.3	$	487.1	$	408.8
Mexico	254.0		228.7		110.9
Canada	2.9		2.2		2.1
Other international	5.9		2.4		27.1
Total Property, plant and equipment, net	$	800.1	$	720.4	$	548.9