AI Takeaway
CARR reported Q1 FY2026 revenue of $5.34B (+2.4% YoY), but operating income collapsed 58.8% to $259M and operating cash flow plunged 83.6% to $79M, reflecting a sharp margin compression driven by an 18.1% surge in SG&A expenses.
Revenue
$5.34B
++2.36% YoY
EPS (Basic)
$0.29
-38.30% YoY
Operating Income
$259M
-58.82% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue grew 2.4% YoY to $5.34B in Q1 FY2026, but operating income fell sharply from $629M to $259M, compressing the operating margin from 12.1% to 4.8%. This suggests that top-line growth was more than offset by rising costs.
Source: Source: 10-Q Income Statement
SG&A expenses jumped 18.1% YoY to $861M, a significant increase that is the primary driver of the operating income decline. This likely reflects integration costs, restructuring charges, or increased headcount following recent acquisitions.
Source: Source: 10-Q Income Statement
Operating cash flow dropped 83.6% YoY to just $79M from $483M in the prior-year period, signaling that earnings quality has weakened materially and that working capital or one-time items are consuming cash.
Source: Source: 10-Q Cash Flow Statement
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Upgrade to unlockOperating margin fell from 12.1% to 4.8% YoY, a decline of approximately 720 basis points. If SG&A costs remain elevated — potentially due to post-acquisition integration — profitability could remain under pressure for multiple quarters.
Source: Source: 10-Q Income Statement
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Upgrade to unlockReported EPS of $0.57 versus the $0.52 analyst consensus — a +9.8% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $5.34B | $5.22B | +2.36% |
Operating Income | $259M | $629M | -58.82% |
Net Income | $238M | $412M | -42.23% |
EPS (Basic) | $0.29 | $0.47 | -38.30% |
EPS (Diluted) | $0.28 | $0.47 | -40.43% |
R&D Expense | $143M | $153M | -6.54% |
SG&A Expense | $861M | $729M | +18.11% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $37.19B | $36.45B | +2.03% |
Current Assets | $9.02B | $8.44B | +6.80% |
Total Liabilities | $23.39B | $22.25B | +5.11% |
Current Liabilities | $8.59B | $7.01B | +22.45% |
Cash & Equivalents | $1.37B | $1.7B | -19.26% |
Long-Term Debt | $10.42B | $11.08B | -5.94% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $79M | $483M | -83.64% |
Investing Cash Flow | $-65M | $-23M | -182.61% |
Financing Cash Flow | $-141M | $-2.75B | +94.87% |
Share Buybacks | $306M | $1.29B | -76.24% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 4.8% | 12.1% | -7.21% |
Net Margin | 4.5% | — | — |
ROA | 0.6% | — | — |
Current Ratio | $1.05 | — | — |
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CARR's Q1 FY2026 results showed revenue growth of 2.4% to $5.34B, but profitability deteriorated sharply with operating income falling 58.8% to $259M and net income declining 42.2% to $238M. The primary driver was an 18.1% surge in SG&A expenses to $861M, which overwhelmed the modest top-line growth.
CARR's operating income fell from $629M to $259M in Q1 FY2026, a 58.8% decline, largely because SG&A expenses surged 18.1% YoY to $861M. This likely reflects elevated integration or restructuring costs, potentially tied to recent acquisitions, which compressed the operating margin from 12.1% to 4.8%.
CARR's operating cash flow dropped 83.6% YoY to just $79M in Q1 FY2026, down from $483M in the prior-year period, signaling a significant deterioration in cash generation. Cash and equivalents also fell 19.3% YoY to $1.37B, raising questions about near-term liquidity given current liabilities of $8.59B.
Based on the financial data, key risks include severe operating margin compression (from 12.1% to 4.8%), a thin current ratio of 1.05x amid surging current liabilities (+22.5% YoY), and $10.42B in long-term debt that could pressure earnings in a high interest rate environment. The sharp drop in operating cash flow to $79M also raises concerns about earnings quality.
Yes, CARR significantly reduced share buybacks by 76.2% YoY to $306M in Q1 FY2026, compared to $1.29B in the prior-year period. This reduction likely reflects the company's effort to conserve cash amid weaker operating cash flow of just $79M and a tighter liquidity position.