TT - Earnings call transcript Q1 2024 | Trane Technologies plc

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Operator

Good morning. Welcome to the Trane Technologies Q1 2024 Earnings Conference Call. My name is Briana, 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] I will now turn the call over to Zack Nagle, Vice President of Investor Relations.

Zac Nagle

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

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

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

David Regnery

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

to purpose-driven enables our few begin, a minutes I'd we differentiated financial our our uplifting like engaging, results over on As time. drives spend culture which strategy, and

Our centered on aligned world, is strategy trends transformation. is powerful digital more a mega and our energy to and like sustainable efficiency, creating decarbonization purpose

We to game-changing on Customer increase to as more the and that's solutions innovation warming global leads. creative climate demand change Technologies becomes need urgent. to bend continues curve need and address the Train where

and powerful planet. strong strong and and shareholders, the enables is employees for to us across for margins a cash end culture growth operating high-performing customers, Our board relentless proven profile, system the our creation business innovation, consistently deliver flow. our value leading our result free The

extended strong Slide #X. In we our record track of to execution. Please the first turn quarter,

than up adjusted XX%. bookings were performance board. Adjusted Quarterly and $X were operating an XX% were revenues high organically. EPS delivered across all-time XX%. basis was teams XXX points of robust global up and billion margins up Our Organic at the more up

up commercial which over more in by and businesses than strength XX% quarter equipment HVAC XX% led were growth bookings was services. again in globally, our First with in mid-teens

were XX% Americas We bookings a our vertical XX% sales Commercial with and than customer applied our strength up more relationships force, again in once XX% HVAC high-growth standout, solutions, Booking nearly Bookings in power services. more broad-based all in was in business growth leading capitalize growth project exceptional across the growth in delivered than equipment leveraging on complexity our direct and markets. innovation to verticals. of increasing deep with

around opportunities world, Our commercial tremendous HVAC see remains we pipeline and the into the robust future. growth well

with EPS focus investments us to sales delivering capacity, ROI in cash strong flight excellence, of key high on quarter. these automation. first increased in include put growth, flow. future With product while a a provides innovation, profile investments optionality excellent growth service digital number accelerate investments strong the XXXX and leverage, Our and and in free We

QX performance and $XXX we increasingly up ending XXXX. for bookings million backlog backlog position XXXX strengthens And results our of minutes. few our expectations performance, year billion, full raising details to and we're cover on guidance. will EPS our future is increased XXXX. QX Our further for in $X.X and growth. billion from year-end continued visibility beyond our of for for total XX% a XXXX a Chris Based the to by increasing $X.X strong revenue and

XX%. our segment, on be growth for with of exceptional services In the XX multiplier Please up life of to a and Americas X XX% over the XX% over commercial strong in go on equipment. Applied HVAC an estimate delivered stack, the business carries by performance across the innovative continues quarter led revenue revenue X-year portfolio, of which up our higher-margin Solutions Demand book-to-bill to Slide organic were #X. solutions the XXX% a Bookings strong we to our board. of

revenue grow, to mid-teens growth compounding bodes continues were in in services which growth growth. equipment macro and of up than services year term. programs, for services. strong times Backlog more We're for after for provides XX% HVAC in year challenging future conditions. in well growth mid-XXs Solutions business and excellence sales revenues The heavily with strengthen investing our resilient in the Commercial Applied and good is long more

Turning to optimistic performed expectations single were residential. and we're cautiously QX, our down The low up moving initial digits single were digits. for business than and Bookings low revenues forward. stronger

down low single Our businesses with expected, as transport revenues mid-teens. digits performed down bookings and

first down second XX% half, see the the near we business overall, the comp modest the which cycle is comp term. and a down the tough transport growth growth in a impacts optics XX% While XXXX, as plus facing half in from the comps in in

a to strong we see XXXX, expect second first soft a half and In half.

EMEA. respectively, XXX%. book-to-bill The was at teens performed with strong to Commercial revenues bookings The very expectations. single and low up region transport single approximately digits, while HVAC our in were high up low revenues were and Turning down digits. line and strong, bookings

up delivered for performance team with The the our Asia. than revenues up to quarter. with expectations teens. XX% strong strong, very high remains and China Turning more consistent bookings

was Asia's XXX%. strong approximately also very at book-to-bill

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

Christopher Kuehn

strong and basis At Organic Slide XXX we teens. Please snapshot enterprise adjusted points, EPS slide up EBITDA was respectively, and revenues operating low were growth both revenue provides an were margins services, XX%. a to Dave. XXX quarter first basis #X. and of strong in up top points up organic delivered level, highlight in the and execution This to adjusted equipment and up Thanks, our turn performance bottom. XX%,

to growth with more growth. expansion continues we with we of commercial dividends, points Please offset points. very and high-performance strong delivered growth, productivity strong incrementals, delivered robust strong turn In Americas Our HVAC to flywheel enterprise investments in volume about volume points Americas driving inflation. delivering and that XX At segment, growth price XX of realization business price, than relentless our and volume our approximately X level, with innovation, pay positive about the top Slide #X. EPS line margin

X delivered our which more basis segment, operating driven strength of about adjusted than In margin points in we about volume HVAC of of were the and expected business. business, the impact offset stronger X for Adjusted our points with operating in decline commercial our volume in segment basis XXX you from Strong HVAC revenue business. expansion our stronger and up by consider in impact commercial points the point price was the XX EMEA FX margins acquisitions and when of transport quarter.

would devaluation almost We and Asia volume, Excluding Egyptian modest related the first quarter XXX revenue into expect each XX.X%. well in points FX reinvested quarter, through price exclusively adjusted the productivity the contributed in volumes. to of business pound The back basis the to currency to margin margins to segment heavily these future. been year investments Strong EBITDA and delivered EMEA growth losses growth ramp into mid-teens higher the from have in drive operating expansion. the

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

David Regnery

turn Thanks, Slide Chris. #X. Please to

largely segment outlook unit from earnings is with market business QX end Our call of and couple unchanged a our differences. notable

expected growth We're you the had XXX% start quarter, quarter revenue growth quarter. strong of XX% in First, revenue than a tough commercial in the on encouraged we especially take strong for and very a despite our mid-teens comp by of bookings . exceptional when book-to-bill ratio into Americas mid-XXs business business, first account stronger XXXX. the the HVAC growth the

comps Commercial throughout as the Americas to the from we XXXX business year. throughout increasingly remain expect We tough HVAC move versus strong XXXX

first performed business in residential our stronger than we expected quarter. the Second,

be some business the EPA down season. expect sell-through the helped distributors destocking, the to on we clarification We into mitigate the independent modestly believe continued heading wholesale to on and of concern

sufficient residential too QX before the through is and quarter with other for for believe season. as pleased first reference. year year results, through the outlook more unchanged. slide read the balance provided of details move QX. We All percentage on performed typically expected, provide the from to the a businesses your the and of it's we're gain doesn't prudent are to While We extrapolating small very the a the visibility additional much for and

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

Christopher Kuehn

#X. Thanks, Dave. Slide to Please turn

initial to end optimism key reflected our markets about XXXX ability and guidance Our outperform.

X% businesses quarter XXXX our raising X% by percentage X raising only organic robust line strengthen we're will our per to backlog in of midpoint and adjusted of points another our our range growth. guidance that $X.XX revenue conviction We're the prior. guidance be at share of and our top line X% prior low X% X also revenues . We're earnings guidance While the our bookings, to above full end year by bottom to high and year end commercial exceptional HVAC our from in, raising range. guidance the

and flywheel, narrowed high new reinvestment our in Embedded is $XX healthy value EPS levels is end $XX.XX, our around our to in strong to leverage business free $XX.XX range which from drive philosophy flow. up guidance outgrowth, market builds to $XX.XX Our cash adjusted prior. guidance relentless of creation to

into strong incrementals. the We and continue of and back the to half accompanied expect year, second ramp to the investments growth see by in leading quarter

year We continue to from to negative costs. $XX reported full of to million, carries X of impact about point of negative adjusted integration-related approximately the Nuvolo $XX and versus for X impact million related operating X or of impact which M&A in income year technology XXXX plus approximately expect acquisition points a with leverage primarily amortization to The about leverage. growth organic the acquisition, noncash is intangibles a accelerated

basis of is reported revenues long-term from expect percentage plus growth target our about same year, and stated There's FX of We XXXX. to revenue our negative guidance change now consistent a organic the XXXX. the offset no reported also revenue X meaning to at our X% for the M&A organic point point on leverage for X% of is in impact growth to a FX to target. with expected XX%

free of cash. flow in start quarter, greater. cash XXXX to XXX% and be generation first We to a or another of expect had we to year flow strong Turning conversion the free cash

growth of quarter, For X.X% of and the revenue approximately adjusted we second expect $X.XX. approximately EPS

strategy, highest with additional helpful information Page excess be to may our balanced that modeling focused remain returns to shareholders. see We committed for for go Slide opportunities allocation XX deploying consistently Please Please cash capital #XX. the purposes. to on for

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

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

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

Our includes value. long-term capital on turn to the to improve deployment. #XX, trades I'll shareholder update calculated provide below intrinsic strategic as Please XXXX our share our M&A further and approach stock balanced returns and an Slide repurchases

with million million $XXX cash in million $XXX share $XXX deployed we've to April, to and dividends repurchases. through Year-to-date

optionality our current We have our calculated shares providing trading $X.X with repurchase attractive, value. authorization, below the intrinsic remain under us remaining share billion strong as

M&A Our remains pipeline active.

industrial key, We technology. potential continue to value-accretive made did and services we XXXX accelerate in opportunities we control and cooling investments across solutions, digital where strategic our energy progress precision for process to see as M&A temperature

$X.X deploy expect cash. approximately in For billion to XXXX, we

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

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

Dave?

David Regnery

go Please Slide Chris. Thanks, to #XX.

business while rebound modest transport As long the to is We've and #XX. performance to Please through deck expected, and for outperform was a term. XX% our forecast business discussed, down XXXX. expect both market in XXXX, change overall transport regions. ACT in in year. there's We reference. XXXX, project turn their continued in a as are continued to expected for our operate outlook to markets a Slide no And the into the horizon your for this future. through growth and downturn modestly, in bright QX slide this The provide moving to trailer be a we from with XXXX up our we're projects strong great

the we're strong to system well across a grow have innovation, through market operating transport outperform leading world-class environment. business globally with dealer any a with diversified in We positioned network, portfolio, to execution and business our opportunities

In Please well go Slide growth we to and differentiated drive to summary, over are value time. positioned #XX.

us are continuing I over and enables operating culture best business financial term days Our our quartile to performance proven reinvest our leading long believe business. deliver system while to in innovation, top unmatched consistently the And ahead.

the strategy returns your term. a performance record and XXXX And happy deliver take Operator? and to team, track questions. the in the over shareholder now differentiated the have be long to We leading we'd

Operator

from comes Citigroup. with [Operator Instructions] Andy question first Your Kaplowitz

Andrew Kaplowitz

acceleration growth? You can a your you backlog enjoyed into significant momentum give orders in more strength obviously applied. us and order you mentioned color Dave, little and

you're us duration data this you center give backlog can think color cycle thoughts if maybe fact, you of much in your on to it from And Americas growing centers. orders acceleration your So the is here? led? is, the order any more how of from coming continued data Do

David Regnery

find almost growth care, for we good certainly strength guess health really -- X the to was Thanks Andy, It part, it office concentrated weakness, I any But question, for would necessarily us a growth, say, in. lodging. in for did it question. and We Look, some the strengthen We education, global in wasn't data a have vertical a you industrials. that I high-tech a hard the vertical. broad-based on broad-based of quarter, have in we Yes. conventional in we saw and grow was in certainly didn't mean, and had was bit level. it centers. most and

So businesses. news HVAC a in And lot of the commercial very pipeline strength is is our our strong. also good

actually an on. sales what That booking, our So comes be in be are this this would before is working a order continues well. very strong as be teams to to

So lot able of right executing proud to we're look, certainly now. at and the of very been a it's high a innovation. I'm deliver, team's what level

Andrew Kaplowitz

can that. appreciate David, definitely,

organic note, So your on to than XX%. higher continue that incremental margins trend

while as a and you've you now, been on then where able overall new undertaking? your able in that execute, we markets XX you've And or the productivity the record focused let's Trane? strength productivity for being the during are the say, to know isn't ability to you've much for the as been XX why on, really Given after pandemic. to projects not do of XX Because been slope

Christopher Kuehn

then start and may in. it's jump Dave Chris. Andy, I'll

began investments investments So stronger quarter started. across as we say, when continues the our the these QX first February into is and to than are rate than, to about run ramp The categories. really the back stronger exiting And for business of March pipeline and think grow. into we multiple start the quarter,

order want business. rates investments long-term tells continuing talked around Dave and we guide incrementals. or the the comments. us and pipeline in the to the about the for see framework just Think and where But really to to these XX% better investments, revenue rates, sales I in XXXX. think, we're and So your market what we again, investment the That's the investing can keep we of the that innovation, back service outgrowth question, like here of

automation funding making back These factory; the are we've and sure as always investments, goes to in capacity sure digital, upfront tools the got make well people on, as list want investments, we we're into the business.

the productivity, there's On the forward. gross side, still us getting more opportunities We're there going not yet. but on for we're productivity better

Operator

with Scott question comes next Melius Davis Your from Research.

Scott Davis

bit. just in on little data mark But following up Andy's on know market that investment capability? liquid you can center stack. made question at you're a I where to you

the do -- soup-to-nuts some of kind of handle I be these -- hotter you data able are kind to center think chips? it's newer, of to called have you developing capabilities in

David Regnery

Yes. Great question, Scott.

I you [indiscernible] think long we've a technologies being terminal but been fast for new these that pretty aware to compared move this, tends know side time. at think this the others. certainly to And developed technology of really are vertical in we're I cooling. of And

emerging as cooling the that think direct of it at . level. rack cooling to think chip as the So or of

need about And at One systems, about that center's to about things systems. well think of you entire think the the really, is cooling do we you data a think really Trane system. we if Technologies

and these They it what referred of efficiency high look and certainly sophisticated to. customer would require think the systems the to also just data is the at what really side, whole we call the the through terminal help air we But for require entire that's entire needs center. we energy handling. some also So system chillers,

think center, to thermal that's the you're going this system. we thing really is management think of other data of The a as hear more emerging, about it

of that this, heat, heating have that spot be loops where atmosphere. as future. very creating but grow a it you're we're it. It's repurpose removing? and nice early heat you're lot It can the gets when will the how space. been be from it obviously heat in with What district wasted that projects it, dynamic vertical heat. you're So a It's back from in just you the But done here, still at it I and do know growing asset. nice out we've of reusing at you we're future and and be continued know for that middle do normally stages a very space, would it's Data a always and an clip. a some you Conventional rate strong the admitted cooling the removing centers will a thinking would heat into

Scott Davis

That think the like a against bit does little a makes to capabilities, sense, very but here. more about with of seems obviously because you it you explicitly different find have And data somebody But both it apps in or Dave. some on like Vertiv just overlap sense a there. sky them make guys competing critical center partnering

when engineering guys like that almost Is opportunity just you center, wrong? X. it that about on the X something do than I a these about data would rely giant about how X-gigawatt thinking So giant, supplier, Or you presumably more am about maybe think think accurate, capabilities Dave? not where

David Regnery

out the Yes. you not partners a efficient that We that than operating we that may with technology but would we component, but I about within would tell you're that a right? here, an no building, in right? would particular different be a partner wouldn't company have every any It's think system it we a It's cooling that call because I would a into for system, system have component, on. customer. spot would way work that have exists help have but we integrate

Operator

Mitchell Julian Your next Barclays. question with comes from

Julian Mitchell

the Maybe a just organic the sales year. question on first guide for

big year way you're I so better so. look XX% So understand TK is that resi that the haven't tough have versus versus cooling about first the think QX revenue extremely about up thought and or of singles, -- guidance, we and in season to full Is you've way seen up would like got in because the it high maybe would the about of based is half year-on-year it's the looks think on half But guide half, sales a second HVAC the back because comps yet half. to the at forth. commercial maybe first X% sort so slowdown and the there framework,

So the just tough HVAC comps? with to it the enterprise commercial going really total sort that X%, is battling from XX% piece just of

Christopher Kuehn

year it's Americas. the quarter a first and Julian, the year the there HVAC a year then when It is growth Commercial back around you quarter Chris. have last go of especially HVAC in year, in comps about of the fourth great mid-XXs. But And was XXXX, I'll Americas is to a mid-teens. tough full They're the on by going growth start. for think commercial basis.

So of revenue throughout growth think in XX-point year. a terms that and as increase of last

So down We tougher the expect do stronger outstanding HVAC the half also get But half of due tough work right, be year half of again, XX% tough it this Transport as we comps XXXX. 'XX, than is was first the going you're business comps through commercial the up year. to in have do Americas. bit half. But That is a to they're the comps. XX% to an second in The of 'XX. second the first

we the look, you're And there and little comps the the in on feel now we meet you've exceed bit get there. throughout full go But the year. that a our easier guide it as right, we dialed guide to that So out year. or ability comfortable put with

the another through quarter results Let here quarter. us second get of in

know, you Technologies quarter first our year. As within of is the quarter generally the Trane smallest

guide confident the with the just insight quarter. second We year second released we today. the feel get that at that very the on better of have We'll a Let us half through time.

Julian Mitchell

And would the sort maybe price be of price follow-up outlook. mix and just on my

tailwind as of year about quarter, think price embedding whole. So remind kind revenue. the has the you're first And X-point a us in was I what to a Maybe maybe for the light from shift of in in and in of that? the sort refrigerant on the any movements resi commercial price/mix HVAC the tailwind on been expectations EPA sort there various change

Christopher Kuehn

Julian.

call those quarter, we the So little a price, move bit first as as getting tougher about we comps year throughout start delivered enterprise at level, a in an in year on to the of question our points X get a now, X guiding the more normalization had of we full price, of price. certainly price. we're about on of guide a Think few full that the ago was we year months points to of

gives that by of commercial we model maybe And confidence delivering raise the could to the on of the price a in price point been points. Americas, year Think revenue little HVAC as In a we thought within of We the that's better do our X with and that there. QX been volume. stronger. company point us a Americas, full generally and the within would bit have led

confident or inflation terms of to with remain the of is full operating As and We've about next That's something nimble they maybe points, our the very best to one inputs. we that of system and maybe of year has price if in play inflation better how right we think [indiscernible] in been our nimble of versus XX a the basis on year. X parts, as the delivering about we're terms And out think pricing. in I XX got ability kind commodities price/mix terms bit, remaining business about offering. price/cost, think the pricing over years,

residential. Dave, you Your want cover on do -- that? comment to not We

David Regnery

as built product Yes, for lot XXXX, we year, at a of see lot progresses least our launching we're don't be the in XXXX. but from year Americas, we're we'll we the XXXB a of those we'll products standpoint, go in into ready how and volume obviously the through anticipating have okay? not guide, XX a

out One now. everyone's using a being things, X years make want refrigerant. of too, in come of Europe just sure over the clear. comments been couple on about a XXXB I I pre is, for saw new XXXB to We've

some for refrigerant this [indiscernible] it's a A not we've Americas very new is baked in and refrigerant Trane the in our for had of Technologies. time. lot comfortable So We're portfolio with

Operator

comes Khanna Cowen. with question TD Gautam from next Your

Gautam Khanna

on with you transition. I opine given pricing XXX the could average happens wanted next what think year you results. resi great if to again ask

would how You still Or think to up it's kind you just characterize...? of XX%? XX%

David Regnery

of projecting you. I I obviously XXXX, we'll We're -- XXXX. a as will Look, up a just product From when lot it's said. Gautam. as release not good to anticipate XXXB hope But in we XXXX we the don't pricing products. what to from pre-buy pricing you'll We okay? from see the of expect a We're probably as for maybe the some how X is see others runners. Maybe in don't in ballpark to year big happening -- standpoint. a we're at ramp pricing out, get well think standpoint, a what the I XXX. you've a heard the yet. to That in going with going plays high question, end announce minor with year

really wants to going how -- the And to stuck year. it's we update an -- with watch So be to just nobody give and it's to the out, we inventory. as get plays move have through see we'll out you balance

Operator

question Your Ritchie Goldman next from with comes Sachs. Joe

Joseph Ritchie

Yes, stellar results.

-- and on second. discussion data center way Is content on like just a for dollar it any a maybe to parse us relative is? data for center out a or maybe taking sense a back range kind the the or what of your there to Just give opportunity basis,

David Regnery

Yes.

this always averages, ballpark, strong where cases, in I'd a about that But may vertical. which I they're we're mean that estimated X% X% people not the into some the far in some off. dangerous, hyperscale In different talking then you range. Joe. very start say You to and get configuration. reports have are have it's read Look, I've

had it's understand, we in. the quarter, have in of many been lot growth a we first going while, in it's play But that which one broad-based And verticals strength. for of and exciting. vertical is to the We have future, a

So it focused wasn't data just on centers.

Joseph Ritchie

helpful, mega the had question That's And the today. time, Dave. strong, on have the an are that funding things coming It like a example other Got lot project a an number of seems follow-on it. At just for might as ESSER some throughout you other comp. electrical right, down. do like $X.X maybe peer funding there's trillion the like you same investment be that

maybe to of in you of high coming next years? just over talk what us couple do see Or activity? the the pipe through see terms level, So just like quoting your you what about

David Regnery

in. with I'll in mega projects Yes. start that I are very mean been projects. we've I mega verticals think always strong that happening

So over said, strength particular what's XXX received. been orders tracking that always mega it's ongoing That And to additive versus vertical. some projects. team say what's a had in have we've is difficult our

typically the the these majority pipeline still projects in However, longer are as to duration are close.

these that advantage projects with we're makers are sales world. as and provide nature, force support our because of gives of projects decision really able in deemed lot which to A direct a competitive us in parts triage global technical mega the are different

So with tune mega projects. what's to well in happening

As of this it way ESSER order fulfilled far an as can September of ESSER year, quarter XXXX. to the until funding, goes, the you right it's has now, take up and designed be within first look,

ESSER believe in that's past. always bond we've And funding well very education with been municipal the whole also very ESSER don't There's robust funding, process done And but after the stops the we vertical funding. that IRA course, that's available. there's, of

has the always Trane as well. strong to vertical Technologies, future be in strong expected education look, the been for So

Operator

Tusa Your next JPMorgan. question comes with from Steve

C. Stephen Tusa

and light applied Congrats. revenues? very seeing you're versus you talk nice orders. what commercial, on orders Can about just just

David Regnery

for very time, they we is been Americas, past, I Yes. Applied we saw order in I over were overall. were I mean, obviously, your in really I've strong has in both was pretty stronger. And where applied rate said the XX%. our think This a equipment is And lot mean equipment question which and focused, in strength the unitary. up close.

lot those all there. almost a that a different are had verticals. broad-based So with growth applications. we And across strength And you out of lot sense makes verticals served look, there's really if because of

was strong. So it very

C. Stephen Tusa

in your your And -- I orders what there. gaining you are share are guess pretty down that dramatically because there main like particular peer in commercial think verticals had

David Regnery

because can't some but more year are to tell verticals I side get verticals to another. on -- that would are broad-based, you don't the some comps on you have side. applied a going I the X Yes. speak that it to more I from you're unitary just competitor

we're side. So will be; more think the on tends split; conventional But not look, the very had I tends in in And quarter was happy was don't about I education, it's as rooftop always, about as order office performance side, to probably a remember be when retail growth QX. but unitary the to a typically talking XX-XX be on and with saw we it we XX% QX. broad-based

C. Stephen Tusa

Right. that -- then quarter? just price/mix and just break you the the on the for X Can for volume quarter, resi. the And business just down in X last

Christopher Kuehn

expected, Yes, as small up just digits, low see, price than terms single Dave better numbers, X% ] cooling Revenues for we to them low around start price low is season volume numbers [ a starting de volume of we're just were did of But minimis, think Steve. law earlier, there -- contributing resi. really getting we talked maybe the up residential. as of in here. think let's up It digits. It's and single was very of

another and out we'll get year see Let's through plays residential. how the for quarter,

Operator

RBC Markets. Your with comes next from question Deane Dray Capital

Deane Dray

So those China. of were pretty positive comments coming out

us of pretty have like about growth. kind of you seeing strong could is, some Because you're mixed outlook? sounds So heard sense it some a but the where we give the demand best signals stabilizing, at

David Regnery

company, a have with data team, centers, happy well saw. of which there team portfolio in care, for the a applied really at our been place in systems. with of pharmaceutical, Yes. health level, seasoned a execute lot lot we Very plays what very is continues high The where to very tenure strength -- our with they high-tech,

encouraging. in there, lot of range, is China X% a is a the which the of small but percentage enterprise strength Now

Deane Dray

on think And us where services refresh helpful. sense you how And this the can of on us then year? your that mix, real target? you give stand you a for out plays do That's

David Regnery

very where is and this the business strong in it was And in Americas, a services XX% service in to think XX% at said service with question. back the low the effect up of on a our equipment. Americas, was going -- we we're QX low compounding But got always I It's great telling, had had over digits. the a up we teens. was growth, single business growth year level to was we there's In we've equipment go at there. that's a and I the the and look global service XX% Chris, our going Look, calculation. sixth

-- this. in So we've invested it's heavily

one I'd at of very it and Technologies. underappreciated team I X/X business. the you, execute expect as and very tell think in areas in an the that it's continues Trane But well. and is high our resilient, sometimes of it future it's a It's that to gets level enabler

Christopher Kuehn

year X single years, the high and last us was the growth to But out and the pressuring and the tell there in the business. digits, I'll we year double start keeps digits. the up called digits services, move he double Deane, like up to margins it's resiliency to as in -- nice you, kind a of Dave

Operator

next Coe Your Research. Nigel comes question Wolfe with from

Nigel Coe

great And on I quarter, often here. say sorry, this, been I'm a don't results. calls back different the going fantastic and forth but -- I guess I've

would a you any I what upside came back, just obviously, mean, this what lot step really better, helpful. But strong organic quarter? there surprised mean, I be commercial you just during maybe it Was color So conversion? -- trends. to specifically, the Anything this quarter? really HVAC backlog surprised

David Regnery

Yes.

One upside. in the the to were It business that things Americas. really commercial X than really HVAC was better was our there expectations. performed think I

a our well. of and for team Just executed products innovative lot extremely the demand

beginning was destocking thought upside business. mid-single the was digits, to we even in be going digits The a that was residential that occur. Look, business single was for QX year our with maybe low in that of to the other going down

help the for on clarification season, which that for their be our I think was with is and EPA XXX should kind the coming we ready stocking up to where there the independent wholesale confidence distributors getting they that saw. we out gave of sell-through and what got

So where really rest of played the be out The the of that saw those way areas world the upside. the would we thought. we big kind X

HVAC continues. our Europe, in business commercial strength

Thermo business, a in Thermo a better look, do be the modest it's we'll to play in the year, than King downturn exactly in going but saw what King quarter. markets, out we first Our the that's

in Asia, pretty a maybe commercial HVAC as bit it our out but we as of business, little rest in played the the thought, really much stronger world. expected

Nigel Coe

[indiscernible] standard just the backlog, the of orders of just my then and HVAC here follow-on resilience is in et the especially backdrop the is such cetera. And commercial

just there's targets demand? color et there obviously, Any replacement is evidence demand, data wondering, of emission increasing there? cetera, just really of So strength are driving there -- COX more pockets but proactive in center,

David Regnery

tell that answer Yes. that you to haven't I looked strong But pipeline. I see we I can't way. would that specifically. continue very a

is on what remains are putting very actually working that they're be sales systems. our would force our that this in And so CRM And robust.

the lot And -- you out numbers, I have don't at there's are aligned the So look vertical. You one the a look, hear just look strong okay? activity there. or and But to we to very of we versus another strong. to are look just other at at saw some of a at vertical [ demand disconnect, you pipelines one, when have still and too, broad-based ABI some several macro look ]

Operator

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

Andrew Obin

a question. Just

to solution advantage As that, provide semiconductor this that It second, value doing project, of provide centers, and to going a, it's we And question think also up. you does opportunity right? to your the are an for data And aftermarket more and take plants the that? for capture scale support have to of more the cooling about to seems sophisticated customers organization your what Trane? to I

David Regnery

Yes. about from look, adoption to bit faster data move is others. a little earlier. We vertical than that But technology a centers tends talked a this

center on trends now at terminal with customers and you, look And data We the things I okay? And right to the the a at and understand a you're middle at hearing closely system, we're we're to are, In partners lot the level. entire it. of like tell data working look Andrew, data of would system side center. the center, in what right

cooling. to entire So chip like the cooling system. the immersion look We be or at that would direct

refrigerants required. of next-gen chillers, that are it handling air chillers also well the high-efficiency the as sophisticated So the with as side

a to a little I data out on center, hear you're thermal taken data think asset the the where management future. we're how the heat more of of level can is of in of going can of take side we as that you to how some an produce bit the it is an and heat repurpose that lot a at turn leadership a They center. kind thought that's And it. in technology into discussions, and -- asset heat or

Andrew Obin

was energy hungry. systems they basic. that My Yes. complex, more was these more are thinking more bigger I just I question, think, and

packaged for you you these was with partner to opportunity more sort for I need up more for your -- energy-saving going. to of opportunity where provide So That's solution. and customers more

David Regnery

You're right on, Andrew, all vertical. opportunities, and growing a it's

Andrew Obin

Got on just you. a follow-up M&A. then And

You we at on pharma, get the past guys are been rooms my you by fact manufacturing, the pardon these, punt. guys pretty have areas that been over is the couple all have years. But the market market, of once clean to hot, the active [indiscernible] think, I looking getting

pursue you now? the ability What's whats' are these So sort the right pipeline What [ to for environment of in? recent targets does ] valuations? your What looking at like bolt-on? interested look

Christopher Kuehn

Andrew, I'll it's remains very pipeline M&A It's active. an Chris. transaction start. closes. episodic Yes, Sometimes when

of in a maybe bit to very of year, very the properly we've quarter-by-quarter, But of happy acquisitions right? that XX investments strategy. and hard over technology. active. bolt-on channel as We're over, described Think XX, So last course the remains the You months, in call. think the say, I investments them pipeline with the done around the

to very been the with Europe has channels technology channel some applying in successful We've that strategy. limited and/or it in it's a taking great and both. in deep cases, And Americas. our a that It's

not that years, trading accretive X about tell to to to isn't be got you I'll the to we're also over the calculated intrinsic we our we've acquisitions available rates. going for hurdle As at EPS But M&A pipeline it And the as got in ROIC constructive see but years. looks disciplined. deploy repurchases value. really deploy our remain today, X balance to as sheet if below We've great what's cash we stock share accretive only in think a

go technology years or time and really started Thermocold, great with grow it our that with team. got Europe more think then generation we grown it in we systems acquisition pipe an can that's X back We've thermal I So thermal over over period to seventh sixth even of you have it sales time. tells the management that our early-stage people, systems, take of a really a you X, longer ago chillers management how and and with out if now,

as a businesses, great infrastructure service sure keep well make where this We have and support is those some of That's year to to growing investments team. are those have the all we going

is across of the let's with I'll and best I'll into to what of each is on Trane Trane the as think organization. our regions you success our just you, bring don't We we spot team also how acquired really that a across replicate And recent XX globe. some bring them It of the do acquired, we've of our an a it's it you of how great about depending the business and are our business. can of integrate. got the XX, acquisition, Technologies acquisitions, learning challenge And that think tell Trane the from plants lot into in integrate it we learnings on tell of and the acquiring is taking we've well take we When you businesses it's acquisitions. the family time,

area. you in this bullish tell I'll So where we're

the strong. pipeline I'd say just remains So

Operator

final Kaye Oppenheimer. with Your question Noah from comes

Noah Kaye

customer the what play there about and a dimensions understand complexity to differ to question, going across around complexity think it's proposition? the but Maybe broad dimensions, I When X is the X this customer in How the verticals. are does to where value the applied. increase be really discussed to Dave, competitive us into proposition, a differentiation the that you in it give sustainable we speaks biggest goes going many that, company. creates or increasing value for that and

David Regnery

question, Yes, Noah. great

We -- understand of we're the sales this the may now and And require basis. starts shines, because products obviously, them the the to in strength . A especially sales to customer And more downstream these future. effect our direct technical account continue projects be. products, for best and triage I course, And lot all think global force sophistication able a increase, our -- global the through is they sell through what decision-makers products we sophisticated, some -- that's think on right? whatever customers. the we solution always really of the with direct don't their really as globally, it applications OEM these highly our way help solutions. that's the then, and the people don't not basis. tell have technical, decision-makers force sell times, of of need helping behave think lot with They mega these managers on we is the right side. a are a on are service of I

associated these selling. applied tail So that there's with we're long systems a

adding say, the I investing And that's plant, investing but we're heavily of investment, not investing about, in part of training like capacity. it as back heavily, in adding also of okay, to sales adding just direct have our force, service too. adding to our sure force, process, people the direct sales think we're to capacity our customer to we're to right sometimes offices as technicians, think to It's our They adding support. our make to engineer our critical our skill we set, close

really we systems into as they inclusive Trane become it all but it's just strength more have the engineered, So the sophistication as more -- these of plays and Technologies. really

Noah Kaye

working just the quantitatively right? about to we you're And attach And those part, how I the think this at of think as where attach those in it of you've projects complexity answered services on? for rate applied you point? really do follow-up to projects, grow services rates is the see around but the increasing

David Regnery

too the no longer that application was the it's sure but we're to and we increasing using were break/fix. system -- always wants it's by that solution. make where okay? telling This And system, able us And think on in way, I As in in of service can there. monitor I applied the that's opening the over also complexity, is the The right connected want that no the energy, system, is was the an that customer longer then And detect about week asset we So about want isn't connected operating way designed. to life a to we earlier remarks, be edge group leading the connected services an system a it's that. performing solutions. system. of XXx -- system, you their is ways. it the think much system said my goes to both sophistication how you multiplier to and the It's the the to this properly. just They X all of is but

Operator

back I questions no turn will time. are Zack closing further call Nagle this now for the to remarks. at There

Zac Nagle

actually in everyone I'd and days you here. We'll call. or today's the that at as near and weeks, of always, you have our many road coming thank joining on like in seeing future may cases, to for the look be for questions headquarters to around, any we the in forward some

day. and thanks have So great a again,

Operator

This today's call. conference concludes

You disconnect. may now

Trane Technologies (TT) 30 Apr 242024 Q1 Earnings call transcript