Letter to Shareholders 

Dear Shareholder,

As I write this letter, the world is managing the widespread effects of COVID-19. The situation continues to evolve at a rapid pace, and we are working hard to safeguard the health of our people, while meeting the critical needs of hospitals, data centers, grocery stores, military bases, food and pharmaceutical distribution and other essential customer operations that are under great strain.

Each day, our team challenges what’s possible—innovating in support of a sustainable world. Our strategy is at the intersection of sustainability megatrends and our advanced HVAC and transport technologies. Today, 15% of the world’s carbon emissions come from heating and cooling buildings, and nearly another 10% comes from global food loss—and these numbers are growing. We are directly addressing emissions at the source, by developing new and better ways to heat and cool homes and buildings, and to transport food and medicine. These solutions are enabling precise temperature control in critical environments and ensuring that vital products are transported safely. 

Premier Performance

In 2019, our sustainability-focused strategy led to innovative solutions for customers, above-market results for shareholders and better environmental outcomes for the world. Our proven business operating system enabled us to navigate global uncertainties, deliver strong earnings per share growth and generate powerful cash flow.

We exceeded the financial goals we set at the beginning of 2019 through strong execution of our business model in sustainability-focused, growing end markets. Adjusted continuing earnings per share* grew 14%, organic revenue* grew 6% to a record $16.6 billion, and adjusted operating income margins* expanded by 70 basis points, delivering exceptional free cash flow* of $1.8 billion, or 118% of adjusted net earnings*. We executed our dynamic capital allocation strategy, including maintaining a high level of business reinvestment, deploying $1.5 billion to value-accretive M&A, and funding $510 million in dividends and $750 million in share repurchases as the shares continued to trade below our calculated intrinsic value. 

We achieved our 2020 Climate Commitment ahead of schedule, reducing carbon emissions from our products by more than 50%, and emissions from our own operations by more than 35%.

Strategic Innovation

Since announcing our 2020 Sustainability Commitments in 2014, we have invested more than $500 million in research and development focused on innovative climate change solutions. In 2019, we introduced nearly 90 new products and enhanced our portfolio through strategic acquisitions.

Our EcoWise™ portfolio expanded with new high-efficiency chillers, designed to reduce building emissions with low global warming potential refrigerants. Through our acquisition of Arctic Chiller, we added new air- and water-cooled chillers that reduce energy and operational costs. Our new connected building services enhance energy efficiency and performance through a building’s life cycle.

Our transport refrigeration portfolio offers a broad range of zero- and low-emission solutions including a new all-electric unit equipped with ThermoLite solar panels. Paired with our telematics, we provide transport customers with real-time visibility to temperature-sensitive cargo and equipment while on the road.

Winning Culture

Our experienced leadership team, talented people and high-performance culture enable us to push the boundaries of what’s possible. In 2019, we maintained world-class employee engagement in the midst of a rapidly changing environment.

We also continued to enhance our focus on diversity and inclusion. Our Black Employee Network, now in its seventh year, was central to the launch of the Black Leader Forum. As the first company in our industry to join Paradigm for Parity,® we are proud that through seven years of our signature Women’s Leadership Program, we have retained 83% of its graduates and promoted nearly one-third.

Focusing for the Future

Now, we’re focusing for the future. With the separation of our Industrial segment, our portfolio is fully focused on climate innovation. As a world leader in climate solutions, we are creating a more focused organizational model, more focused investments and aligning around one central purpose: to boldly challenge what’s possible for a sustainable world.

Our new 2030 Sustainability Commitments include a pledge to reduce our customers’ carbon emissions by one gigaton (2% of the world’s annual emissions) and to bring our own operations to carbon neutral. These commitments extend to our communities, where we are investing in education and workforce development, housing and comfort, and food and wellness. Our actions are predicated on a strong belief that one company can change an industry, and one industry can change the world. 

With our focused strategy, we will rise to meet the immediate challenges ahead and create long-term value for our people, customers, shareholders and communities.

Thank you for joining us in our quest for a better future. Please stay safe. 


Michael W. Lamach




* These are non-GAAP financial measures. Reconciliation of non-GAAP financial measures can be found preceding the 2020 Notice and Proxy Statement.