TT
Trane Technologies PLC
NYSE
8-K: Trane Technologies Reports Strong Q4 and Full-Year 2023 Results, Backlog Provides Visibility for 2024
Sentiment:
Quarterly Report
1 February 2024 6:19 AM
Trane Technologies announced robust fourth-quarter and full-year 2023 results, driven by strong organic growth and margin expansion, with a healthy backlog setting the stage for continued growth in 2024.
Better than expected
The company's revenue, earnings, and margin growth exceeded expectations for both the fourth quarter and full year.
The company's free cash flow conversion of 103% was better than expected.
The company's backlog of $6.9 billion was better than expected.
Summary
- Trane Technologies reported a 9% increase in revenue for the fourth quarter of 2023, reaching $4.4 billion, with organic revenue growth of 6%.
- The company's GAAP operating margin increased by 120 basis points, while the adjusted operating margin rose by 190 basis points in Q4 2023.
- Adjusted EBITDA margin for the quarter was 17.2%, a 150 basis point increase year-over-year.
- Fourth-quarter adjusted continuing EPS was $2.17, a 19% increase compared to the same period last year.
- The company's backlog stands at $6.9 billion, providing a strong foundation for growth in 2024.
- For the full year 2023, Trane Technologies reported revenues of $17.7 billion, an 11% increase, with organic revenue growth of 9%.
- Full-year adjusted continuing EPS was $9.04, a 23% increase compared to 2022.
- The company achieved a strong free cash flow conversion of 103% for the full year 2023.
- Since 2020, Trane Technologies has delivered a compound annual revenue growth of 12%, adjusted EBITDA margin expansion of 260 basis points, and average free cash flow as a percentage of adjusted net earnings of approximately 100%.
Sentiment
Score: 9
Explanation: The document conveys a very positive sentiment due to strong financial results, significant growth metrics, and a positive outlook for the future. The company's performance exceeded expectations, and the management's comments are optimistic.
Positives
- Trane Technologies experienced strong revenue growth in both the fourth quarter and full year of 2023.
- The company demonstrated significant margin expansion in both operating and EBITDA metrics.
- The company's earnings per share showed substantial growth, both on a GAAP and adjusted basis.
- Trane Technologies has a robust backlog of $6.9 billion, indicating strong future demand.
- The company achieved excellent free cash flow conversion of 103% for the full year.
- The company has shown consistent growth since 2020, with a 12% compound annual revenue growth.
- The company's bookings increased by 12% in Q4 2023, indicating strong demand for its products and services.
Negatives
- The Asia Pacific segment experienced flat organic revenue growth in Q4 2023, compared to a 19% increase in the prior year.
- The company's cash balance decreased by $126 million year-over-year.
Risks
- The company's forward-looking statements are subject to various risks and uncertainties, including global economic conditions, inflation, and geopolitical conflicts.
- The company faces risks related to climate change, health emergencies, commodity shortages, and government regulations.
- The company is exposed to cybersecurity risks and tax law changes.
- The company is involved in litigation, including the Chapter 11 proceedings for its deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC.
Future Outlook
The company expects full-year 2024 reported revenue growth of approximately 7% to 8%, with organic revenue growth of approximately 6% to 7%. GAAP continuing EPS for full-year 2024 is expected to be between $9.90 and $10.20, and adjusted continuing EPS is expected to be between $10.00 and $10.30.
Management Comments
- Dave Regnery, chair and CEO, stated that Trane Technologies delivered another year of top quartile financial performance in 2023.
- He highlighted the company's record financial results, strong organic revenue growth, and powerful free cash flow conversion.
- He also mentioned the company's focused sustainability strategy, proven business operating system, and investment in future growth and innovation.
Industry Context
This announcement reflects a strong performance in the climate solutions industry, where demand for energy-efficient and sustainable products is increasing. Trane Technologies' results indicate a successful execution of its strategy in a competitive market.
Comparison to Industry Standards
- Trane Technologies' performance is strong compared to competitors in the HVAC and climate solutions industry.
- Companies like Carrier Global Corporation and Johnson Controls also operate in this space, and Trane's growth in revenue and earnings is competitive.
- Trane's 103% free cash flow conversion is a strong result compared to industry averages.
- The company's backlog of $6.9 billion is a positive indicator of future revenue and is a strong result compared to other companies in the sector.
- The company's adjusted EBITDA margin expansion of 260 basis points since 2020 is a strong result compared to industry benchmarks.
Stakeholder Impact
- Shareholders are positively impacted by the strong financial results, dividend payments, and share repurchases.
- Employees are likely to benefit from the company's growth and success.
- Customers benefit from the company's innovative and sustainable climate solutions.
- Suppliers and creditors are likely to benefit from the company's strong financial position.
Next Steps
- The company expects to continue to pay a competitive and growing dividend.
- The company plans to deploy 100% of excess cash to shareholders over time.
- The company will continue to invest in future growth and innovation.
Legal Proceedings
- The company is involved in litigation, including the risks and uncertainties associated with the Chapter 11 proceedings for its deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC.
Key Dates
- February 1, 2024: Date of the press release announcing Q4 and full-year 2023 results.
Keywords
Trane Technologies, Financial Results, Earnings, Revenue, EBITDA, EPS, Bookings, Backlog, Operating Margin, Free Cash Flow, HVAC, Climate Solutions, Sustainability
TT
Trane Technologies PLC
NYSE
Sector: Industrials
Filings with Classifications
Better than expected
30 April 2025 12:09 PM
Quarterly Report
- The company's net revenues, gross profit margin, operating income, and net earnings all increased compared to the same period in 2024.
- Basic and diluted earnings per share from continuing operations also increased.
- The company's effective tax rate decreased compared to the same period in 2024.
Better than expected
30 April 2025 6:00 AM
Earnings Release
- The company's adjusted continuing EPS of $2.45 was up 26 percent year-over-year.
- The company's GAAP operating margin was up 250 basis points, adjusted operating margin was up 100 basis points and adjusted EBITDA margin was up 130 basis points.
- The company expects to perform towards the high-end of revenue and EPS guidance.
Better than expected
24 April 2025 6:21 AM
Proxy Statement
- The company saw robust and broad-based demand for its innovative products and services, reflected in another year of outstanding financial performance.
- The company is consistently delivering value for its shareholders, people, customers, communities and the planet.
Better than expected
30 January 2025 6:00 AM
Quarterly Report
- The company's revenue, earnings, and margin growth exceeded expectations, demonstrating strong financial performance.
- The free cash flow conversion was better than expected, indicating efficient cash management.
- The company's backlog provides a strong base for future revenue, which is a positive indicator.
Better than expected
30 October 2024 1:53 PM
Quarterly Report
- The company's net revenues, operating income, and net earnings all showed significant year-over-year increases, indicating better than expected performance.
- The company's gross profit margin improved, reflecting effective pricing strategies and productivity gains.
- The company's free cash flow was strong, indicating good cash management.
Better than expected
30 October 2024 6:00 AM
Quarterly Report
- The company exceeded expectations with an 11% increase in both reported and organic revenues.
- Adjusted continuing EPS was $3.37, a 21% increase year-over-year, surpassing previous estimates.
- The company raised its full-year revenue and adjusted EPS guidance for 2024, indicating confidence in future performance.
Better than expected
31 July 2024 2:12 PM
Quarterly Report
- The company's net revenue, gross profit margin, and operating income all exceeded expectations for the quarter.
- The company's free cash flow was significantly higher than the same period last year.
- The company's earnings per share were also better than expected.
Better than expected
31 July 2024 6:00 AM
Quarterly Report
- The company's revenue, earnings, and bookings all exceeded expectations, leading to an increase in full-year guidance.
Capital raise
7 June 2024 6:01 AM
Annual General Meeting Results
- The company has renewed the authority to issue shares, which could be used for future capital raising.
- The company has also renewed the authority to issue shares for cash without first offering them to existing shareholders, which could be used for future capital raising.
Better than expected
30 April 2024 1:55 PM
Quarterly Report
- The company's net revenues, operating income, and net earnings all exceeded prior year results.
- The company's gross profit margin improved significantly, indicating better profitability.
- The company's organic revenue growth was strong, demonstrating better underlying business performance.
Better than expected
30 April 2024 6:00 AM
Quarterly Report
- The company's revenue, earnings, and bookings all exceeded expectations, leading to a significant increase in full-year guidance.
Better than expected
25 April 2024 6:10 AM
Proxy Statement
- The company achieved organic revenue growth of 9%, exceeding expectations.
- Adjusted earnings per share grew by 23%, surpassing previous forecasts.
- Free cash flow increased by 37.4%, indicating strong financial health.
Better than expected
1 February 2024 6:19 AM
Quarterly Report
- The company's revenue, earnings, and margin growth exceeded expectations for both the fourth quarter and full year.
- The company's free cash flow conversion of 103% was better than expected.
- The company's backlog of $6.9 billion was better than expected.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.