Trane Technologies Announces Strong Second Quarter 2024 Results and Raised Full-Year Sales and EPS Estimates Again

Summary (Unless otherwise noted, the following data is a comparison between the second quarter of 2024 and the same period in 2023):

• Reported sales amounted to US$5.3 billion, up 13%; Organic sales* up 13% 。
• United States GAAP operating margin growth 70 basis points; Adjusted operating margin* increased by 140 basis points 。
• After adjustment EBITDA margin* increased by 140 basis points to 21.1 percent 。
• United States GAAP earnings per share from continuing operations USD 3.33; Adjusted earnings per share from continuing operations* increased 23% to $3.30 。
• Commercial HVAC business growth in the Americas 21%, driving the company's order volume* to increase by 19% 。

*This press release contains non-GAAP United States. For definitions of non-United States GAAP, please refer to the footnotes to the press release. For more details and adjustments, please refer to the table in the press release.

SWARTS, Ireland /PRNewswire/ -- Trane Technologies (NYSE:TT), a global innovator in temperature control systems, reported diluted earnings per share from continuing operations of $3.33 for the second quarter of 2024. 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)

**Please refer to Tables 2 and 3 of the press release in English for details.

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. "

"In light of our strong performance and positive outlook in the first half of the year, we have significantly raised our full-year sales and adjusted earnings per share guidance beyond the highest of our previous expectations. 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 *(Year to date)	$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.
• More information about the company's "2024 Expectations" can be found in the company's second-quarter earnings report, which can be found on the "Investor Relations" page.

This press release contains forward-looking statements within the meaning of securities laws, that is, statements that are not historical facts. Statements include the Company's future financial performance and targets (including sales, earnings per share and revenue), the Company's operating activities, market demand for the Company's products and services (including order volume and backlog), capital allocation plan including dividend amounts and timing, share repurchase plans, capital commitments expected for M&A activities, capital allocation strategies, discounting power of available assets, expected sales growth and market performance.

These forward-looking statements are based on Trane Technologies' current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from expectations. Such factors include, but are not limited to, global economic conditions, including recessions, inflation, interest rates and foreign exchange fluctuations; changes in energy prices; internal and international conflicts; the impact of a global health crisis, outbreak or other communicable disease outbreak on our business operations, financial performance and financial condition, and on the world economy; financial institution emergencies; climate change and the company's sustainability strategies and goals; shortages of goods; supply chain constraints and price increases; government regulations; restructuring activities and the cost savings associated with such activities; long-term trends in decarbonization, energy efficiency, and indoor air quality; the outcome of any litigation, including the risks and uncertainties associated with the Chapter 11 litigation between our spin-off subsidiaries, Aldrich Pump LLC and Murray Boiler LLC; cybersecurity risks; and tax audits and tax law changes and interpretations. For additional factors that could cause such changes, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent Quarter 10-Q Financial Statements and other filings filed by the Company with the United States Securities and Exchange Commission. Because new risks and uncertainties and their impact on the Company are difficult to predict, Trane Technologies undertakes no obligation to update these forward-looking statements.

This press release also includes non-United States GAAP financial information that should be considered in addition to, and not in reliance on, or superior to, financial measures derived in accordance with United States GAAP in accordance with, and not in accordance with, those measures. Our definitions of non-United States GAAP financial information, as well as comparisons to GAAP, are provided in the Appendix.

All amounts covered in this financial report, including net income (loss), income (loss) from continuing operations, income (loss) from discontinued operations and adjusted EBITDA, and earnings (loss) per share are attributable to common shareholders of Trane Technologies.

Trane Technologies (NYSE: TT), a global innovator in temperature control systems, is committed to providing efficient and sustainable climate control solutions for buildings, residential and transportation through its two strategic brands, Trane® and Thermo Kings®, as well as its portfolio of environmentally responsible products and services.

(With Table)

• Table 1: Condensed statement of comprehensive income
• Table 2-5: United States GAAP Adjustments to Non-United States GAAP
• Table 6: Condensed Consolidated Balance Sheet
• Table 7: Condensed consolidated cash flow statement
• Table 8: Balance Sheet Business Metrics and Cash Flows