Patrick Goris
Senior Vice President and Chief Financial Officer at Carrier Global
Thank you, Dave. Please turn to Slide 8. Q4 benefited from solid organic growth throughout the segments. Residential and light commercial HVAC and transport refrigeration were important growth drivers in Q4, with organic sales growth well into the double digits. We realized more price than expected in the quarter, but that was more than offset by continued and increased inflationary challenges. Similar to Q3, supply chain constraints impacted our factory efficiency levels and our ability to ship product, but it has left backlogs well positioned to deliver growth in 2022.
Adjusted operating profit grew 14% year-over-year and margins were up 20 bps over last year. Increased year-over-year investments offset the absence of onetime cost items we incurred in Q4 of 2020. Price cost finished about $30 million negative for the quarter versus our October estimate of about neutral. Q4 adjusted EPS of $0.44 benefited from $0.06 of discrete tax items. As expected, free cash flow was $775 million in Q4 and $1.9 billion for 2021. We repurchased 4.7 million shares in the fourth quarter and about 10.4 million shares for the year, in line with what we shared with you in October.
Let's turn to Slide 9 and cover our segment's performance. HVAC organic sales were up 14%, driven by continued very strong growth in residential, light commercial and our ALC controls business. Resi sales were up high teens and movement was up 6%. Residential and light commercial demand remains very encouraging as orders continue to grow, leading to very strong backlogs as we enter 2022.
Distributor movement was up 15% in our light commercial business, leading to field inventories for that business being down low single digits compared to last year. Commercial HVAC was up mid-single digits in the quarter and was impacted by supply chain challenges, particularly in North America. Our aftermarket business grew mid-single digits for the quarter and was up double digits for the year. We met our goal of achieving at least 60,000 chillers in our service contracts by the end of 2021. Price/cost was slightly positive in this segment, but a headwind to margin. Acquisitions increased sales by about $90 million for HVAC, but did not contribute operating profit given intangible, amortization and integration costs.
Moving to Refrigeration on Slide 10. Organic sales were up 17% as a result of widespread growth throughout the segment. Truck/trailer was up almost 30% and container was up over 30%. Electrification capabilities are an important differentiator for us in this segment as we lead the industry with electric trailer units currently operating in 10 countries and additional capabilities being launched.
Commercial refrigeration was up low single digits, driven by solid growth in Asia, offset by flattish EMEA sales. Sensitech and aftermarket were both up double digits. Margins were down 10 bps in the quarter compared to last year. Price realization is improving in this segment, but is not yet offsetting increased input costs. In addition, operating performance in commercial refrigeration remains a significant opportunity.
Moving to Fire & Security on Slide 11. Organic sales were up 3%, as products grew 6%, while Chubb was down 3%. Operating margins expanded by about 60 bps in the quarter. Same as for Refrigeration, price realization is improving, but price/cost was negative. Mix was a tailwind to margin for this segment as was the absence of onetime items in the fourth quarter of 2020.
Slide 12 provides more details on orders performance. Excluding Chubb, Company organic orders were up about 20% for the quarter. As I mentioned, residential and light commercial orders remained very strong in the quarter even against difficult comps. Commercial HVAC orders remained strong as well, with backlogs for this business up over 30% compared to last year.
Refrigeration saw a mid-single-digit decline in orders for the quarter, mostly because we worked with customers to support demand, but did not reopen the second half 2022 order book until January of this year. In other words, timing. And we've already noticed a sequential pickup in orders in January. Backlog remains up about 30% in both transport and commercial refrigeration compared to last year. Order intake for our Fire & Security products remained very healthy at over 10%. Growth was led by commercial fire, industrial fire and access solutions.
As you can see on the right side, we saw continued strength in all regions except China. COVID-related measures implemented in China impacted order intake in late Q4. That seems to have improved since the start of the year. We've seen some delayed projects booked and commercial HVAC in China saw double-digit order growth in January.
Moving on to Slide 13. We saw a $0.13 increase year-over-year in adjusted EPS. Within operational performance, the benefit from higher volume and the absence of 2020 onetime items was partially offset by investments. Price/cost was a $0.02 headwind compared to last year. The effective tax rate was a $0.07 year-over-year benefit and mostly relates to discrete tax items. Finally, we saw a slight pickup from lower interest that gave us an extra $0.01 compared to last year. For your reference, we included a full year 2021 adjusted EPS bridge in the appendix.
Moving on to 2022 guidance on Slide 14. Note that our guidance excludes the impact of the pending TCC acquisition. We expect reported sales of about $20 billion in organic sales up high single digits on top of the 15% organic growth we generated in 2021. We expect price to contribute about 5 points of the organic growth and volume 2 to 3 points. Acquisitions are expected to add about $200 million in sales, with minimal operating profit given intangible amortization and integration costs.
Adjusted operating profit is expected to be up compared to 2021 on about $600 million of lower reported sales. Operating margin is expected to expand by about 75 bps, helped by the sale of Chubb and despite $1 billion in price realization, offset by $1 billion of increased inflation. We expect all businesses within HVAC to have about high single digits organic growth in 2022. We expect mid- to high single-digit growth in both Refrigeration and Fire & Security. You can see expected adjusted operating margins for each segment on the bottom right.
For Fire & Security, this significant margin expansion reflects the higher-margin product business now that Chubb has been sold. I will cover adjusted EPS on the next slide, but just want to point out that our free cash flow guidance includes about $200 million in tax payments for the gain on the sale of Chubb and also assumes about $100 million of cash restructuring payments. Also, on Slide 21, you will find additional information about 2022 guidance.
Let's move to Slide 15, 2022 adjusted EPS bridge at our guidance midpoint. As we've mentioned before, the Chubb sale is a $0.24 headwind to adjusted EPS next year. Operational performance is expected to deliver $0.24 of adjusted EPS growth next year. That is about $250 million of adjusted operating profits. At a high level, think of about $120 million or so of volume leverage and about $300 million of productivity, partially offset by about $100 million each for investments and merit increases. As I mentioned earlier, price costs are expected to offset. Obviously, at about $300 million, productivity will be a major driver of earnings in 2022 and includes about $100 million of G&A reductions.
Investments in 2022 will be focused on enhancing our digital capabilities, R&D, and technologies enabling continued G&A cost reductions. Currency and net interest expense are a small headwind and tailwinds, respectively, and the benefit of share repurchases offset a higher expected adjusted effective tax rate of about 22%. That gets us to our midpoint of about $2.25 for next year.
We've talked a lot about Carrier 700 in our cost reduction mindset this year, so we wanted to provide more insight on that on Slide 16. The Carrier 700 program was created over two years ago, in a low inflation environment, which obviously does not apply today. Excluding the significant material inflation challenges we faced in 2021, we actually made great progress on Carrier 700 initiative by driving approximately $300 million of gross productivity savings. Since we historically included material inflation in our Carrier 700 numbers, our net savings were about neutral for the year.
Moving forward and starting in 2022, we will measure our gross productivity efforts, excluding the impact of inflation. We plan to manage price to offset inflation. As I mentioned, we expect to drive about $300 million of cost reductions in 2022. We will provide further detail on our long-term opportunity for continued productivity at our upcoming Investor Day, but the bottom line is that cost takeout remains a key focus area at Carrier and will continue to fund investments, annual merit and drive margin expansion.
Moving on to Slide 17. Our priorities for capital deployment remained the same. As you can see on the right side of the slide, we have already committed to $3.75 billion of capital deployment for 2022 and will remain disciplined in capital allocation to maximize long-term shareowner value. The last topic I wanted to quickly touch on is the outlook for Q1 of 2022. We expect to see organic sales growth in each of the three segments, leading to high single-digit organic growth for the company. We expect price/cost to be modestly negative in Q1 at a level similar to Q4, with an adjusted effective tax rate of about 15% based on known discrete tax items benefiting Q1. We expect adjusted EPS to be approximately $0.45. Free cash flow is expected to be a use of cash in Q1 of about $100 million. Q1 is typically light and includes tax payments related to the Chubb sale and timing of the incentive compensation payout.
In closing, Q4 wrapped up another strong year for Carrier with double-digit organic growth and 36% adjusted EPS growth. Thank you to all of our colleagues and partners, managing and supporting strong demand in a very challenging supply chain environment.
With that, I'll turn it back over to you, Dave for Slide 18.
