Trane Technologies: Q2 2024 sales of $5.3 billion, order intake up 19%

(Nengdong, Aug. 2, 2024) -- Trane Technologies, a global innovator in climate control systems, reported second-quarter 2024 earnings per diluted share from continuing operations of $3.33. Adjusted earnings per share from continuing operations were $3.30, up 23%.

Second Quarter 2024 Results Comparison of the financial position of the continuing operations in the second quarter

Units (US$ millions), excluding earnings per share	Q2 2024	Q2 2023	Year-on-year	Own business
variation	Year-over-year change
Order volume	$5,340	$4,495	19 %	19 %
Net sales	$5,307	$4,705	13 %	13 %
United States GAAP operating income	$1,034	$885	17 %
United States GAAP operating margin	19.5 %	18.8 %	70 basis points
Adjusted operating income	$1,027	$849	21 %
Adjusted operating margin	19.4 %	18.0 %	140 basis points
After adjustment EBITDA	$1,119	$927	21 %
After adjustment EBITDA margin	21.1 %	19.7 %	140 basis points
United States GAAP earnings per share from continuing operations	$3.33	$2.57	30 %
Adjusted earnings per share from continuing operations	$3.30	$2.68	23 %
Net pretax adjusted for non-United States GAAP **	$(7.1)	$15.3	$(22.4)

Dave Regnery, Chairman and Chief Executive Officer of Trane Technologies, commented, "Our global team delivered strong results in the second quarter and further demonstrated our consistent execution excellence. The significant increase in order book and the large backlog of orders demonstrate the high value of our customers in our sustainable solutions, which gives us confidence in our business prospects in 2024 and 2025. "Given our strong performance in the first half of the year and a good outlook, we have significantly raised our full-year sales and adjusted earnings per share estimates, exceeding the highest values previously expected. With our purpose-driven strategy, proven business operating system and exciting corporate culture, we are confident that we will continue to deliver industry-leading growth and deliver long-term differentiated returns to our shareholders." "

Second Quarter 2024 Performance Highlights (Unless otherwise noted, the figures below are based on Q2 2023)

• Sales, operating income, EBITDA and earnings per share all grew strongly.
• Order book reached $5.3 billion, up 19 percent.
• The backlog of $7.5 billion, including approximately $2.8 billion in commercial HVAC backlog in 2025 and beyond, an increase of $1 billion from the previous year.
• The company reported sales and organic sales increased by 13%. M&A-related growth of approximately 1 percentage point was offset by a negative impact of 1 percentage point on foreign exchange.
• United States GAAP operating margin improved 70 basis points, adjusted operating margin increased 140 basis points and adjusted EBITDA margin improved 140 basis points.
• The impact of inflation was more than offset by strong volume growth, price advantage and productivity gains, and the company continued to reinvest its business at a high level.

Second Quarter Results Review (Unless otherwise noted, the following figures are based on: Q2 2023 baseline) Americas Market:

North America and Latin America are actively innovating for customers. The Americas market includes commercial HVAC, building controls, and energy services and solutions; civil HVAC; and transportation refrigeration systems and solutions.

Units (US$ millions)	Q2 2024	Q2 2023	Year-over-year change	Own business
Year-over-year change
Order volume	$4,221.9	$3,422.9	23 %	23 %
Net sales	$4,290.9	$3,692.5	16 %	16 %
United States GAAP operating income	$912.1	$783.1	16 %
United States GAAP operating margin	21.3 %	21.2 %	10 basis points
Adjusted operating income	$903.9	$732.6	23 %
Adjusted operating margin	21.1 %	19.8 %	130 basis points
After adjustment EBITDA	$978.2	$791.3	24 %
After adjustment EBITDA margin	22.8 %	21.4 %	140 basis points

• The Americas had a strong order intake at $4.2 billion, up 23 percent, driven by more than 20 percent growth in the commercial HVAC business.
• Both reported and organic sales increased by 16 percent.
• United States GAAP operating margin improved 10 basis points, adjusted operating margin improved 130 basis points and adjusted EBITDA margin improved 140 basis points.
• The impact of inflation was more than offset by strong volume growth, price advantage and productivity gains, and the company continued to reinvest its business at a high level.

Europe, Middle East, Africa ( EMEA) market:

EMEA is actively innovating for its customers. The EMEA market business includes HVAC Systems & Services, Commercial Building Solutions, and Transportation Refrigeration Systems & Solutions.

Units (US$ millions)	Q2 2024	Q2 2023	Year-over-year change	Own business
Year-over-year change
Order volume	$669.4	$610.0	10 %	10 %
Net sales	$645.3	$617.6	4 %	5 %
United States GAAP operating income	$120.7	$101.1	19 %
United States GAAP operating margin	18.7 %	16.4 %	230 basis points
Adjusted operating income	$121.0	$108.0	12 %
Adjusted operating margin	18.8 %	17.5 %	130 basis points
After adjustment EBITDA	$131.0	$117.8	11 %
After adjustment EBITDA margin	20.3 %	19.1 %	120 basis points

• Bookings increased 10 percent, driven by a 20 percent increase in the commercial HVAC business.
• Reported sales increased by 4 percent, with acquisitions-related growth of approximately 1 percentage point offset by a negative impact of 2 percentage points on foreign exchange. Sales from the own business increased by 5 percent.
• United States GAAP operating margin improved 230 basis points, adjusted operating margin improved 130 basis points and adjusted EBITDA margin improved 120 basis points.
• The impact of inflation was more than offset by strong volume growth, price advantage and productivity gains, and the company continued to reinvest its business at a high level.

Asia Pacific Market:

The Asia-Pacific region is actively innovating for customers. The Asia-Pacific market includes HVAC Systems & Services, Commercial Building Solutions, and Transportation Refrigeration Systems & Solutions.

Units (US$ millions)	Q2 2024	Q2 2023	Year-over-year change	Own business
Year-over-year change
Order volume	$448.8	$461.9	(3) %	Flat
Net sales	$371.2	$394.6	(6) %	(3) %
United States GAAP operating income	$89.3	$82.3	9 %
United States GAAP operating margin	24.1 %	20.9 %	320 basis points
Adjusted operating income	$89.3	$82.7	8 %
Adjusted operating margin	24.1 %	21.0 %	310 basis points
After adjustment EBITDA	$94.8	$86.6	9 %
After adjustment EBITDA margin	25.5 %	21.9 %	360 basis points

• The volume of orders from own business was at the same level as the prior-year quarter.
• Reported sales were down 6 percent, including a negative impact of around 3 percentage points from foreign exchange. Sales in the organic business decreased by 3 percent.
• United States GAAP operating margin improved 320 basis points, adjusted operating margin increased 310 basis points and adjusted EBITDA margin improved 360 basis points.
• Inflation was more than offset by price advantages and productivity gains, and the company continued to reinvest its business at a high level.

Balance sheet and cash flow

Units (US$ millions)	Q2 2024	Q2 2023	Year-over-year change
Cash flow from continuing operations (year-to-date)	$959	$548	$411
Free cash flow (YTD)	$810	$427	$383
Working capital /Sales*	4.2 %	6.3 %	210 basis points
Cash balance (as of June 30)	$1,326	$664	$662
Debt balance (as of June 30)	$5,268	$5,027	$241

**Includes $451 million in short-term investments.

• As of June 30, 2024, the Company had cash flow from continuing operations of $959 million and free cash flow of $810 million.
• From the beginning of the year to July, the company's capital allocation was about $1.2 billion, of which $379 million was used for dividends, about $100 million was used for mergers and acquisitions, and $731 million was used for share repurchases.
• The Company will continue to pay a consistently growing and competitive dividend and distribute 100% of its cash surplus to shareholders.

Raised Full-year 2024 sales and earnings per share estimates

• The company expects full-year 2024 reported sales and sales growth from its own business to be approximately 10%; The increase in M&A of approximately 1 percentage point was offset by the negative impact of foreign exchange of approximately 1 percentage point.
• The Company expects full-year 2024 United States GAAP and adjusted earnings per share from continuing operations of approximately $10.80.