TT - Earnings call transcript Q2 2022 | Trane Technologies plc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Welcome to the Trane Technologies Q2 2022 Earnings Conference Call. My name is Chantel, and I will be your operator for the call. The call will begin in a few moments with the speaker remarks and the Q&A session. [Operator Instructions]. the to turn President, Nagle, now Relations. Investor will call Zac over Vice I

Zachary Nagle

morning, you Call. and for Good the website operator. Thanks, thank you'll where Second being on find XXXX at is tranetechnologies.com, Trane presentation. for Quarter Earnings call Conference This accompanying webcast our Technologies us joining

description statements X. pursuant archiving historical today's Please in cause see call the are not to our recording our We on the provisions securities of differ website. This made SEC some are results measures, release. and actual news includes the of also made filings materially may Please in law. Statements our for are and considered safe which that also harbor forward-looking tables facts anticipated explained call results. a to presentation this financial factors go are to attached to from Slide of our non-GAAP federal that are

call Kuehn, over and Dave? today's the Chair call are to Regnery, President on that, turn With Vice me CFO. Executive Joining I'll Dave Chris Dave. and CEO; and

David Regnery

call. Thanks, today's joining everyone, for us on Zac, and

Let's turn to Slide #X.

Technologies we deliver and the quarterly results, Trane the bigger financial I differentiated Before picture, the dive shareholder that enables to returns. frame performance strategy want into up to

are and forging do because new We First we we driven love foremost, are healthier better, ground purpose. by what world. we for a

for world. work real for difference the for their communities a in makes people knowing and pride Our take our customers, our

for back those leading act events waves and day, commitments next in the health. generation. weather more to serious parts intense aligned and we're to Technologies of planet the frequent it proud the action with on to is strategy are the heat is ensure Trane every bold far-reaching These our of health the getting world. mitigate and many environment like economy, We impacts purpose-driven that our including industry the experiencing up. events, climate to sustainability We impacts be of the human impact Our must have only stronger. climate change mega-trends see and and now

Our decarbonization commercial innovation homes buildings, transport. is of accelerating and

our has we of Our innovation higher. Demand sustainability choice performance efficiency. never recognize customers our their expertise, goals been are while in and partner and improving achieving and

our strong superior Our board the profile relentless through enables allocation us helps planet. to is and and for cash turn, for strong purpose-driven creation customer flow customers, drive capital our This, to in our innovation through focus and strong strategy, growth deploy powerful deliver across strategy. shareholders our cycles. us free the balanced end The value result margin team,

quarter #X. to QX another Moving was strong Slide for us.

Our operating global and deliver our to business leveraged teams record adversity results. faced high-performance system

at enabling is energy Our of the an us efficiency secular unprecedented innovation at pace. apex and leadership to mega-trends is decarbonization, customers win on which

share of reflecting up company's the X%, remained the extremely Our virtually business. at organic $X.X the second quarter, every our strong reaching history high, billion. highest in area booking levels In in gains bookings were level

were XX% stack a up than QX. backlog result, adds XX% and norms. On bookings X-year stack, twice in billion, rising of a a historical records, XX% year-over-year up to $X.X also As prior up more QX. X-year enterprise to eclipsed in This

are encourage XXXX. the growth absolute to step growth they reference misleading historical trends number bookings the may investors years and when any in global portfolio. Last X-year booking XXX% and our revenues over I QX. absolute a in across Our higher get natural fuller extraordinary exceeded a functions million absolute I with levels in organic business grew broad-based book-to-bill to results are on QX, to business have is bookings than been period, on good backlog did to backlog we've past consider revenue robust transport in constraining our Absolute The XX% tendency have HVAC visibility growth bookings to of stack. the commercial in help delivered nonresidential and to we but our absolute revenues, trends, addition XX% be focus refrigeration that mitigate provide and particularly of X.X our quarter, more up bookings into as our you QX discussed when bookings moves been picture. growth bookings sequentially than future stronger businesses. These us levels with consider backlog even a inflationary $XXX Even risks. from strong

competency our closer enabled expectation closures and execution Our our on price for team's call second quarter. our us important again serve in quarter this increasingly case. up nonresidential which given us Strong I'm lockdowns backlog longer first of higher XX roughly the a China price inflation the operating the positive total customers system of to in our stay given our overcame ahead and temporary represent across our and has of over to plant we to to value chain. of X the tends core still especially total quarter. versus second We deliver persistent the and and businesses XX% cycle. discussed of COVID and to cost make half, This performance, the is of revenue XX% proud is be in business points inflation

we million, better range Our lockdowns the $XXX $XX the at to impact managed minimize time approximately to the than teams to revenue anticipated the million occurred. million $XX

America knocked The approximately also temporarily at We of $XX million. refrigeration out to transport quarter one the impact that revenue our North was tornado in also a facilities the overcame quarter. production

impact the recoup the with up of second the exited full the We quarter both expect to running. back half We plants fully year. in and

high-performance we remained has Backlog remained has the in we been have higher. significantly execution the Inflation been confident of we levels tight, raising is of half robust. pricing persistent, Our but in seen our some but pace. improvement Supply chains we're our sight believe half and All kept line improvement to has in, of more year. second further originally have than performance through the stronger than year first Booking anticipated. an the have from FX, When headwind adjusted that guidance to partially are EPS our customers guidance growing to unwavering includes do. everything remain a Execution by $X.XX we're effectively stronger. of business offset we M&A, operational guidance strategy $X.XX secular tailwind from $X.XX. first range putting our our $X.XX additional and core our of by you only The raising mega-trends at on focus consider the system underpinning $X.XX. operating our

Our balance sheet, to flow strong free liquidity cash robust and deliver provides foundation capital position deployment. optionality and financial ability for a good

as to Please not navigate exceptionally macro improve. challenges to conditions We to only but Slide turn thrive #X. are well positioned near-term

book-to-bill HVAC As up top XX%. were closely risks. records understand and much high prior digits, XXX% I revenue despite was up QX. Americas the the over healthy, strong growth up bookings X-year strong, dynamics tough the I us prior are QX comp. despite and stack is inflationary comp, continues and the the in delivered QX, bookings with on revenue working our Backlog Absolute slots. a constraining broad-based. would growth. to referenced stronger, we approximately to we business demand low mid-teens. This were with history to Americas impacted with Transport to fact mainly on were mitigate but be up the bookings high In were are revenues slide, versus year bookings discussed booking digits bookings in up up services. prior our were Commercial from Revenues HVAC Non-constrained in customers a resilient across booking quarter were residential that strongest were commercial equipment and shifted digits low bookings by levels XXs year-over-year. single extremely HVAC, were XX%, earlier. against and nearly half, weather second mid-single year XX% down growth down the effectively single Demand strong, event extreme teens,

Turning to EMEA.

to our see customers. continue greenhouse intensity services and to EMEA products emissions strong, low up single for high and continue help strong innovative reduce revenues commercial our HVAC We energy gas be up demand for were teens, and that orders digits.

comps. part in our down, similar risks. up mitigate markets. were constrain to to were we due book business, low And end order year teens, bookings inflationary our transport Revenues help expected, bookings to tough transport continue through outpacing Americas to prior As

teens revenues delivered growth down as Our Asia to bookings the China, lockdowns were due COVID high discussed. and HVAC team in Pacific in commercial

Chris? like I'd over turn call Now to Chris. to the

Christopher Kuehn

solid was of strong XX%, expedited All significant and from revenue COVID about across the margins. incremental chain, extreme Price in, for Productivity, temporary weather EBITDA was we primarily Please earlier. turn support my was growth serve the focus revenue improved our segment China's Each XX%. freight. I'll from to positive FX the a declined inflation EPS points, costs Slide Dave. and in revenue challenges in presentation, quarter. headwind spot make Each business lower on to associated headwind. Please XX chain related growth also from investments a of innovation was Dave quarter, operating to are In term, Organic operating favorable quarter. XX approximately the to Transport adjusted respectively. comments buys and operating so innovation majority quarter. Americas and the to was shutdown Thanks, basis a higher margin we supply key performance in dollar turn earlier a plant first strong margins still businesses continued were incurring Slide the the income. customers pipeline. Pricing We strong the impacts driven quarter across volume higher XX%, the in XX% than by and mentioned each was significant Adjusted expenses and lockdowns more continue in corporate near the to mix but was grew basis despite Organic of and adjusted impacted in leverage in our value X% on make inefficiencies reinvestments operations. businesses up versus and heavily comprising #X. and discussed of continued #X. including that strong, dynamics this the to at investments the the

in on expected our result impact which the to primarily volume offset as versus margins dollar strong region impacting a dollar outsized expectations. solid price delivered and as Asia leading and Pacific, lower with a growth region's and basis, through In chain were EMEA, strong lower negatively segment was a rate, are delevered by revenues, improve roughly having margins. is the productivity Americas with half, margin margins. Our of incrementals basis, to decline inflation. the inflation are productivity, at price, we challenges price on modest gross move second an inflation in which supply consistent the In offset modest Acute on

to the over I'd call to turn Dave? Dave. back like Now

David Regnery

Slide #X. Thanks, Chris. to turn Please

driving remained in to of customers own is North K-XX In franchise As February excellence establishing operational unprecedented are we've a of expertise. and higher, see improve focus our to our to a of since and sustainability system-based been book-to-bill Demand hallmarks businesses. favorable. and across discussed levels for day, Architectural multiyear with customer our partnering the XXXX. never with relationships Relentless underlying leading over innovation market and throughout bookings services schools. long customized decarbonization create and outgrowth has commercial our variety and And XX% another market strong period their to indicators demand is strong our quality road record of our despite America, XX deep indicators helping time. them with End remains has HVAC our Billing deploy call, brands the XX% backlog, innovative demonstrated business backlog their and quarter the customer for with and positions, like customers of revenue products more up order Index, stack. indoor our than historical a by achieve as strong, funds air a indoor strong, record decarbonization pointing targets we're year-over-year we're growth Every Unemployment data see of our federal and exiting We business of air approximately for tailwinds the And of our on health We're through given norms. remain markets Demand both gains low, with stimulus maps share demand double XXXX, with economic products centers, quality growth which XXX% care. of than education X-year residential more and remain second approach. growth. quarter in targets. been we over

Transport more continued about transport market refrigeration Americas refrigeration. interest to We'll Turning section. ACT growth through outlook projects in XXXX. our talk of topics

we remain opportunities good And and sustainability-focused while muted for with see growth a to services share our volatile continue market backdrop outgrowth continuing, and EMEA, gains. market for to Turning expectations demand strong. for systems have we geopolitical

China the predict in hard The Turning are the impact have to region. COVID to healthy broader business we Asia, monitoring proven on is lockdowns geopolitical for the the with second bookings Potential and strong and growth their quarter. risks COVID-related region. in

see to is lockdowns strength the some in continue picture with in of expansion mixed, pharmaceutical impacting still countries. underlying year, Outside the health care electronics, China's and market COVID-related For we data China, center, markets.

Our the opportunities for in direct sales in equipment good both provides and services. model market region is differentiated and outgrowth

to like over full outline I'd to Now back year turn guidance. updated our Chris? to the Chris call

Christopher Kuehn

Thanks, to Slide #X. Dave. Please turn

discussed at raise our second strong our EPS with us outset pleased pricing we and are performance. to confidence our execution Dave guidance. call, full backlog As In the of first the gives revenue and half year half outlook,

raising full are our organic from higher $X.XX, at guidance EPS guidance $X.XX is to XX%, We to growth by year of $X.XX midpoint. our guidance XX%. prior which revenue up raising our range We're approximately to adjusted the

partially you by is mentioned $X.XX M&A. when higher offset impact the Dave this previously, in of As factor FX, negative

and versus the help for coming is chain similar product supply third to mid-teens. half, be We serve us chain. continue stronger customers second added QX that will better an a and resiliency supply on our provide our leverage to half redesigns quarter leverage to expected to and online Organic improving first with growth expect around or the revenue

We income. expect or to and greater to equal flow strong free adjusted than of remain XXX% net cash

projects approximately profitable further well growth expenditures as of as in high-ROI X% our objectives and our chain across include supply resiliency capital includes outlook commitments. high-ROI of revenues projects Our decarbonize sustainability automation, to investments our manufacturing operations. of support These

remain also Our savings run growth. with track focus outlook #XX. free strategic continued million business modest a from cash support in deliver of flow go to to working inventory to XXXX. transformation $XXX capital, Slide by rate on We Please particular includes investment on

for to high-ROI continue to the savings across and balanced investments allocation capital we further cash committed cost with our and go Importantly, other Please focused portfolio. to these to Slide fuel returns projects invest We to consistently opportunities innovation strategy, deploying the highest #XX. on excess shareholders. remain

reinvestment. we core business business strengthen continue our to First, through relentless

maintaining that evolve. markets committed strong us balance we're to a with continued sheet Second, our as provides optionality

of excess time. to expect we XXX% consistently Third, deploy cash over

our approach includes the update an shareholder was improves dividends, of $XXX million remaining balanced $X.X to capital M&A Slide as for provide company In and our in further on repurchases which repurchases strategic $XXX intrinsic deployment for quarter, authorizations. Please I'll in long-term value. we the cash, million of calculated M&A XXXX. with have $XXX below and trades that Our share deployed to second returns turn XX, stock approximately share current million and the has million repurchases. and share billion, $XXX Year-to-date, under $XXX approximately billion deployed million we $X.X

deploy continue shareholders to to competitive dividend of a pay to We expect to and growing time. cash and over excess XXX%

deploy M&A. Turning $X.X in cash are in, $X.X M&A repurchases. to pipeline track and We to billion M&A small April between acquisition channel our active. share we inclusive remains completed All approximately in XXXX, on in and of billion a

strong powder and Our us liquidity dry continue sheet give free flow, and cash optionality to capital moving balance allocation forward. excellent

Dave? Now to back the I'd over like Dave. to turn call

David Regnery

refrigeration actual for are and first size stronger XX% market available forecast XX% average approximately the transport the XXXX. healthy ACT approximately year-over-year from is XXXX America, dropped weighted in removal size X% XX% primarily a than to the the has X and XXXX expected and in XXXX as builds by about the trailers #XX. In North Overall, Thanks, to is market raised versus half. average global expected modestly, market Russia expected markets relatively of size be market. bit Overall, EMEA expected removing of Chris. Russia growth Russian well. X% comprises year. On Growth Please their in reflecting Slide quarters the by remain trucks. the market unchanged. XXXX reflect to coming prior. go markets is for forecast up up The balance, market Effectively for trailers has EMEA for trucks for total lowers total weighted for the of to

gains gains realization in growth After the the forecast reduction trailer as and clear growth Please and the slide trailer EMEA APU Slide XXXX, through both XXXX updated share in expecting the #XX. XXXX added available drive growth in While ACT the in will and We've North we're for expect across share reference. outlook continue the gains market price region. market turn share Americas we our well. to EMEA impact continued to America in outgrowth global truck, XXXX, and to and strong total business in

for You at efficiency, XXXX products step-down IHS has that outlook in growth for sustainability XX-year Please can see innovative of a demand and and beyond #XX. for continue mega-trends ACT to intensify unit Slide modest record to in this updated a not trailers decarbonization its continues our America the go create stage. North EMEA call and XXXX levels mid-XX,XXX average with for through XXXX. and services. to Energy range,

innovation business uniquely addresses deliver We by these progress, culture. engaging, the to uplifting positioned are our trends accelerates supported and our world's transformation that leading and

system, strength macro challenges customer-first navigate the operating With of we successfully with our business mindset. a continue to

half best strong the take happy our be full in give place first guide. record solid questions. believe performance performance, and XXXX year year us outlook in and And the half Operator? long-term We to backlog strategy, foundation of our in Our your deliver right have we'd revenue and shareholder for the to team raising confidence back and the EPS returns. now, differentiated we a

Operator

[Operator Instructions].

Kaplowitz question Citi. comes with first from Andy Your

Andrew Kaplowitz

orders just markets terms slowing Americas concerns? macro HVAC have everyone those headwinds that in core of over visibility, To 'XX that considering visibility of backlog your point your versus at up into just $X.X maybe XX% of that gives knows the the commercial end And terms perspective in can given any that us backlog you about. orders, in then any amidst across billion, you seen give you

David Regnery

all and second business really, Americas. very Yes. commercial quarter in in across in with Andy. especially the start HVAC the It's I'll really were verticals, orders robust the orders

there. soft So see didn't any we spots

I the is $X.X billion. level, our as right backlog far backlog, As at now mean record

north book-to-bill give $X backlog XX% XX% our that in quarter or great Our see the of will business. XXXX, a it which our entering billion. backlog backlog, in are second XXXX, of be us our into XX% We will And especially XXX%. of was longer-cycle of businesses, visibility our

Andrew Kaplowitz

Dave, you been smaller EMEA the but that's price/cost that then much a price you've more you've particular into little hard chain supply negative in And region? seen can supply there little and chain helpful. a a color issues, digging issues than cost. maybe Trane versus give obviously the for the hit us It's region bit, Americas, just with

difference what's does in about And Americas? talk could confidence if there the you Europe improvement, expected versus bigger into So the slowdown? your especially in a fall

David Regnery

Sure.

I'll and acute to also outpacing business services. low King higher were the start Europe rates strong In perform demand. Revenues growth chain high Now well, the in see our Thermo cost positive. to serve spot with supply continue a see challenges We markets. up and up revenues HVAC, we organic buys continues freight. equipment teens, backlog expedited did commercial to digits, customers with low teens and we our was and in a both to in Order with continue up single EMEA. strong have with

as back the our share really in confident term And as the Supply opportunities get good to Overall, Europe. improvement. However, with will need system especially we factories innovation. investments, grow our I'm gradual This region management investments, improves, improve through customers. be see our for track. on half, a these a minimize and to demand leading chain fuels the going with efficiencies fossil improve thermal will and in the it very to back of the margins it's continues we'll for long

Operator

Suisse. Walsh next Your with Credit from comes John question

John Walsh

services, happening digits. what's continue when used mid-single-digit start there. mean grow? dive grower. trailer maybe to We've there? we interest, a first. topics do you of Kind we plus make we of into the And great double truck at I'll a services. But think suggestion I where a It'd a market. I can up be on Maybe can this was services lot done deep remember think to take maybe look of

David Regnery

your that's compound and we're pandemic last over our constrained to rate X-year Service I'll it's we getting annual mean very fact we take topics Service with and in globally, of I suggestion over despite facilities. years, high access In I'll Yes. But a the our our speak interest. growth digits, XXXX, X business, services the happy of a that XXXX to single had a were -- got and flat year, business period. was business with

our with of business. happy was our X/X business it the And up quarter, very globally. Service second it -- was rates. double-digit roughly It's in So again, total

a So very very happy resilient with the performance and business. there

John Walsh

conversation. in of rolling story you costs get if maybe the And starting think here deflation then of back guys remind would this the commodity how and phasing the the just of or of through. can lower price/cost the just benefits some half Great. think if XXXX us kind you we on commodity is more about a Maybe

Christopher Kuehn

Yes, John, it's Chris.

to I more a think story. XXXX it's going be of

as a being price as happy with and it cost. so orders positive for seeing Our And the making in markets, bit percent see start been, performance XX% come these really can if in down hedge get, continue at like booking we we're quarter. pullback X And to quarter, locked. here lock more out, bit sure looked terms on long for appropriately. X an the cost dollar we we're in which of commodities our on selective little we're in then that a on in certainly, terms practice But time, in in the inputs. XXXX to the and on to to uptick backlog X even second steel the a of tailwind, point, steel volatility we're second in later a and we prices copper locked. the much of and we're today's of we're a QX XX% visibility quarters of a But And has basis and being steel commodities we then over quarters price and out, main to see aluminum. XX-plus X with to those quarter

John Walsh

pass I'll it And quarter. Good on. Great.

Operator

question next Mitchell Your Barclays. Julian from with comes

Julian Mitchell

question around first just Maybe operating the leverage. a

about did It you QX. is you of guided sort highlighted, sounds as same. the like XX% think QX I in So

plus QX. so step-up to XX% sort implies a that And of big in

So not those maybe terms seeing leverage to is guess should price/cost of if going steep globally, And just are that's from probably QX volume operating over headwinds the confirm in you you're Asia if I a why narrow. in correct. hump catch-up? And improve declines and

Christopher Kuehn

Organic XX%, XX% Julian, was about in about if up half. step first QX. I leverage back on the

saw we improvement first from expecting the of quarter. a So the nice high range. low be second the we're to to teens, leverage year, the really XXs in half quarter Back

little going to going consistent in but our up year I full with to of it's bit leverage And an as a guide improving bit we on going that Our mid-teens factory does third QX, to May spot on and disruptions gradually what second quarter customers continue guide we with baked certainly to little baked chain. costs into half. is a see freight. the said Dave improving buys QX. in be fourth get better It's to a the into the serve it it sequentially, that leverage supply basis. additional the think a challenge organically would and to continue cause But we're be year full while the mentioned quarter, year-over-year to We expedited about a guide, on basis, the

QX. And we get So around a than we be bit stronger in that's QX improvement, but QX saw that thought level gradual will mid-teens would like would it then a little where be, that.

Julian Mitchell

that. And just one follow-up helpful. That's then of around sort

third probably XX% of so teens of kind quarter leverage. mid-high about year-on-year, thinking sort we're growth earnings, when So or

very of on thinking earnings range? HVAC? of What's $X, And then resi kind we a that are that of any into strong after thoughts QX? gone back half sort So sort

Christopher Kuehn

Yes.

I that same in in year-over-year low revenue of the the half kind think for Julian, range. the about third We same roughly teens growth. see a and on QX QX the second think the that roughly quarter, growth -- in growth for basis,

our quarter the down the dollars then QX And comes of year with terms of would come top It's of Now traditionally revenues. off higher in revenues. line QX. strongest quarter of third

Leverage we more roughly for that's that mid-teens see step kind quarter. the around it'll second range And quarters. the and X So out. half same second up half revenue of growth, organic the into QX, then that playing and in how fourth the

David Regnery

resi. here on that chime And on I'll Yes. question in part of second the

First with and job did of quarter. team -- I'll start growth XX% fantastic in all, our the top mean a the and second had in book-to-bill just we second the was line I we the had just XXX%. quarter,

flat a XX% with line. backlog our growth the top on was So

compares seen We year before all XXXX. bookings haven't with level in we resi, have tough that in

we'll look So back got compares here to the the our the for residential And tough have could to you be some second half happier couldn't saw and bookings the we going performance sure, in negative with But our quarter. we into some business the year. see at like backlog, of book-to-bill date. I really in

Operator

Scott from question Research. comes with next Your Davis Melius

Scott Davis

you outside there channel? your opportunity how is it? Or the more perhaps Is can I about done is think round is of more consolidation? that I should down we It's what in there be go road? want to question of, globally? And lots main switch gears U.S. and back think to do can Or more know M&A. But the always distribution pipeline of kind there's a of the you another

David Regnery

that's just we I've We to really before. look at the pipeline said But it's expect. need obviously, do would We I great full, any to don't mean I available. get M&A at fits I'd the mean, our Yes. a as question. channel. It's large pipeline opportunities active. you in anything, as see you tell is look global HVACR. in being We don't player all a that

sure to great portfolio, make look to and portfolio, service equipment But access going great we're we the going that great we're right to we'll have We investments. a channel. and make be patient

Scott Davis

questions. is stuff of you are kind that's But chain going stuff? to mean other Or it to supply the semiconductors I Okay. Fair is of we Or -- short? list back a of wide specific or are broad list hard separately, guys, enough. And more have companies stuff. it it just just is really and it who Is a list? -- a get? shorter components narrowing

David Regnery

and quarter performed anticipate, our the Yes, said half we good back the the I chain supply improvement mean of earlier, question. gradual as year. a I second expected during through as

again, environment, gotten an electronics better. team that's our like suppliers working it. suppliers. wire continue to Chips Our job half. to harnesses, have okay? back this through somewhat better to managing do Yes, excellent working the theme, continues We our progress too. with is with that, a other in get still But components through It's going working closely see we're

We good and with have able suppliers to things a solve communication open And it's They're team. great happen. problems. our

Operator

from Joe comes Ritchie Goldman Your next question with Sachs.

Joseph Ritchie

us think quarter the XXX told to whether have Can to you if roughly price/cost, I'm supposed a impact was just in can same guys better of we just you then just basis the XX%. guess gave, that I'm as on year. it then color well. if half thinking give through that get was QX. you for second like last you curious number curious that's margins. And I price just that of the maybe that maybe, much point growth I resi us And how

Christopher Kuehn

Chris. it's Joe,

moderately balance the year with the happy as it margin as XXX right, giving a really headwind. on us were We points. think QX basis. less of I margin headwind, the positive, confidence price/cost, kind it's quarter. would describe we than basis the with points basis you're full positive I a net think further be from on as certainly, we about I turning quarter want about as to basis to about second dial year performance more described in So dollar a any in of don't XXX that. positive than even QX the And

a last deliver quarter. think most operating I in we've the see highly happy of the our side XX and in environment, very parts the of of that's right on able us equation to one that So price/cost business for inflationary here stay been system. And the improved the to months, second

The second resi growth your part price. was question of resi --

So say XX.X%. yes, XX% XX.X%. up for growth price that Americas for in enterprise in quarter the And those price report the than the the the quarter about resi report terms here What going we're resi. better of averages overall just realization. today, Q that in was up to in was price was We I'll

Joseph Ritchie

think I I quick rates you K-XX talked And really picking about follow-up. helpful. That's quarter, Great. up. Okay. last a order know

-- were I'm on in I think what just curious direction quarter. in see step another up orders first the right we in they the QX? did K-XX like XX%

David Regnery

rates has education I'd see quarter funds very flow start. we Incoming strong were Joe, to order always us north XX%. vertical, strong education the there. for very in been stimulus of Well, for were They the second continue The and vertical.

we there to our have process we that sure and and make they're to facilities. funds show progress make have in So customers proper place help continue able the to great upgrades great to to track -- their a

Operator

Joshua Stanley. Morgan from comes with Pokrzywinski next Your question

Joshua Pokrzywinski

bookings go if least. I and want mind. growth to solid commercial Pretty to Europe first, there don't a uncertainty more the say you HVAC to bit macro obviously

by is paybacks, representing of energy guys XQ the what's of you skyrocketing just are the how Russia-Ukraine, wondering of this had just if go the just kind driven Like on, prices going of with of market? much has really sort there. kind Or like where of and feel terms Just is in started sort i.e., going process, we continued what's stuff in maybe through on this pre to through? that

David Regnery

right a Ukraine shown getting for that's that systems. happening the around of say Europe tighter. management what's of that from our Obviously, has Europe and I'd outgrowth period energy of Russia, time specifically with war in the long the the thermal have, market into now now innovations rest with Yes. supply we

a a for So fuel. tailwind it of for eliminate fossil the management sure, is as thermal need our bit systems

just which original stronger. into extremely think tailwind got that And future. we will customers, proposition, And so a our our was to continued be value strong the

Joshua Pokrzywinski

more then just this trying less there's kind business, of list it. Like of a list and understanding That's the And like applied think commodities to a I a skin of strategy. job been little price that that maintain come or in price/cost, of go-to-market less as in, price differently. maybe everyone's kind like phenomenon? cat bidding to what's there the a on the But it's spread historical helpful. Got hold a ability

Christopher Kuehn

commodities those longer is lead-type job. and they're ultimately what bidding on Yes, team first that future is costs Josh, for when projects, say does the like about thinking what would curve look is the I

to basis in curves with a But as say Some in accordingly. ballpark forward we visibility they're of to go price after in bid of company, we price/cost cost out. change something of being on of, external XX the positive lot positive. inflation view also into XX company largest it And I that businesses can we and the about if of for commercial escalation, points best much price/cost. were depending we the the as year, those cost longer-term can getting a which index having getting the to normal the same projects whole part think very price a for allow adjust normal then year, of an into But also

David Regnery

I the down. Yes, going Josh, that into the we over XX won't could we we've same if continue price year. seen I the don't see at last pricing next months rate but coming see don't future, add, mean, just down likely prices increases

Operator

JPMorgan. Your question next with Steve comes from Tusa

Charles Tusa

know just sure. the a XX%. resi, was? reporting. to XX-XX think Good relative movement guys digging is obviously, are execution kind XX% -- of choppy into The up a captive. independent you do you in other just number, like environment What your I for back that and pretty channel big guys are

just were if differences distribution. more So and channel to curious captive there your as between any the

David Regnery

is mean I in proud the And residential. there up of question. the right. news our you're million. Good is was really we got book-to-bill Yes. the there results XX%, good we're that -- I shocking mean $XXX

flat our enter QX. So stayed as backlog we

little up channel. the in IWDs XXs, was it, own put Just the bit around in around to some a It there. stronger in our was our XX% right sell-through context

inventory track independent especially that So our as Steve. to as be, about Difficulty] levels, [Technical carefully, far pretty where We expect they're would we them

Charles Tusa

like percentage parts [Technical Difficulty] pieces is What and or distributors. captive non-equipment?

David Regnery

I'm your XX-XX like we're parts our you're about mean Or... that question. I business, if going was side not if through a sure Steve? the of shop,

Charles Tusa

captive if own. you distributors, that, just your Yes, and guys Yes. things like they and parts do the services

David Regnery

we the that we percentage have in they for you. that. guys me, of I I but front exact up we dig of absolutely. own, have have don't part -- could mean The

Charles Tusa

the follow-up commercial. for follow-up, guys? One on Okay. in quick quarter What you, was light commercial up

David Regnery

Yes. the strong. order it for rates over was commercial -- very light XX%. incoming It Americas, was In up our was

Operator

Nigel question Coe Your Wolfe. next comes from with

Nigel Coe

ground, of want we've lot back but to to covered just residential. I come a So

extremely results. -- obviously strong You're

dynamic. the word did use You

HVAC, wondering high-efficiency of elsewhere Not really, So around sort Is across So sort there. the equipment. you're markets? of had that just this from subsidies bill seeing mean referring what punitive but inflation But just bill kind there? residential we're would the protection some end sector? I'm of other wondering across the for provisions to damage what dynamic

could that of and to kind that over demand wondering you how months the do do like what XX the Just or so. next

David Regnery

mean, time. we I as -- there. a at obviously, seeing of We're lot volume A dynamic environment. Yes. the year. seen is we've there a very, prior I happening Obviously, same very different backdrop of things of strong lot And it price dynamic mean a have compares well. from

mean of So space. we the that's what being dynamic kind around a

as right, in working heating, for the through heat As provision way pump a far the least pre-draft which in that's there -- written least Washington, the electrification at its seen, there yes, that IRA the space at of homeowner. currently the right is I've there a way it's for is is now,

see Congress to final to and But we'll wait be tailwind through. a and goes we'll Senate. how let could written for that gets -- goes see the and that sure proposal that So the if

Nigel Coe

cadence. good. is my follow-up Fair that's And enough. No, the on then buyback

You've done million a load, it's that and so of -- bit or more back-end M&A, $XXX of buyback $XXX million well, $X.X thereabouts billion. a of

share buyback the more quarter. through the might given a thought I see second of activity during sort bit price quarter, the Just I

wondering any cadence if on activity the buybacks just potential there's during Was there. But on just the So there the quarter. during wondering some restrictions M&A quarter?

Christopher Kuehn

say go looking year. would as this kind at I through we're quarter the of quarter Nigel, by we

year already to share million far left that half. of $X.X in the dividends $XXX second account will for so about repurchases right, paid this when you be go and about You're and deployment between billion M&A out

I So of in year. see the Dave's remains X year, end the active Certainly, or M&A. to the committed to end X point, the closed to or of transactions think by the I'd pipeline by like

I'd point, about to if price to we our trying of we're capacity and same have. do here would we deploy trading this intrinsic M&A lot to know, isn't think well to powder very for as our to QX. that. is, some with available At we cash sheet share make lot leave So say continues We different just of balance cash sure time, so But at the QX value, to very continue look below strong. things a a calculated shares we the as the got you favorable

the earlier commented the be Nigel, little mid-teens, It I I go a around I -- third made for leverage. if would be And as we similar than that me, to could that could that we back a to Let comment to quarter. work Julian QX. better want think quarter, through around it

in the that. little for a I So closer me EPS estimate, that XX%, mid-teens, not it for about Thanks than leverage, And QX. is $X, we it but little probably letting with it's higher stronger Julian, would the than add to the that maybe a range come higher $X.XX out be put of teens, be could thinking range would be range. bit $X above be of around could maybe think I'd that, the

Operator

Vertical Your Jeff from comes next Sprague question Research. with

Jeffrey Sprague

own And the lead your you ordering across customers times that just chain kind are Dave, seen behavior. the customer supply in times? We've not address further of spectrum in just order really advance. but can lead here

wonder typical? on tail on of advance I longer if that. doing other booked you in kind sure yourself Are address just the orders? is kind So some could orders being of of of on you're kind further these things it what price that to make And protecting and you're than

David Regnery

our second our booked that with there's lead sooner, they answer is the factories want longer our yes, I are backlog. is of Yes. the sure getting think are to X One and have -- make And mean that. of out visibility. reasons all is for that's I enough times customers our we

a that is fact. yes, So

escalations of protecting actually how we're business. lead As a on. entire put would from business, far we as some pricing, the it's the items, That's ourselves the not in portion the of longer

Jeffrey Sprague

the And transport transport? -- but What difference for orders? you for is don't all do the that

David Regnery

get There, not we a business. our the that until transport to backlog. months -- don't a it we'll or price go basically time won't out that X able to our not quarter not on in We'll control we fill point fact, slots. We It's a working -- Yes. just in customers at that. in we're with time. be That's like we, do to

So up opened like have we not orders. XXXX yet for yet

sure we customers, in at Now want them. to disappoint and say, business, to we'll so we this back just very we so something. it -- with might been it, that reprice demands it's we We volatile. We're time. slot don't And our make be difficult unable just we'll have we're to very it's go to talking sure price what understand make so their

from we want we the standpoint conservative be and So just in that have that -- to the make price product. right sure on

Jeffrey Sprague

more maybe for of me, finally big just And kind picture cycle. just

changes. you relatively of of into -- that There's You're a You're kind to kind aware need here, running impact whole them legitimate there's at right? replacement get the sort look the well 'XX and resi some mix on. from do debate going call of plateau? least we're and your it's on and cycle, to you argument Or of of 'XX, SEER hotter When longer but things and think forward see cyclically? I we mean on do here stay high a resi for you a

David Regnery

that. with I'll dynamic, It's Jeff. start Yes. pretty

would XX% wouldn't more obviously, product. your higher-SEER expect the expect As going -- said on to the in be margins will that's for think I XXXX. the you -- SEER that XX% to coming there want be other variable because, to model depending that into I that neutral the may I product be change to that earlier, put top the on Remember, to costs is the be model, it be line. on

-- on guide our It's we line planning yet tailwind haven't process seeing. for working with now. through up the be we'd top another that's We're XXXX. come So that our

very But for remember, But to we what's I said as bit little I have in business. record our -- a of of we And models like is this to of lot in detailed before, with a detail residential here. guide we sound as have happening. We explain space. a a total you XX% XXXX, broken come up when can only

drop we enterprise. X%. So the opportunities even both the if exceed by Trane commercial did commercial see for it'd in X% King the that it XX%, And our business and our businesses Thermo far on be fall a

Operator

Andrew Obin of with comes Our next America. Bank from question

Sabrina Abrams

Abrams on Sabrina Andrew have for Obin. You

need first, how wanted term, the Europe to the for weather. and order So climate Europe Europe in your in to longer I positioned question sort for do recent in it to on and get conversation you new HVAC in is positioned the of trends. what And on ask organization in to given another changing what Europe be means better

David Regnery

latest management Yes. systems. Well, first the innovation very marketplace of into of with some well all, I with think our positioned we've the thermal that we're introduced

than a got already efficient -- plant So products better. proposition and that's that plant. ways boiler and buildings, have more We just separate would technology chiller been these. These significantly conventional combine have I fossil think it as -- thinking, now could the need value of are fuels great, for and which you that was eliminate the even

is heat up is. efficiency your between X sink on and depending Your Xx, what

very happy So a our traction. we're there we're and of lot with seeing position

Sabrina Abrams

you to change, SEER new of Cool. are where production And transitioning you XXXX can just talk the in about on quickly terms the equipment? high-SEER

David Regnery

all prior ready. this. Yes. product certainly to for We're well change. We're the sold the We higher-SEER equipped already

So we're in good shape there.

Operator

Khanna Cowen. Our Gautam next question from with comes

Gautam Khanna

curious, at related call people a the the seeing would Some But you or nothing markets there more said ago slowdown. of on you're least One, worry the funding mean timing I so to I'm X to point the was you that had than I a couple anecdotally questions. project emerge can comment of any year on any even a about sign... maybe pipeline, case commercial front in log? is issues slips any there is months? the

David Regnery

more the to Billing been XX for months. slanted is I is a it's towards been mean, I'm it's macro you I assuming now at mean Index, your strong. which indicator over good if at, question XX look Architectural but look Americas, the

see Americas. So the we in continue to strength

order trend the rates And Asia had in in there We the talked. XX% EMEA, with strength it quarter have as already our we in nice was range. in we up second a good

you a And strength. of I at lots to macro the us while. it's would longer-term going look with overall, be say for So if trends,

Gautam Khanna

we secondly, a we in broadly about it's about as those whatever year? Or net then in bit components material, and the steel, side? from And seeing we get next cost you you do aluminum. guys of continuing copper, What you Do offsetting cost positive are today on talked inflation a little stand think benefit terms -- raws? raw maybe

Christopher Kuehn

spend others. it realized these motors commodities now, X calls the but a described looking X we that electrical benefit with which looking X on months, as bit for everything XXXX. on say, Tier to right really at things in in to and in locked a so in us, more metal we're generally costs track time of we cost to Locking from be would in that And the a more and others, X, the X lot from a components input the steel, really be -- But Gautam, a on impacts months stands on December. we as June Tier track of for we really months going versus, deflationary tailwind point that labor also components is of ago, you to costs tracking this ago, for it's fabrication. but and kind

place the over roughly third for at push type of to quarter X respect mechanisms deflation to And year change in with the price also any quarter, here least aluminum then got out months. in the really into that see copper steel. we pullbacks locking So in next in we've and first X carries really that of any

environment. a see it I So deflationary think to represents tailwind a we continue if

way I think every sure tell is and where the market it's going. hedge out similar a follow really level. that's each which we quarter to we're a to we also process just making But hard a where dynamic

So on also the see a of we smoothing down way we that on of if way up, a increases type bit and means smooth any deflation. the

Operator

Our with next RBC. question comes from Deane Dray

Deane Dray

centers. A data question on

cooling you affect and growth take this Just to what growth baking to see centers? in not liquid kind in? bit of of a Is Or a they both are going can in path? the coexist threat share? any technical question. growth each rate Do data other's you And

David Regnery

forward. we're Yes. latter I'll that we'll lot start with moves see that the technology a And with. doing The certainly of certainly liquid emerging there. work cooling is how

scientists the are some we closely. of technology are and of looking aware our very at that So

As we far growth continue in in nice see don't for a we dig of as I can -- front have growth number we to that the saw But exact up nice centers. the you. centers. in me, data data

have I think office your so continue of we nice understanding complicated. little there. But a part bit -- the gets to it's vertical, a growth it

dedicated have there expertise customers there's have work teams centers on. specific work that on we with because a data that we our that We

Deane Dray

estimate And you bit. Got have to then That a year education a the air broad it. us But annual the question. quality, market. technical line? technologies? a as give good disinfection ago, businesses, on in that offices lots another basis feel air follow-up we about take a There path, then are indoor waned that do just seems was, what's on focus of rate points more talked just XXX still about a And of XX-year technologies. using disinfection But of top sense

David Regnery

quality -- different in we're health health industry. first mean, several a indoor quality. there continue for We're as well in lots different continuing doing as verticals, all, Yes. okay? It's care. secular including air care office to growth we in education, as see we do see we indoor have indoor just I air not air the long-term mega-trend of to And qualities verticals, of

air, products we to to of continue hydrogen peroxide sell, see for. continue As cleaning demand far as dry the like the product, we

track see controls harder tailwind the to whole But services, waning. so generally and the systems for is We to future. mind for of in indoor customers quality our our our we top embedded to So -- it see continue industry. and It's for a our our don't as growth the really think well for stand-alone foreseeable item. applied for as that be air as it business going as it's we a

Operator

the end Zac Nagle back session. of to reached I'll call have the closing for We over turn the question-and-answer remarks.

Zachary Nagle

everyone like hopefully days in and the as to and call, in be in road, seeing near future. for questions would we'll And thank joining we you around coming for to on always. I the the weeks forward look Thanks. person, today's

Operator

today's conference concludes call. This

may You disconnect. now

Trane Technologies (TT) 3 Aug 222022 Q2 Earnings call transcript