Patrick P. Goris
Senior Vice President and Chief Financial Officer at Carrier Global
Thank you, Dave, and good morning, everyone. Please turn to slide seven. Reported sales of $5.5 billion were up 2% compared to last year, and organic sales were up 8%, driven by price, with volumes flat. The Chubb divestiture reduced sales by 10% and acquisitions, substantially all Toshiba Carrier increased sales by 8%. Currency translation was a larger-than-expected headwind of 4%. All the segments were price/cost positive in the quarter. Q3 adjusted operating margin was down 40 basis points compared to last year.
The margin impact of the Chubb divestiture and the TCC acquisition at about 70 basis points each offset each other. Price cost, although positive in the quarter, is a margin headwind of about 30 basis points. The adjusted effective tax rate of 23% is in line with what we now project our ongoing annual effective tax rate to be given the Toshiba acquisition.
Adjusted EPS of $0.70 was stronger than expected and includes a $0.02 benefit from Toshiba, which will reverse in Q4, in essence, timing of integration expenses. For your reference, we have a year-over-year Q3 adjusted EPS bridge in the appendix on slide 17. Free cash flow in the quarter was $699 million. While there has been some improvement in the supply chain, component shortages continue to affect deliveries and shipments and thus, inventory levels.
Before I move on to the segments, let me make a comment about the other income you see in our P&L. As a result of the Toshiba Carrier acquisition, we recorded a onetime gain of about $730 million in Q3, which, in essence, is the step-up associated with the ownership stake we already had in Toshiba Carrier. This is not a taxable event. We exclude this onetime gain and amortization related to acquired intangibles from adjusted operating profit and adjusted EPS.
Moving on to the segments, starting on slide eight. HVAC reported sales were up 22% and of course, reflect the impact of Toshiba, which added 12 points of year-over-year growth. HVAC organic sales were up 13%, driven by high single-digit growth in residential and strong double-digit growth in our light commercial and commercial HVAC businesses. Resi movement was down mid-single digits in the third quarter, and quarter-end field inventory levels are up about 20% year-over-year.
We continue to work towards balanced year-over-year field inventory levels by year-end as we transition to the new 2023 products. Residential HVAC growth was all driven by price as volume was down mid-single digits. Our light commercial business grew over 20% in Q3 and field inventories remained down about 10% year-over-year. Commercial HVAC had a very strong quarter with double-digit growth in applied equipment, aftermarket and controls.
All regions grew mid-teens. Sales in China were up more than 50% as we recovered from the impact of the Q2 Shanghai lockdowns. Adjusted operating profit for the HVAC segment was up 6% compared to last year. As expected, operating margin was down 260 basis points with about 150 basis point impact from the Toshiba consolidation and 90 basis points due to price cost. The balance is unfavorable mix and lower JV income, offset by good productivity.
We expect the HVAC segment to remain price/cost positive for the full year and to deliver full year margins of about 15%, consistent with what I shared with you last quarter. The Toshiba acquisition has about a 100 basis point dilutive impact on full year 2022 margins for this segment. Transitioning to refrigeration on slide nine. Q3 reported sales include a significant headwind from currency translation as this segment is very global.
Organic sales were down slightly, given significant supply chain constraints as truck/trailer growth offset declines in container and commercial refrigeration. With transport refrigeration or within transport refrigeration, North America truck/trailer saw a strong growth in the quarter, up high teens. However, supply chain issues affected Europe truck/trailer leading to increased backlog and inventories. Container sales were down about 20% year-over-year based on demand softness as well as tough comps. Sensitech delivered another strong quarter with double-digit sales growth. Commercial refrigeration was flat year-over-year as our European food retail customers are pressured by high inflation and energy prices.
Adjusted operating margins were up 80 bps compared to last year despite lower sales with favorable productivity, price cost and currency translation more than offsetting the volume headwind. The segment remains on track to deliver margins of about 12.5% this year. Moving on to Fire & Security on slide 10. Excluding Chubb sales from the third quarter of 2021, Fire & Security segment sales were up 6%. Adjusted operating margins expanded 220 basis points in the quarter, mainly because of the Chubb divestiture and productivity, which more than offset the impact of negative volume.
This segment is particularly impacted by supply chain challenges, especially in the higher-margin access solutions business. Price/cost was positive and this segment remains on track to deliver margins of about 16% this year. slide 11 provides more details on orders performance. The total company organic orders were up low single digits for the quarter, and backlog remained strong throughout all segments. Similar to last quarter and as expected, resi HVAC orders were down in Q3 as the business continues to prioritize their order book and normalize the backlog that is still measured in months, versus typically weeks. Light commercial demand remained robust, and orders were up almost 50% in the quarter. Backlog is up 3.5 times year-over-year within that business, which should position us for a good start to 2023.
And as I mentioned, commercial HVAC saw double-digit orders growth for the seventh consecutive quarter. All regions within commercial HVAC saw double-digit growth and the commercial backlog, excluding NORESCO, is now up over 35% compared to last year and extends well into 2023. Refrigeration orders were up mid- to high single digits in the quarter, driven by an almost tripling of orders in North America truck/trailer as we opened the order book for the first half of 2023 in September. Given how we manage the order book, a better year-over-year comparison for North America truck/trailer is properly looking at year-to-date order performance.
Through nine months, orders are up 27% year-over-year for North America truck/trailer. The transport refrigeration backlog remains up almost 10% year-over-year as the North America strength more than offset some order weakness within the Europe truck/trailer business and container. Commercial refrigerated orders were down over 20% organically as the European food retail customers are impacted by energy prices and inflation. And as we continue to focus on improving profitability of this business. Finally, demand for our Fire & Security products remained healthy. Orders were positive in each of the businesses, except for access solutions, which has been most impacted by supply chain challenges.
Fire & Security products backlog is up almost 40% year-over-year with double-digit growth in all businesses except residential fire in the Americas. As you can see on both the left and right sides of the slide, we saw strong demand in many of our businesses; however, we have seen some weakness in a few areas such as in Europe, driven by Europe truck/trailer and commercial refrigeration. In addition, the weaker container orders impact Asia, excluding China, given that this business mainly books orders in Singapore. For reference, with the addition of TCC, China sales are about 9% of our total company business.
Now moving on to guidance on slide 12. Compared to our prior guidance, we are reducing our full year expected sales by about $400 million with most of the reduction due to currency translation, the balance due to slightly lower organic sales growth. Accordingly, we now expect full year revenues of about $20.4 billion versus the prior guide of $20.8 billion. We now expect adjusted operating margin of 14.2%, up 60 basis points compared to last year and up 20 basis points compared to our prior guide. This reflects improved Q3 margin performance. Currency translation is also a minor tailwind to margins compared to our July guidance.
We are increasing our full year adjusted EPS guidance range to the high end of our prior guidance or $2.30 to $2.35. This is primarily due to the strong performance in the third quarter including productivity that more than offsets the incremental earnings headwind from slightly lower volumes and currency translation. We continue to expect the TCC acquisition to have a neutral impact on adjusted operating profit and adjusted EPS in 2022 with operating profit contribution to be mostly offset by the loss of equity income and integration expenses. However, as I mentioned earlier, the timing of the planned integration costs shifted from Q3 to Q4 causing a TCC adjusted EPS contribution in Q3, but a negative impact in Q4.
Lastly, on free cash flow. Last quarter, we said achieving our free cash flow target has become more challenging given continued supply chain headwinds. While we did see supply chain improvements in Q3, the improvements are coming later than expected, and so it will not be enough to reduce our inventories by year-end to get to $1.65 billion of free cash flow. In addition, and to a lesser extent, Free cash flow is negatively impacted as we acquired cash from the acquisition of TCC rather than receiving that cash through dividends from equity investments.
As a result, we now expect to generate closer to $1.4 billion in free cash flow. This still includes approximately $200 million in tax payments related to the Chubb gain and a $100 million unfavorable impact from the expiration of the R&D tax credits. In summary, another good -- another quarter of good performance enables us to increase our adjusted operating profit and adjusted EPS guidance.
The strength we see in parts of our portfolio are helping to balance weakness in other areas such as Europe and some consumer-related end markets. Supply chain improvements are coming later in the year than we expected and are leading to elevated inventory levels impacting free cash flow. With that, I'll turn it back to Dave for slide 13.
