Highlights (third-quarter 2024 versus third-quarter 2023, unless otherwise noted):
- Reported revenues of $5.4 billion, up 11 percent; organic revenues* up 11 percent
- GAAP operating margin up 110 bps; adjusted operating margin* up 90 bps
- Adjusted EBITDA margin* of 20.7 percent, up 120 bps
- GAAP continuing EPS of $3.43; adjusted continuing EPS* of $3.37, up 21 percent
- Continued strong bookings of $5.2 billion, up 5 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.
Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $3.43 for the third quarter of 2024. Adjusted continuing EPS was $3.37, up 21 percent.
Third-Quarter 2024 Results
Financial Comparisons Third-Quarter Continuing Operations
$, millions except EPS | Q3 2024 | Q3 2023 | Y-O-Y Change | Organic Y-O-Y
|
Bookings | $5,213 | $4,946 | 5% | 5% |
Net Revenues | $5,441 | $4,883 | 11% | 11% |
GAAP Operating Income | $1,025 | $864 | 19% | |
GAAP Operating Margin | 18.8% | 17.7% | 110 bps | |
Adjusted Operating Income* | $1,026 | $879 | 17% | |
Adjusted Operating Margin* | 18.9% | 18.0% | 90 bps | |
Adjusted EBITDA* | $1,127 | $954 | 18% | |
Adjusted EBITDA Margin* | 20.7% | 19.5% | 120 bps | |
GAAP Continuing EPS | $3.43 | $2.74 | 25% | |
Adjusted Continuing EPS | $3.37 | $2.79 | 21% | |
Pre-Tax Non-GAAP Adjustments, net** | $1.2 | $15.0 | $(13.8) | |
**For details see table 2 and 3 of the news release. | ||||
"The third quarter continues our track record of delivering leading revenue and earnings per share growth," said Dave Regnery, chair and CEO, Trane Technologies. "Customers continue to choose our sustainable solutions. With bookings near an all-time high and a strong project pipeline, particularly in commercial HVAC, we are raising our full-year revenue and adjusted EPS guidance for 2024 and expect 2025 to be another strong year.
"Our purpose-driven strategy, proven business operating system and uplifting culture, combined with the resilience of our diversified global portfolio, position us to deliver leading growth and differentiated shareholder returns over the long term."
Highlights from the Third Quarter of 2024 (all comparisons against third-quarter 2023 unless otherwise noted)
- Delivered strong revenue, operating income, EBITDA and EPS growth.
- Strong bookings of $5.2 billion, up 5 percent.
- Backlog of $7.2 billion, up from $6.9 billion at year-end 2023.
- Enterprise reported revenues and organic revenues were both up 11 percent.
- GAAP operating margin was up 110 basis points, adjusted operating margin was up 90 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.
Third-Quarter Business Review (all comparisons against third-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 | Q3 2024 | Q3 2023 | Y-O-Y Change | Organic Y-O-Y
|
Bookings | $4,296.9 | $3,960.3 | 8% | 8% |
Net Revenues | $4,474.9 | $3,888.0 | 15% | 15% |
GAAP Operating Income | $922.3 | $748.3 | 23% | |
GAAP Operating Margin | 20.6% | 19.2% | 140 bps | |
Adjusted Operating Income | $920.7 | $750.6 | 23% | |
Adjusted Operating Margin | 20.6% | 19.3% | 130 bps | |
Adjusted EBITDA | $993.9 | $809.0 | 23% | |
Adjusted EBITDA Margin | 22.2% | 20.8% | 140 bps |
- Strong bookings of $4.3 billion, up 8 percent.
- Reported and organic revenues were both up 15 percent.
- GAAP operating margin was up 140 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 | Q3 2024 | Q3 2023 | Y-O-Y Change | Organic Y-O-Y
|
Bookings | $637.0 | $585.6 | 9% | 9% |
Net Revenues | $667.8 | $618.6 | 8% | 8% |
GAAP Operating Income | $137.4 | $110.1 | 25% | |
GAAP Operating Margin | 20.6% | 17.8% | 280 bps | |
Adjusted Operating Income | $137.1 | $118.4 | 16% | |
Adjusted Operating Margin | 20.5% | 19.1% | 140 bps | |
Adjusted EBITDA | $144.3 | $130.4 | 11% | |
Adjusted EBITDA Margin | 21.6% | 21.1% | 50 bps |
- Strong bookings, up 9 percent.
- Reported and organic revenues were both up 8 percent.
- GAAP operating margin was up 280 basis points; adjusted operating margin was up 140 basis points and adjusted EBITDA margin was up 50 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 | Q3 2024 | Q3 2023 | Y-O-Y Change | Organic Y-O-Y
|
Bookings | $279.0 | $400.2 | (30)% | (31)% |
Net Revenues | $298.5 | $376.3 | (21)% | (21)% |
GAAP Operating Income | $56.9 | $82.6 | (31)% | |
GAAP Operating Margin | 19.1% | 22.0% | (290) bps | |
Adjusted Operating Income | $56.9 | $82.6 | (31)% | |
Adjusted Operating Margin | 19.1% | 22.0% | (290) bps | |
Adjusted EBITDA | $62.7 | $87.7 | (29)% | |
Adjusted EBITDA Margin | 21.0% | 23.3% | (230) bps |
- Bookings were down 30 percent. Organic bookings were down 31 percent.
- Reported and organic revenues were both down 21 percent led by lower volumes.
- GAAP operating margin was down 290 basis points, adjusted operating margin was down 290 basis points and adjusted EBITDA margin was down 230 basis points.
Balance Sheet and Cash Flow
$, millions | Q3 2024 | Q3 2023 | Y-O-Y Change |
Cash From Continuing Operating Activities Y-T-D | $2,272 | $1,483 | $789 |
Free Cash Flow Y-T-D* | $2,038 | $1,288 | $750 |
Working Capital/Revenue* | 2.2% | 4.8% | (260) bps |
Cash Balance September 30** | $1,928 | $960 | $968 |
Debt Balance September 30 | $5,269 | $4,825 | $444 |
**Includes short-term investments of $458 million as of September 30, 2024. | |||
- Through September 30, 2024, cash flow from continuing operating activities was $2.3 billion and free cash flow was $2 billion.
- Year-to-date through October, the Company deployed or committed approximately $2.0 billion of capital including approximately $800 million for dividends, approximately $230 million for M&A and approximately $1 billion for share repurchases.
- The Company expects 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 11 percent.
- The Company expects GAAP and adjusted continuing EPS for full-year 2024 of approximately $11.10.
- Additional information regarding the Company's 2024 guidance is included in the Company's third-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.
10/30/2024
(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
*Q3 Non-GAAP measures definitions
Adjusted operating income in 2024 is defined as GAAP operating income adjusted for restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition related costs, and legacy legal liability. Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, a non-cash adjustment for contingent consideration and merger and acquisition related costs. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2, 3 and 4 of the news release.
Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.
Adjusted earnings from continuing operations attributable to Trane Technologies plc (Adjusted net earnings) in 2024 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc adjusted for net of tax impacts of restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition related costs, legacy legal liability, and a U.S. discrete tax benefit. Adjusted net earnings in 2023 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc adjusted for an impairment of equity investment and the net of tax impacts of restructuring costs, transformation costs, a non-cash adjustment for contingent consideration, and merger and acquisition related costs. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.
Adjusted continuing EPS in 2024 is defined as GAAP continuing EPS adjusted for net of tax impacts of restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition related costs, legacy legal liability, and a U.S. discrete tax benefit. Adjusted continuing EPS in 2023 is defined as GAAP continuing operations attributable to Trane Technologies plc adjusted for an impairment of equity investment and the net of tax impacts of restructuring costs, transformation costs, a non-cash adjustment for contingent consideration, and merger and acquisition related costs. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.
Adjusted EBITDA in 2024 is defined as adjusted operating income adjusted to exclude depreciation and amortization expense and include other income (expense), net. Adjusted EBITDA in 2023 is defined as adjusted operating income adjusted to exclude depreciation and amortization expense, include other income (expense), net and exclude the impairment of an equity investment. Other income (expense), net mainly comprises interest income, foreign currency exchange gains and losses and certain components pension and postretirement benefit costs. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 4 and 5 of the news release.
Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues.
Adjusted effective tax rate for 2024 is defined as the ratio of income tax expense adjusted for a U.S. discrete tax benefit and the net tax effect of adjustments for restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition related costs, and legacy legal liability divided by adjusted net earnings. Adjusted effective tax rate for 2023 is defined as the ratio of income tax expense adjusted for the net tax effect of adjustments for restructuring costs, transformation costs, a non-cash adjustment for contingent consideration, and merger and acquisition related costs divided by adjusted net earnings. This measure allows for a direct comparison of the effective tax rate between periods.
Free cash flow in 2024 is defined as net cash provided by (used in) continuing operating activities adjusted for capital expenditures, cash payments for restructuring costs, legacy legal liability, and merger and acquisition related costs. Free cash flow in 2023 is defined as net cash provided by (used in) continuing operating activities adjusted for capital expenditures, cash payments for restructuring costs, transformation costs, and merger and acquisition related costs. Please refer to the free cash flow reconciliation on table 8 of the news release.
Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q3 2024) less the prior period (e.g. Q3 2023), divided by the change in net revenues for the current period less the prior period.
Organic revenue is defined as GAAP net revenues adjusted to eliminate currency fluctuations and the impact of acquisitions.
Organic bookings is defined as reported orders in the current period adjusted to eliminate currency fluctuations and the impact of acquisitions.
Working capital measures a firm's operating liquidity position and its overall effectiveness in managing the enterprise's current accounts.
- Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabilities that exclude short-term debt, dividend payable and income tax payables.
- Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of September 30) by the annualized revenue for the period (e.g. reported revenues for the three months ended September 30 multiplied by 4 to annualize for a full year).
The Company reports its financial results in accordance with generally accepted accounting principles in the United States (GAAP). The following schedules provide non-GAAP financial information and a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a substitute for or superior to, financial measures calculated in accordance with GAAP. They have limitations in that they do not reflect all of the costs associated with the operations of our businesses as determined in accordance with GAAP. In addition, these measures may not be comparable to non-GAAP financial measures reported by other companies.
We believe the non-GAAP financial information provides important supplemental information to both management and investors regarding financial and business trends used in assessing our financial condition and results of operations.
Non-GAAP financial measures assist investors with analyzing our business results as well as with predicting future performance. In addition, these non-GAAP financial measures are also reviewed by management in order to evaluate the financial performance of each segment. Presentation of these non-GAAP financial measures helps investors and management to assess the operating performance of the Company.
As a result, one should not consider these measures in isolation or as a substitute for our results reported under GAAP. We compensate for these limitations by analyzing results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to non-GAAP results.
Table 1 | |||||||||||||||
TRANE TECHNOLOGIES PLC Condensed Consolidated Income Statement (In millions, except per share amounts) UNAUDITED | |||||||||||||||
For the quarter | For the nine months | ||||||||||||||
ended September 30, | ended September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net revenues | 5,441.2 | 4,882.9 | 14,964.2 | 13,253.5 | |||||||||||
Cost of goods sold | (3,466.8 | (3,224.8 | (9,594.5 | (8,867.6 | |||||||||||
Selling and administrative expenses | (949.8 | (793.9 | (2,677.2 | (2,179.5 | |||||||||||
Operating income | 1,024.6 | 864.2 | 2,692.5 | 2,206.4 | |||||||||||
Interest expense | (63.0 | (57.9 | (178.5 | (177.1 | |||||||||||
Other income/(expense), net | 6.3 | (10.0 | (22.8 | (76.8 | |||||||||||
Earnings before income taxes | 967.9 | 796.3 | 2,491.2 | 1,952.5 | |||||||||||
Provision for income taxes | (181.1 | (157.5 | (492.3 | (400.2 | |||||||||||
Earnings from continuing operations | 786.8 | 638.8 | 1,998.9 | 1,552.3 | |||||||||||
Discontinued operations, net of tax | (8.9 | (6.5 | (21.3 | (18.2 | |||||||||||
Net earnings | 777.9 | 632.3 | 1,977.6 | 1,534.1 | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interests | (5.9 | (6.0 | (14.0 | (14.5 | |||||||||||
Net earnings attributable to Trane Technologies plc | 772.0 | 626.3 | 1,963.6 | 1,519.6 | |||||||||||
Amounts attributable to Trane Technologies plc ordinary shareholders: | |||||||||||||||
Continuing operations | 780.9 | 632.8 | 1,984.9 | 1,537.8 | |||||||||||
Discontinued operations | (8.9 | (6.5 | (21.3 | (18.2 | |||||||||||
Net earnings | 772.0 | 626.3 | 1,963.6 | 1,519.6 | |||||||||||
Diluted earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders: | |||||||||||||||
Continuing operations | 3.43 | 2.74 | 8.68 | 6.66 | |||||||||||
Discontinued operations | (0.04 | (0.02 | (0.09 | (0.08 | |||||||||||
Net earnings | 3.39 | 2.72 | 8.59 | 6.58 | |||||||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Diluted | 228.0 | 230.6 | 228.8 | 230.9 | |||||||||||
Table 2 | ||||||||||||||||||||||||
TRANE TECHNOLOGIES PLC Reconciliation of GAAP to non-GAAP (In millions, except per share amounts) UNAUDITED | ||||||||||||||||||||||||
For the quarter ended September 30, 2024 | For the nine months ended September 30, 2024 | |||||||||||||||||||||||
As | As | As | As | |||||||||||||||||||||
Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | |||||||||||||||||||
Net revenues | 5,441.2 | 5,441.2 | 14,964.2 | 14,964.2 | ||||||||||||||||||||
Operating income | 1,024.6 | 1.2 | (a,b,c) | 1,025.8 | 2,692.5 | (0.1 | (a,b,c,d) | 2,692.4 | ||||||||||||||||
Operating margin | 18.8 | 18.9 | 18.0 | 18.0 | ||||||||||||||||||||
Earnings from continuing operations before income taxes | 967.9 | 1.2 | (a,b,c) | 969.1 | 2,491.2 | (0.1 | (a,b,c,d) | 2,491.1 | ||||||||||||||||
Provision for income taxes | (181.1 | (13.5 | (e,f) | (194.6 | (492.3 | (15.2 | (e,f) | (507.5 | ||||||||||||||||
Tax rate | 18.7 | 20.1 | 19.8 | 20.4 | ||||||||||||||||||||
Earnings from continuing operations attributable to Trane Technologies plc | 780.9 | (12.3 | (g) | 768.6 | 1,984.9 | (15.3 | (g) | 1,969.6 | ||||||||||||||||
Diluted earnings per common share | ||||||||||||||||||||||||
Continuing operations | 3.43 | (0.06 | 3.37 | 8.68 | (0.07 | 8.61 | ||||||||||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||||||||||
Diluted | 228.0 | 228.0 | 228.8 | 228.8 | ||||||||||||||||||||
Detail of Adjustments: | ||||||||||||||||||||||||
(a) | Restructuring costs (income) (COGS SG&A) | (1.9 | 3.6 | |||||||||||||||||||||
(b) | Legacy legal liability (SG&A) | 1.8 | 3.5 | |||||||||||||||||||||
(c) | M&A transaction costs (SG&A) | 1.3 | 1.7 | |||||||||||||||||||||
(d) | Non-cash adjustment for contingent consideration (SG&A) | (8.9 | ||||||||||||||||||||||
(e) | U.S. discrete tax benefit | (12.9 | (12.9 | |||||||||||||||||||||
(f) | Tax impact of adjustments (a,b,c) | (0.6 | (2.3 | |||||||||||||||||||||
(g) | Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc | (12.3 | (15.3 | |||||||||||||||||||||
Pre-tax impact of adjustments on cost of goods sold | (1.7 | (1.1 | ||||||||||||||||||||||
Pre-tax impact of adjustments on selling administrative expenses | 2.9 | 1.0 | ||||||||||||||||||||||
Pre-tax impact of adjustments on operating income | 1.2 | (0.1 | ||||||||||||||||||||||
Table 3 | ||||||||||||||||||||||||
TRANE TECHNOLOGIES PLC Reconciliation of GAAP to non-GAAP (In millions, except per share amounts) UNAUDITED | ||||||||||||||||||||||||
For the quarter ended September 30, 2023 | For the nine months ended September 30, 2023 | |||||||||||||||||||||||
As | As | As | As | |||||||||||||||||||||
Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | |||||||||||||||||||
Net revenues | 4,882.9 | 4,882.9 | 13,253.5 | 13,253.5 | ||||||||||||||||||||
Operating income | 864.2 | 15.0 | (b,c,d,e) | 879.2 | 2,206.4 | (6.3 | (a,b,c,d,e) | 2,200.1 | ||||||||||||||||
Operating margin | 17.7 | 18.0 | 16.6 | 16.6 | ||||||||||||||||||||
Earnings from continuing operations before income taxes | 796.3 | 15.0 | (b,c,d,e) | 811.3 | 1,952.5 | 45.9 | (a,b,c,d,e,f) | 1,998.4 | ||||||||||||||||
Benefit (Provision) for income taxes | (157.5 | (3.5 | (g) | (161.0 | (400.2 | 2.8 | (g) | (397.4 | ||||||||||||||||
Tax rate | 19.8 | 19.8 | 20.5 | 19.9 | ||||||||||||||||||||
Earnings from continuing operations attributable to Trane Technologies plc | 632.8 | 11.5 | (h) | 644.3 | 1,537.8 | 48.7 | (h) | 1,586.5 | ||||||||||||||||
Diluted earnings per common share | ||||||||||||||||||||||||
Continuing operations | 2.74 | 0.05 | 2.79 | 6.66 | 0.21 | 6.87 | ||||||||||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||||||||||
Diluted | 230.6 | 230.6 | 230.9 | 230.9 | ||||||||||||||||||||
Detail of Adjustments: | ||||||||||||||||||||||||
(a) | Non-cash adjustment for contingent consideration (SG&A) | (49.3 | ||||||||||||||||||||||
(b) | Acquisition inventory step-up and backlog amortization (COGS SG&A) | 8.4 | 18.5 | |||||||||||||||||||||
(c) | Restructuring costs (COGS SG&A) | 2.3 | 10.1 | |||||||||||||||||||||
(d) | Transformation costs (SG&A) | 1.1 | 3.5 | |||||||||||||||||||||
(e) | M&A transaction costs (SG&A) | 3.2 | 10.9 | |||||||||||||||||||||
(f) | Impairment of equity investment (OIOE) | 52.2 | ||||||||||||||||||||||
(g) | Tax impact of adjustments (a,b,c,d,e) | (3.5 | 2.8 | |||||||||||||||||||||
(h) | Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc | 11.5 | 48.7 | |||||||||||||||||||||
Pre-tax impact of adjustments on cost of goods sold | 2.5 | 14.7 | ||||||||||||||||||||||
Pre-tax impact of adjustments on selling administrative expenses | 12.5 | (21.0 | ||||||||||||||||||||||
Pre-tax impact of adjustments on operating income | 15.0 | (6.3 | ||||||||||||||||||||||
Pre-tax impact of adjustments on other income (expense), net | 52.2 | |||||||||||||||||||||||
Pre-tax impact of adjustments on earnings from continuing operations | 15.0 | 45.9 | ||||||||||||||||||||||
Table 4 | ||||||||||||||
TRANE TECHNOLOGIES PLC Reconciliation of GAAP to non-GAAP (In millions) UNAUDITED | ||||||||||||||
For the quarter ended
| For the quarter ended
| |||||||||||||
As Reported | Margin | As Reported | Margin | |||||||||||
Americas | Net revenues | 4,474.9 | 3,888.0 | |||||||||||
Segment operating income | 922.3 | 20.6 | 748.3 | 19.2 | ||||||||||
Restructuring/Other (a) | (1.6 | 0.0 | 2.3 | 0.1 | ||||||||||
Adjusted operating income | 920.7 | 20.6 | 750.6 | 19.3 | ||||||||||
Depreciation and amortization (b) | 75.1 | 1.7 | 65.2 | 1.7 | ||||||||||
Other income/(expense), net | (1.9 | (0.1 | (6.8 | (0.2 | ||||||||||
Adjusted EBITDA * |
| 993.9 | 22.2 |
|
| 809.0 | 20.8 |
| ||||||
Europe, Middle East Africa | Net revenues | 667.8 | 618.6 | |||||||||||
Segment operating income | 137.4 | 20.6 | 110.1 | 17.8 | ||||||||||
Restructuring/Other (c) | (0.3 | (0.1 | 8.3 | 1.3 | ||||||||||
Adjusted operating income | 137.1 | 20.5 | 118.4 | 19.1 | ||||||||||
Depreciation and amortization (d) | 10.8 | 1.6 | 11.2 | 1.9 | ||||||||||
Other income/(expense), net | (3.6 | (0.5 | 0.8 | 0.1 | ||||||||||
Adjusted EBITDA * |
| 144.3 | 21.6 |
|
| 130.4 | 21.1 |
| ||||||
Asia Pacific | Net revenues | 298.5 | 376.3 | |||||||||||
Segment operating income | 56.9 | 19.1 | 82.6 | 22.0 | ||||||||||
Restructuring/Other | ||||||||||||||
Adjusted operating income | 56.9 | 19.1 | 82.6 | 22.0 | ||||||||||
Depreciation and amortization | 4.4 | 1.4 | 4.4 | 1.2 | ||||||||||
Other income/(expense), net | 1.4 | 0.5 | 0.7 | 0.1 | ||||||||||
Adjusted EBITDA * |
| 62.7 | 21.0 |
|
| 87.7 | 23.3 |
| ||||||
Corporate | Unallocated corporate expense | (92.0 | (76.8 | |||||||||||
Restructuring/Other (e) | 3.1 | 4.4 | ||||||||||||
Adjusted corporate expense | (88.9 | (72.4 | ||||||||||||
Depreciation and amortization | 4.7 | 4.4 | ||||||||||||
Other income/(expense), net | 10.4 | (4.7 | ||||||||||||
Adjusted EBITDA * |
| (73.8 |
|
| (72.7 |
| ||||||||
Total Company | Net revenues | 5,441.2 | 4,882.9 | |||||||||||
Operating income | 1,024.6 | 18.8 | 864.2 | 17.7 | ||||||||||
Restructuring/Other (a,c,e) | 1.2 | 0.1 | 15.0 | 0.3 | ||||||||||
Adjusted operating income | 1,025.8 | 18.9 | 879.2 | 18.0 | ||||||||||
Depreciation and amortization (b,d) | 95.0 | 1.7 | 85.2 | 1.7 | ||||||||||
Other income/(expense), net | 6.3 | 0.1 | (10.0 | (0.2 | ||||||||||
Adjusted EBITDA * |
| 1,127.1 | 20.7 |
|
| 954.4 | 19.5 |
| ||||||
*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions. | ||||||||||||||
(a) Restructuring/Other within Americas in 2023 includes acquisition inventory step-up and backlog amortization of $0.2 million. | ||||||||||||||
(b) Depreciation and amortization within Americas in 2023 excludes $0.3 million of acquisition backlog amortization, which has been accounted for in the Restructuring/Other line. | ||||||||||||||
(c) Restructuring/Other within EMEA in 2023 includes acquisition inventory step-up and backlog amortization of $8.2 million. | ||||||||||||||
(d) Depreciation and amortization within EMEA in 2023 excludes acquisition backlog amortization of $6.5 million, which has been accounted for in the Restructuring/Other line. | ||||||||||||||
(e) Other within Corporate in 2024 includes $1.8 million of legacy legal liability and $1.3 million of M&A transaction costs. Other within Corporate in 2023 includes $1.1 million of transformation costs and $3.2 million of M&A transaction costs. | ||||||||||||||
Table 5 | |||||||
TRANE TECHNOLOGIES PLC Reconciliation of GAAP to non-GAAP (In millions) UNAUDITED | |||||||
For the quarter | |||||||
ended September 30, | |||||||
2024 | 2023 | ||||||
Total Company | |||||||
Adjusted EBITDA | 1,127.1 | 954.4 | |||||
Less: items to reconcile adjusted EBITDA to net earnings attributable to Trane Technologies plc | |||||||
Depreciation and amortization (1) | (95.0 | (85.2 | |||||
Interest expense | (63.0 | (57.9 | |||||
Provision for income taxes | (181.1 | (157.5 | |||||
Restructuring costs (income) | 1.9 | (2.3 | |||||
Transformation costs | (1.1 | ||||||
M&A transaction costs | (1.3 | (3.2 | |||||
Legacy legal liability | (1.8 | ||||||
Acquisition inventory step-up and backlog amortization | (8.4 | ||||||
Impairment of equity investment | |||||||
Discontinued operations, net of tax | (8.9 | (6.5 | |||||
Net earnings from continuing operations attributable to noncontrolling interests | (5.9 | (6.0 | |||||
Net earnings attributable to Trane Technologies plc | 772.0 | 626.3 | |||||
(1) Depreciation and amortization in 2023 excludes acquisition backlog amortization of $6.8 million which has been included in the acquisition inventory step-up and backlog amortization line. | |||||||
*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions. | |||||||
Table 6 | |||||
TRANE TECHNOLOGIES PLC Condensed Consolidated Balance Sheets (In millions) UNAUDITED | |||||
September 30, | December 31, | ||||
2024 | 2023 | ||||
ASSETS | |||||
Cash and cash equivalents | 1,470.0 | 1,095.3 | |||
Short-term investments | 457.6 | ||||
Accounts and notes receivable, net | 3,393.4 | 2,956.8 | |||
Inventories | 2,033.4 | 2,152.1 | |||
Other current assets | 745.3 | 665.7 | |||
Total current assets | 8,099.7 | 6,869.9 | |||
Property, plant and equipment, net | 1,906.6 | 1,772.2 | |||
Goodwill | 6,214.3 | 6,095.3 | |||
Intangible assets, net | 3,364.6 | 3,439.8 | |||
Other noncurrent assets | 1,318.5 | 1,214.7 | |||
Total assets | 20,903.7 | 19,391.9 | |||
LIABILITIES AND EQUITY | |||||
Accounts payable | 2,194.8 | 2,025.2 | |||
Accrued expenses and other current liabilities | 3,481.9 | 3,226.4 | |||
Short-term borrowings and current maturities of long-term debt | 952.2 | 801.9 | |||
Total current liabilities | 6,628.9 | 6,053.5 | |||
Long-term debt | 4,317.1 | 3,977.9 | |||
Other noncurrent liabilities | 2,343.4 | 2,343.5 | |||
Shareholders' Equity | 7,614.3 | 7,017.0 | |||
Total liabilities and equity | 20,903.7 | 19,391.9 | |||
Table 7 | |||||||
TRANE TECHNOLOGIES PLC Condensed Consolidated Statement of Cash Flows (In millions) UNAUDITED | |||||||
For the nine months | |||||||
ended September 30, | |||||||
2024 | 2023 | ||||||
Operating Activities | |||||||
Earnings from continuing operations | 1,998.9 | 1,552.3 | |||||
Depreciation and amortization | 282.7 | 260.2 | |||||
Changes in assets and liabilities and other non-cash items | (9.4 | (329.9 | |||||
Net cash provided by (used in) continuing operating activities | 2,272.2 | 1,482.6 | |||||
Net cash provided by (used in) discontinued operating activities | (26.5 | (27.8 | |||||
Net cash provided by (used in) operating activities | 2,245.7 | 1,454.8 | |||||
Investing Activities | |||||||
Capital expenditures, net | (245.0 | (217.2 | |||||
Acquisition of businesses, net of cash acquired | (179.6 | (510.2 | |||||
Purchases of short-term investments, net | (450.0 | ||||||
Other investing activities, net | (12.0 | (8.7 | |||||
Net cash provided by (used in) investing activities | (886.6 | (736.1 | |||||
Financing Activities | |||||||
Net proceeds from (payments of) debt | 491.0 | (11.6 | |||||
Dividends paid to ordinary shareholders | (568.8 | (513.0 | |||||
Repurchase of ordinary shares | (926.1 | (459.8 | |||||
Other financing activities, net | 13.7 | 32.3 | |||||
Net cash provided by (used in) financing activities | (990.2 | (952.1 | |||||
Effect of exchange rate changes on cash and cash equivalents | 5.8 | (27.1 | |||||
Net increase (decrease) in cash and cash equivalents | 374.7 | (260.5 | |||||
Cash and cash equivalents beginning of period | 1,095.3 | 1,220.5 | |||||
Cash and cash equivalents end of period | 1,470.0 | 960.0 | |||||
Table 8 | ||||||||||
TRANE TECHNOLOGIES PLC Balance Sheet Metrics and Free Cash Flow ($ in millions) UNAUDITED | ||||||||||
September 30, | September 30, | December 31, | ||||||||
2024 | 2023 | 2023 | ||||||||
Net Receivables | 3,393.4 | 3,142.5 | 2,956.8 | |||||||
Days Sales Outstanding | 56.9 | 58.7 | 61.0 | |||||||
Net Inventory | 2,033.4 | 2,191.8 | 2,152.1 | |||||||
Inventory Turns | 6.8 | 5.9 | 5.5 | |||||||
Accounts Payable | 2,194.8 | 2,093.3 | 2,025.2 | |||||||
Days Payable Outstanding | 57.8 | 59.2 | 62.6 | |||||||
Nine months ended | Nine months ended | |||||||||
September 30, 2024 | September 30, 2023 | |||||||||
Net cash flow provided by continuing operating activities | 2,272.2 | 1,482.6 | ||||||||
Capital expenditures, net | (245.0 | (217.2 | ||||||||
Cash payments for restructuring | 7.2 | 8.8 | ||||||||
Legacy legal liability | 2.2 | |||||||||
M&A transaction costs | 0.9 | 10.7 | ||||||||
Transformation costs paid | 3.5 | |||||||||
Free cash flow | 2,037.5 | 1,288.4 | ||||||||
*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions. | ||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20241030812535/en/
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919-802-2593
Media@tranetechnologies.com
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704-990-3913
InvestorRelations@tranetechnologies.com
