Highlights (first-quarter 2024 versus first-quarter 2023, unless otherwise noted):
Reported revenues of $4.2 billion, up 15 percent; organic revenues* up 14 percent GAAP operating margin up 250 bps; adjusted operating margin* up 230 bps Adjusted EBITDA margin* of 16.8 percent, up 200 bps GAAP continuing EPS of $1.92; adjusted continuing EPS* of $1.94, up 38 percent Organic bookings* up 17 percent, led by Americas Commercial HVAC, up 30 percent $7.7 billion backlog, up 10 percent versus year-end 2023, and over 2.5 times historical norms
*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of the news release. See attached tables for additional details and reconciliations.
SWORDS, Ireland, May 7, 2024 /PRNewswire/ — Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $1.92 for the first quarter of 2024. Adjusted continuing EPS was $1.94, up 38 percent.
First-Quarter 2024 Results
Financial Comparisons – First-Quarter Continuing Operations
$, millions except EPS
Q1 2024
Q1 2023
Y-O-Y Change
Organic Y-O-Y
Change
Bookings
$5,073
$4,306
18 %
17 %
Net Revenues
$4,216
$3,666
15 %
14 %
GAAP Operating Income
$634
$457
39 %
GAAP Operating Margin
15.0 %
12.5 %
250 bps
Adjusted Operating Income*
$640
$472
36 %
Adjusted Operating Margin*
15.2 %
12.9 %
230 bps
Adjusted EBITDA*
$706
$542
30 %
Adjusted EBITDA Margin*
16.8 %
14.8 %
200 bps
GAAP Continuing EPS
$1.92
$1.35
42 %
Adjusted Continuing EPS
$1.94
$1.41
38 %
Pre-Tax Non-GAAP Adjustments, net**
$5.8
$15.6
$(9.8)
**For details see table 2 and 3 of the news release.
"Our strong first quarter performance demonstrates the power of our purpose-driven sustainability strategy, uplifting culture and highly engaged team," said Dave Regnery, chair and CEO, Trane Technologies. "We continue to deliver a leading growth profile among industrials through relentless investment in our business, our proven business operating system, and focused execution in high growth verticals that play to our unique strengths.
"In the first quarter, we achieved double-digit revenue growth, an increase of 38% in adjusted earnings per share, and exceptional bookings that drove backlog to $7.7 billion. Our performance gives us confidence in raising our full-year guidance for organic revenue and adjusted EPS growth and positions us well to continue delivering leading growth and differentiated shareholder returns over the long term."
Highlights from the First Quarter of 2024 (all comparisons against first-quarter 2023 unless otherwise noted)
Delivered strong first-quarter revenue, operating income, EBITDA and EPS growth. Strong bookings of $5.1 billion; organic bookings were up 17 percent. Book-to-bill was 120 percent. Backlog of $7.7 billion. Added approximately $800 million of Commercial HVAC backlog for 2025 and beyond. Enterprise reported revenues were up 15 percent, including 2 percentage points related to acquisitions and approximately 1 percentage point of negative foreign exchange impact. Organic revenues were up 14 percent. GAAP operating margin was up 250 basis points, adjusted operating margin was up 230 basis points and adjusted EBITDA margin was up 200 basis points. Strong volume growth, positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
First-Quarter Business Review (all comparisons against first-quarter 2023 unless otherwise noted)
Americas Segment: innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating, cooling and ventilation systems, building controls and solutions, energy services and solutions, residential heating and cooling; and transport refrigeration systems and solutions.
$, millions
Q1 2024
Q1 2023
Y-O-Y Change
Organic Y-O-Y
Change
Bookings
$4,016.3
$3,324.1
21 %
20 %
Net Revenues
$3,334.8
$2,861.0
17 %
15 %
GAAP Operating Income
$542.5
$391.6
39 %
GAAP Operating Margin
16.3 %
13.7 %
260 bps
Adjusted Operating Income
$545.3
$400.0
36 %
Adjusted Operating Margin
16.4 %
14.0 %
240 bps
Adjusted EBITDA
$604.8
$455.8
3 %
Adjusted EBITDA Margin
18.1 %
15.9 %
220 bps
Strong bookings of $4.0 billion. Book-to-bill was 120 percent. Organic bookings were up 20 percent, led by Commercial HVAC, which was up 30 percent year-over-year and up more than 60 percent on a 3-year stack. Reported revenues were up 17 percent, including 2 percentage points related to acquisitions. Organic revenues were up 15 percent. GAAP operating margin was up 260 basis points, adjusted operating margin was up 240 basis points and adjusted EBITDA margin was up 220 basis points. Strong volume growth, positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
Europe, Middle East and Africa (EMEA) Segment: innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
$, millions
Q1 2024
Q1 2023
Y-O-Y Change
Organic Y-O-Y
Change
Bookings
$660.2
$591.7
12 %
7 %
Net Revenues
$553.4
$510.5
8 %
4 %
GAAP Operating Income
$94.5
$85.7
10 %
GAAP Operating Margin
17.1 %
16.8 %
30 bps
Adjusted Operating Income
$95.6
$86.6
10 %
Adjusted Operating Margin
17.3 %
17.0 %
30 bps
Adjusted EBITDA
$99.4
$94.4
5 %
Adjusted EBITDA Margin
18.0 %
18.5 %
(50) bps
Bookings were up 12 percent; organic bookings were up 7 percent. Book-to-bill was 119 percent. Reported revenues were up 8 percent, including approximately 4 percentage points related to acquisitions. Organic revenues were up 4 percent. GAAP operating margin was up 30 basis points; adjusted operating margin was up 30 basis points impacted by lower contribution from year one M&A. Adjusted EBITDA margin was down 50 basis points due to the negative impact of foreign exchange losses. Strong volume growth, positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
Asia Pacific Segment: innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
$, millions
Q1 2024
Q1 2023
Y-O-Y Change
Organic Y-O-Y
Change
Bookings
$396.9
$390.1
2 %
6 %
Net Revenues
$327.3
$294.3
11 %
16 %
GAAP Operating Income
$66.4
$49.3
35 %
GAAP Operating Margin
20.3 %
16.8 %
350 bps
Adjusted Operating Income
$66.4
$50.6
31 %
Adjusted Operating Margin
20.3 %
17.2 %
310 bps
Adjusted EBITDA
$70.8
$57.2
24 %
Adjusted EBITDA Margin
21.6 %
19.4 %
220 bps
Bookings were up 2 percent; organic bookings were up 6 percent. Book-to-bill was 121 percent. Reported revenues were up 11 percent, including approximately 5 percentage points of negative foreign exchange impact. Organic revenues were up 16 percent. GAAP operating margin was up 350 basis points, adjusted operating margin was up 310 basis points and adjusted EBITDA margin was up 220 basis points. Strong volume growth, positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
Balance Sheet and Cash Flow
$, millions
Q1 2024
Q1 2023
Y-O-Y Change
Cash From Continuing Operating Activities Y-T-D
$254
$17
$237
Free Cash Flow Y-T-D*
$175
($52)
$227
Working Capital/Revenue*
5.4 %
6.6 %
(120) bps
Cash Balance March 31
$850
$693
$157
Debt Balance March 31
$4,881
$4,830
$51
First quarter of 2024, cash flow from continuing operating activities was $254 million and free cash flow was $175 million. Year-to-date through April, the Company deployed approximately $621 million, including $190 million for dividends and $431 million for share repurchases. The Company expects to continue to pay a competitive and growing dividend and to deploy 100 percent of excess cash to shareholders over time. In the first quarter of 2024, the Company increased its annual dividend by 12 percent to $3.36 per share annualized. Since launching Trane Technologies in March of 2020, the Company has raised the quarterly dividend by 58 percent.
Raising Full-Year 2024 Revenue and EPS Guidance
The Company expects full-year reported and organic revenue growth of 8 to 9 percent; reported revenue growth includes approximately 1 percentage point of M&A offset by approximately 1 percentage point of negative foreign exchange. The Company expects GAAP continuing EPS for full-year 2024 of approximately $10.30 to $10.40. This includes EPS of $0.10 for non-GAAP adjustments. The Company expects adjusted continuing EPS for full-year 2024 of $10.40 to $10.50. Additional information regarding the Company’s 2024 guidance is included in the Company’s earnings presentation found at www.tranetechnologies.com in the Investor Relations section.
This news release includes "forward-looking" statements within the meaning of securities laws, which are statements that are not historical facts, including statements that relate to our future financial performance and targets, including revenue, EPS, and earnings; our business operations; demand for our products and services, including bookings and backlog; capital deployment, including the amount and timing of our dividends, our share repurchase program, anticipated capital commitments for M&A activity, and our capital allocation strategy; our available liquidity; our anticipated revenue growth, and the performance of the markets in which we operate.
These forward-looking statements are based on our current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from our current expectations. Such factors include, but are not limited to, global economic conditions, including recessions and economic downturns, inflation, volatility in interest rates and foreign exchange; changing energy prices; national and international conflict; impacts of global health crises, epidemics, pandemics, or other contagious outbreaks on our business operations, financial results and financial position and on the world economy; financial institution disruptions; climate change and our sustainability strategies and goals; commodity shortages; supply chain constraints and price increases; government regulation; restructurings activity and cost savings associated with such activity; secular trends toward decarbonization, energy efficiency and internal air quality, the outcome of any litigation, including the risks and uncertainties associated with the Chapter 11 proceedings for our deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC; cybersecurity risks; and tax audits and tax law changes and interpretations. Additional factors that could cause such differences can be found in our Form 10-K for the year ended December 31, 2023, as well as our subsequent reports on Form 10-Q and other SEC filings. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events and how they may affect the Company. We assume no obligation to update these forward-looking statements.
This news release also includes non-GAAP financial information, which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. The definitions of our non-GAAP financial information and reconciliation to GAAP are attached to this news release.
All amounts reported within the earnings release above related to net earnings (loss), earnings (loss) from continuing operations, earnings (loss) from discontinued operations, adjusted EBITDA and per share amounts are attributed to Trane Technologies’ ordinary shareholders.
Trane Technologies (NYSE:TT) is a global climate innovator. Through our strategic brands Trane® and Thermo King®, and our portfolio of environmentally responsible products and services, we bring efficient and sustainable climate solutions to buildings, homes and transportation. For more information, visit tranetechnologies.com.
5/7/2024
(See Accompanying Tables)
Table 1: Condensed Consolidated Income Statement Tables 2 – 5: Reconciliation of GAAP to Non-GAAP Table 6: Condensed Consolidated Balance Sheets Table 7: Condensed Consolidated Statement of Cash Flows Table 8: Balance Sheet Metrics and Free Cash Flow
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