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Highlights (second-quarter 2024 versus second-quarter 2023, unless otherwise noted):
Reported revenues of $5.3 billion, up 13 percent; organic revenues* up 13 percent
GAAP operating margin up 70 bps; adjusted operating margin* up 140 bps
Adjusted EBITDA margin* of 21.1 percent, up 140 bps
GAAP continuing EPS of $3.33; adjusted continuing EPS* of $3.30, up 23 percent
Bookings* up 19 percent, led by Americas Commercial HVAC, up 21 percent
*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations. |
SWORDS, Ireland, Aug. 2, 2024 /PRNewswire/ -- Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $3.33 for the second quarter of 2024. Adjusted continuing EPS was $3.30, up 23 percent.
Second-Quarter 2024 Results
Financial Comparisons - Second-Quarter Continuing Operations
$, millions except EPS | Q2 2024 | Q2 2023 | Y-O-Y | Organic Y-O-Y | |
Change | Change | ||||
Bookings | $5,340 | $4,495 | 19 % | 19 % | |
Net Revenues | $5,307 | $4,705 | 13 % | 13 % | |
GAAP Operating Income | $1,034 | $885 | 17 % | ||
GAAP Operating Margin | 19.5 % | 18.8 % | 70 bps | ||
Adjusted Operating Income* | $1,027 | $849 | 21 % | ||
Adjusted Operating Margin* | 19.4 % | 18.0 % | 140 bps | ||
Adjusted EBITDA* | $1,119 | $927 | 21 % | ||
Adjusted EBITDA Margin* | 21.1 % | 19.7 % | 140 bps | ||
GAAP Continuing EPS | $3.33 | $2.57 | 30 % | ||
Adjusted Continuing EPS | $3.30 | $2.68 | 23 % | ||
Pre-Tax Non-GAAP Adjustments, net** | $(7.1) | $15.3 | $(22.4) |
**For details see table 2 and 3 of the news release. |
"Our team around the world delivered strong performance in the second quarter, continuing our consistent track record of execution," said Dave Regnery, chair and CEO, Trane Technologies. "Customers continue to choose our sustainable solutions, demonstrated by our exceptional bookings growth and backlog - giving us good visibility for 2024 and into 2025.
Given our strong first half performance and positive outlook, we are raising our full-year revenue and adjusted EPS guidance well above the high end of our prior range. With our purpose-driven strategy, proven business operating system and uplifting culture, we are well positioned to continue delivering leading growth among industrials and differentiated shareholder returns over the long term."
Highlights from the Second Quarter of 2024 (all comparisons against second-quarter 2023 unless otherwise noted)
- Delivered strong revenue, operating income, EBITDA and EPS growth.
- Strong bookings of $5.3 billion, up 19 percent.
- Backlog of $7.5 billion, including approximately $2.8 billion of Commercial HVAC backlog for 2025 and beyond, with $1 billion added in the second quarter.
- Enterprise reported revenues and organic revenues were both up 13 percent. Approximately 1 percentage point related to acquisitions was offset by 1 percentage point of negative foreign exchange impact.
- GAAP operating margin was up 70 basis points, adjusted operating margin was up 140 basis points and adjusted EBITDA margin was up 140 basis points.
- Strong volume growth, positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
Second-Quarter Business Review (all comparisons against second-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 | Q2 2024 | Q2 2023 | Y-O-Y Change | Organic Y-O-Y | |
Change | |||||
Bookings | $4,221.9 | $3,422.9 | 23 % | 23 % | |
Net Revenues | $4,290.9 | $3,692.5 | 16 % | 16 % | |
GAAP Operating Income | $912.1 | $783.1 | 16 % | ||
GAAP Operating Margin | 21.3 % | 21.2 % | 10 bps | ||
Adjusted Operating Income | $903.9 | $732.6 | 23 % | ||
Adjusted Operating Margin | 21.1 % | 19.8 % | 130 bps | ||
Adjusted EBITDA | $978.2 | $791.3 | 24 % | ||
Adjusted EBITDA Margin | 22.8 % | 21.4 % | 140 bps |
- Strong bookings of $4.2 billion, up 23 percent, led by Commercial HVAC, up more than 20 percent.
- Reported and organic revenues were both up 16 percent.
- GAAP operating margin was up 10 basis points, adjusted operating margin was up 130 basis points and adjusted EBITDA margin was up 140 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 | Q2 2024 | Q2 2023 | Y-O-Y Change | Organic Y-O-Y | |
Change | |||||
Bookings | $669.4 | $610.0 | 10 % | 10 % | |
Net Revenues | $645.3 | $617.6 | 4 % | 5 % | |
GAAP Operating Income | $120.7 | $101.1 | 19 % | ||
GAAP Operating Margin | 18.7 % | 16.4 % | 230 bps | ||
Adjusted Operating Income | $121.0 | $108.0 | 12 % | ||
Adjusted Operating Margin | 18.8 % | 17.5 % | 130 bps | ||
Adjusted EBITDA | $131.0 | $117.8 | 11 % | ||
Adjusted EBITDA Margin | 20.3 % | 19.1 % | 120 bps |
- Bookings were up 10 percent, led by Commercial HVAC, up 20 percent.
- Reported revenues were up 4 percent, including approximately 1 percentage point related to acquisitions offset by 2 percentage points of negative foreign exchange impact. Organic revenues were up 5 percent.
- GAAP operating margin was up 230 basis points; adjusted operating margin was up 130 basis points and adjusted EBITDA margin was up 120 basis points.
- 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 | Q2 2024 | Q2 2023 | Y-O-Y Change | Organic Y-O-Y | |
Change | |||||
Bookings | $448.8 | $461.9 | (3) % | flat | |
Net Revenues | $371.2 | $394.6 | (6) % | (3) % | |
GAAP Operating Income | $89.3 | $82.3 | 9 % | ||
GAAP Operating Margin | 24.1 % | 20.9 % | 320 bps | ||
Adjusted Operating Income | $89.3 | $82.7 | 8 % | ||
Adjusted Operating Margin | 24.1 % | 21.0 % | 310 bps | ||
Adjusted EBITDA | $94.8 | $86.6 | 9 % | ||
Adjusted EBITDA Margin | 25.5 % | 21.9 % | 360 bps |
- Organic bookings were flat.
- Reported revenues were down 6 percent, including approximately 3 percentage points of negative foreign exchange impact. Organic revenues were down 3 percent.
- GAAP operating margin was up 320 basis points, adjusted operating margin was up 310 basis points and adjusted EBITDA margin was up 360 basis points.
- Positive price realization and productivity more than offset inflation. The Company also continued high levels of business reinvestment.
Balance Sheet and Cash Flow
$, millions | Q2 2024 | Q2 2023 | Y-O-Y Change |
Cash From Continuing Operating Activities Y-T-D | $959 | $548 | $411 |
Free Cash Flow Y-T-D* | $810 | $427 | $383 |
Working Capital/Revenue* | 4.2 % | 6.3 % | (210) bps |
Cash Balance June 30** | $1,326 | $664 | $662 |
Debt Balance June 30 | $5,268 | $5,027 | $241 |
**Includes short-term investments of $451 million.
- Through June 30, 2024, cash flow from continuing operating activities was $959 million and free cash flow was $810 million.
- Year-to-date through July, the Company deployed or committed approximately $1.2 billion of capital including $379 million for dividends, approximately $100 million for M&A and $731 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.
Raising Full-Year 2024 Revenue and EPS Guidance
- The Company expects full-year reported and organic revenue growth of approximately 10 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 and adjusted continuing EPS for full-year 2024 of approximately $10.80.
- Additional information regarding the Company's 2024 guidance is included in the Company's second-quarter 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.
7/31/2024
(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
