TT - Earnings call transcript Q4 2024 | Trane Technologies plc

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Operator

Good morning, and welcome to the Trane Technologies Fourth Quarter 2024 Earnings Conference Call. My name is Regina, 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 Zac Nagle, Vice President of Investor Relations. ahead. go Please

Zac Nagle

the where morning, our Trane of Good are This attached statements safe law. may you forward-looking are joining X. Statements archiving today's are the at for differ and is We're in accompanying Thanks, anticipated This in recording to federal SEC pursuant to materially made Please also financial Fourth and factors results historical provisions considered our go securities Quarter not for and which tranetechnologies.com, results. harbor website our Technologies' webcast explained the call are Call. that presentation find XXXX Please filings us to facts made of the release. for some being that our news includes presentation. on operator. see also actual this measures, on thank you'll tables website. Earnings call call from a cause Slide Conference to description of non-GAAP

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

David Regnery

few strategy, I'd results Thanks, for to on #X. call. with joining like time. over which purpose-driven minutes a to Please Zac, Slide our enables our begin financial turn today's everyone, and differentiated

customer we Trane significant our demand. And driving Technologies, continuously is At innovate for world. a innovation sustainable

use and the choice performance of reducing to emissions. partner are energy optimal We ensure while

that good know our green green, and for customers Our line. planet are for bottom for good solutions the the

uplift profile into differentiated With our leading operating proven this to are strong intent outperformance cash innovation system in flow. the and and growth well we business powers a relentless positioned market our value of culture, deliver and shareholder future. Our and our flywheel momentum, free

turn Slide to #X. Please

across and our our over how strategy targets performance consistently set we expect is to our reliably global core shareholders. long financial term, deliver quartile top execute and and culture central for We our the our This to portfolio. to

top a We global was track the well adjusted and the core XX%. quartile for revenue performance in proud top how EPS to group XX%; rank will bottom. standout I'm of our our company. as quartile up organic targets, growth, closely as on peer against our believe year XXXX growth, our exceeded up teams top performance

delivered through strategic flow $X.X flow M&A also enabling We free of significant or our billion returning share free cash raising dividend while make repurchases. to to XXX% and shareholders key investments cash cash us conversion,

#X. to Please turn Slide

clear growth, delivered over we've growth while relentless revenue culture strong benefits in track billion deploying $XX and our our of adjusted XXX free basis our system Our flow capital. record. cash points by innovation, and time, Since by demonstrated EBITDA expanded of have conversion XX%, approximately compound investment of people, business XXXX, rate XXX%, margins annual yielded operating a delivered

business is long-term consistent that our reinvestment key to believe success. We

most pressing For level year enabled It investments projects. incremental over direct ROI sales driving world-class customer channel organization. decade, a we've cutting-edge This us each of solutions has for resulted develop in added a has a the service to also demand. force in and high strong challenges, high

to execute long the continue the shareholders our all our have for We over and ingredients returns differentiated term. essential driving strategy

growth. strong We extending #X. of the quarter, delivered EPS revenue financial track results industry-leading fourth robust and Slide and to turn in our execution Please record

points expansion of adjusted and team adjusted EPS achieved EBITDA revenue XX% growth. margin growth, XX% global Our organic basis XXX

to growth. XXXX This full XX% XX%, contributed organic book-to-bill were year a top revenue bookings backlog with of Organic for of $X.XX a elevated entering highly on XXX% billion up ratio XXXX. of strong,

Americas Commercial organic Americas Commercial than HVAC HVAC up both Commercial EMEA Commercial on of quarter XX% HVAC a up exceptional, stack. more mid-XXs and and organic same strong HVAC led We over stack, segments, than period. our businesses. up more XX% X-year EMEA out with strong, across the X-year Fourth saw quarter performance were our bookings percent by Fourth revenues each were

teams cycle, excelling Our complex, in are key are CapEx especially multiyear in verticals. high-growth bespoke which to the applied projects,

instance, MEDIA Commercial and XXX% up X-year in for organic revenue over Applied growth our XX%, stack Systems For is HVAC Americas businesses and respectively.

equipment offer a service margins presents Systems to in XXx the durable us. ahead of X that Applied [indiscernible] with meaning of growth Applied still over Solutions higher largely our their lifespan, are initial tremendous cost strong opportunities

expected in residential are returning the the long-term tailwinds transport half beyond our normalized in Americas a markets strong for second in XXXX HVAC, largely and bottom first Looking growth. markets growth see of in strength XXXX. recovery the believe to have we and and The refrigeration continued Commercial framework XXXX. paving way are to several We GDP+ half of XXXX,

challenges actions half with the ahead second expectations. XXXX tighten of are credit our to in addition, in In policies of initial associated the improving our China

consistent we performance in time, in Given results over strong ability our are to confident our XXXX. deliver

guide the in Chris will detail which strong cover few in more for minutes. a We are year, a initiating

segment, second revenues turn Demand Please for in equipment and both were In our bookings solutions mid-teens fourth up were broad-based segments consistent innovative up our Slide was HVAC quarter. teens, were across and Commercial revenues Americas the high up our in third #X. to services. with low quarters. single the Residential digits,

third which up down the in quarter, this markets, orders associated of after more down XX% were XXs end Revenues being in teens, the timing in were quarter. with low high reflecting down customer large inherent than outperforming lumpiness bookings refrigeration the the business. Transport high XXs were

up Revenue mid-single HVAC up commercial quarter was comp. in a year were also EMEA, bookings were In bookings digits stack teens. prior tough the up low versus XX%. X-year

line digits. with Our revenues single expectations with in business our low down performed transport

team of revenues our the for low X% in teens. were in China, were declined strong bookings demonstrated X%. were softness achieving the down and improvement. Bookings region revenues single Pacific, up resilience, the strength low and Asia Asia compensated sequential than In The up more where digits in by rest

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

Christopher Kuehn

snapshot board. This the across strong turn Thanks, performance, Slide to of a showcasing Please fourth Dave. execution slide quarter provides #X. our

up we revenue organic by were high margin low EBITDA increased growth by equipment digits the and in points respectively. XX%, both adjusted robust up revenues rose adjusted EPS achieved single XXX basis and enterprise teens, and services XX%. At Organic level,

Our high-performance driving with growth. yield flywheel expansion innovation margin relentless investments and in EPS line top results continues to growth,

performance growth Adjusted by the X business Slide and productivity gains by EBITDA points points, HVAC enterprise basis Strong in we Residential to volume and by price transport expanded inflation #X. growth, offset was of volume driven results. and turn softer XXX and volume Commercial we Americas, partially productivity X delivered price. price realization. In margin points Please robust offset achieved At that of the and level, growth, high positive levels of realization reinvestment.

XX points, we EMEA, points and with driven productivity HVAC and growth volume growth, price In margin of by basis strong X Commercial EBITDA delivered volume of X Adjusted expanded by performance. strong price by realization. expansion and we price margin realization EBITDA offsetting business was X more Pacific, inflation In point Asia price delivered driven reinvestment. and flat. than was of volume productivity, point and

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

David Regnery

to Thanks, key guidance for our #XX. Slide dynamics outlines the shaping This Chris. market XXXX. slide Please turn outlook and

anticipate with in core In continued markets, execution verticals. in broad-based and strength strong particular high-growth momentum the Americas, we

and force sales drive that advantages innovation and direct opportunities us world-class competitive optimize to enable Our are market powerful outperformance. leading

QX a XXXX. prebuy in a expected XXXX, prebuy We of of around $XXX Most to framework quarter expect following impact $XX residential is of this to markets GDP+ XXXX. modest return QX first the to million million to of and in

For the from the with see the business, full residential a low mid-single-digit mix. we year, growth in GWP tailwind

transport. to Turning

forecasts. XX% then expect bottom We minus plus year-over-year, in low down with QX, in recovery XXXX, The rebound market relative about second flat aligning the should markets or half, single market digits. freight in

exact and we speed We've are downturn, predicts market the the invest XXXX back. as well sharp in up and recovery during to the heavily a each positioned year. to and XXXX, comes uncertain, timing While both ACT are market mid-teens outperform continued

Management In Services single markets to strength Commercial by HVAC be strong EMEA, and from markets low we and flat EMEA expected execution verticals. core in XXXX, and continued transport we expect up tailwinds Thermal digits in driven growth outperform. to XXXX key in to are Systems, expect in

soft backdrop flattish year our In XXXX. half anticipate credit for to first impacting the and tightened policies a of macro Asia, a the we due market

We of by expect to in Asia. growth in muted offset China be performance the rest

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

Christopher Kuehn

#XX. Thanks, Dave. turn to Please Slide

reflects in innovation, investment market our outlined also optimism dynamics our the healthy It on emphasizing slide, outgrowth, to flywheel, the and ability prior and Our continued outperform. flow. creation market about strong XXXX incorporates cash guidance leverage our value free

the approximately with to M&A FX XX% year. negatively XXXX and We share and representing EPS earnings together growth are guidance $XX.XX points XXX growth for points of includes growth. impact per negative to roughly revenue $X.XX basis earnings of X% impacting by are XX about to which This $XX.XX, basis from to about revenue, initiating of XX% expected X% organic adjusted

We organic We of or are long-term higher, anticipate XX% year with flow targeting XXXX. cash XXX% greater our or free of another conversion consistent leverage in goals.

of first approximately quarter driven expect at Looking growth XXXX, organic X% strength commercial by in the HVAC. continued revenue X% we to

first adjusted guidance, the of and year the and QX Overall, We X-year midpoint an our ahead averages EPS is XX% expect quarter of approximately with guidance XX%. year. This $X.XX. achievable we believe our to to start about midpoint represents $X.XX of our $X.XX, be in a X-year and full between XX% strong of to historical

details to our Slide related refer additional to please #XX. guidance, For

cash on capital Please to We excess our to Slide balanced #XX. to shareholder go focused remain maximize committed allocation returns. strategy, deploying

relentless through business First, we our reinvestment. strengthened core

maintain strong sheet markets balance a evolve. we Second, as flexibility ensure to

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

repurchases strategic includes value. trades returns enhance below M&A share long-term when to and intrinsic approach stock Our the

capital with making $XXX bolt-on approximately $X.X committed repurchases. enhancing expanding M&A to refrigerated investments. channel and we specialized transport turn XXXX, approximately Slide deployed and Please #XX. billion balanced to AI made building strategy, through strategic our or digital share We several $XXX allocation $X.X million capabilities, billion to million and acquisitions, our multiple management In to dividends,

to our pipeline in active continue be we will Our disciplined M&A remains and approach.

with under repurchase as our shares our we authorizations, In billion value. flexibility below trade intrinsic addition, strong have calculated $X.X remaining

we XXXX, billion $X to $X.X capital. between expect For in billion deploy and

significant balance Our strong capital share flow, optionality and authorization excellent moving liquidity, allocation repurchase forward. provide cash free sheet

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

David Regnery

#XX. Thanks, Chris. Please expectations Slide Americas comments We've I'll my transport our on the covered keep market so already brief. turn and to EMEA XX, in Slide

units show to have year recent XX-year XXXX trailer the long-term years While the the a the per period. average forecast over X pandemic, ACT of strong. Americas more years preceding transport volatile remains outlook refrigeration XX,XXX markets been compared an in

For XXXX opportunities future projects The about excited XXXX, looks and growth. we're bright, ACT and the ahead. mid-teens

and In Slide performance to #XX. XXXX summary, we in positioned to deliver well turn are leading differentiated shareholder returns Please beyond. and

uplifting engaging business and apart. system, innovation combined culture, set proven leading us continue operating and with our Our to

including are days still believe brightest proud in ahead. XXXX, and record team's our our our truly standout performance growth track consistent I'm of of I

be And happy now we'd questions. your Operator? to take

Operator

Stanley. Morgan first comes [Operator question of line Our Chris with the Instructions] from Snyder

Christopher Snyder

Service, again, typically to on And ask to QX Dave, with in wanted Service teens know I years. double-digit rate you has QX. now X up talk was mid-teens America last think a in I the high for at service about growth. single-digit low I X grown the

baked get which Service, I on guide of So lagged to for wanted usually I know said by past, here a years. the into you just a has this 'XX outlook equipment the couple and sense what's in

David Regnery

for the the we've just business, so Yes, that. me CAGR X-year thanks question. Chris, I'm proud Chris that growth Service our seen use makes a there. rates on of

year. where up in full or high single But it's the we comes from high, low that's high sorry, So the fourth were low I'm teens, look, quarter, very digit for single and -- teens the mid-teens digits.

is that Service business there. now, billion growth and Our basis, dollar seeing a just from we're $X.X tremendous

think right, our more propensity the solutions designed applied solutions. for predominantly that's which those was work. if really predominantly our complex do -- on And become, the to And applied, Commercial OEM about the HVAC business Service the backlog, around our you where service more

rate our So close look, $X.X but that of range. at years keep last have year billion about high, couple the single XX% in that's high the double-digit in per guide we'll think been growing digits, at to

we're of really operating it's cadence well said, have system, very can cylinders our we business. resilient the as there we're that hitting you now. part on there. As very right all you that operating tell a And And I

Christopher Snyder

data seems maybe commercial Commercial do, but obviously XX No, the of Orders the turning know always to I A think to lot appreciate on talked be high a to quarter, XX then I equipment. bit over better comp focus there's guys this last And -- And singles. than quarter, same. you or what you single that. really center, HVAC verticals. low

improvement? just lumpiness? some across of So when was Is Or you see that verticals, you those look that project of them? positive do change a rate across

David Regnery

digits. single HVAC a over Commercial XX%. up Great for grade over the high Chris. Look, Americas On stack, was a X-year order XX%. On question. it's in our X-year it's stack,

our growth to continue business. Commercial HVAC we see tremendous in So

and verticals, we're in seeing track As to growth. for us a been strong different a the for XX we yes, centers. far as vertical verticals It's growth seeing going Yes, It's strong But in broad-based the vertical past. seeing future. in growth. data be we're we're the us

it, XX%, in it's the And the revenue very growth only and but about if the growth year, think showing optimistic not life we're over Americas the future I was and The mean of science the you for that up XX vertical year all XX there. was had about for verticals. we and -- been challenged was

the you portfolio showing about broad-based of And growth. broad-based that Trane have. services that think We're that. expect and Technologies So would products with from we

it growth. serve to portfolio particular doing. our within if And direct vertical you market, then serve of deep being able you the vertical. broad-based domain could take we're designed to sales with what knowledge a exactly We have our expertise, at design that to we're understand technical both We a didn't force and why with level this a that's and products level,

we're And the about very is seeing pipeline, too, is HVAC. excited very we're very The what Commercial team So very, well. in performing strong.

robust. we report -- we working on, very, and obviously, remains is So the what is pipeline very but orders, that the team

Christopher Kuehn

more Chris, a the last And the would are verticals. building than which is XX% about solutions, many base, I up Revenues In in EMEA that base nothing front of HVAC over our an years that installed business the the drive in over installed in period. the Commercial that largely us. business, post applied years. of XXX% apply start as impact services XX That's think Americas then of revenues few that after X those add, of. Service to applied warranty

Dave again, So very described, multiple serves durable as tail, applied that, and it's excited a really verticals.

Operator

from comes question of Mitchell Julian next Our line the Barclays. with

Julian Mitchell

around guide year. first question Maybe sort the sales of organic just the through the

acceleration think So year up picking X maybe have of But the the TK guide headwind less bit. would a to lot of your steady HVAC and organic expected resi through looks just because I growth an point slow then investors a in start the from QX. very a recovering prebuy and year,

reflect QX? the half Commercial to understand, trying TK a from when does growth? it does some thinking big reflect conservatism sales So that and Or not we're the in HVAC headwind resi about just HVAC and

Christopher Kuehn

estimate about Julian, we're to largely year, in the continued it's should quarter. Transport the seeing Commercial right means million impact businesses. you residential may the we're seeing in the is flat extend But HVAC that first quarter. of slightly the as bit mean, probably with a $XX think I described, we Chris. I'll in Dave quarter. I'll markets, had It called here the to -- first we start. start quarter bottom It first the we're them that. out quarter. thinking $XXX in right? now, and down first Yes, challenge first beyond should expect first under residential, that half out But the million, that the largely strength around prebuy impact

got guide them digit, growth of think first is of could have We be start growth But first ways revenue quarter. right high it's there. in up organic we've XX% think the really the the X% opportunities as to here single -- multiple range for the even why quarter. to X% range of a get the we So in and

execute the mean, And year, down year. strength beginning to of as have then little a opportunities But that the coming on a we bit but through you're Commercial be in the start full right, will guide multiple we HVAC. of residential I transport the could have a lot

revenue to A in guide it said, was for organic quarter we lot As first the and the of X% confidence X% growth. year. our for full

Julian Mitchell

my follow-up sort price sales just outlook the around then And of organic within the be guide. would volume

mix? than the concerns to When sort that think points is X- pushing of was the a company, price tailwinds ahead, example, channels resi in And across back it X-point for Americas. on any similar we're sort price higher year the thinking of increases? in I customers, So fourth of about sort X X sales to the about in the quarter price

Christopher Kuehn

Yes.

points expect on in well. to And in the XXXX, little quarter, full above full the the over Americas the year there, coming last would driver down be a above to Julian, fourth above year maybe bit as for has points. X.X -- a really X X points we'd revenue a points about years. pricing contribute bit of the been It price X For the X growth at point little was outlook. And it's really in XXXX, Americas. And couple bit little now the

So that X, of X.X 'XX, from nature X.X around for to come and given the so X.X would less It's the new to price on pricing to then carryover XXXX in $X.XX, impact $X.XX that put place we the increases X we 'XX. really of price. It's volume get the XXXX. from in around points just contribution low

you X the residential, so lower for but On the single and XX% clear just high in digits portfolio. on quarters which refrigerant XX% the would part of price. going portfolio really to that is refrigerant, of of think on of to be mentioned We're then that, refrigerant. not to XXXB volume, year of transition the as going being report that AXL But report about that to the for be that transition for year, impacted price We're the the us. the that increase,

the X.X for sense year. X price in hopefully So the point range that -- we're to probably

Operator

of Our Citi. question Kaplowitz comes the from Andy with next line

Andrew Kaplowitz

center the instance, have in to that. XX? lead Commercial bookings like America just XX the I been bookings holding different about in ask versus in question But Chris' you education-related difficult And like 'XX North verticals. wanted more North little are slightly against to for you data continue bookings And are America when some set I well, even consternation way. comps project on comps know growth, up grow there's difficult get in to HVAC issue, still comps? a a

David Regnery

Andy. there, lot growth A all like I Yes. in, a at look, saw we But said, almost verticals.

were So been ESSER were an one, we the other at there you, of Education there. had a tailwind tell yes, in Certainly, And data us, that was the hit funding fourth very, you education is lot behind strong. fourth but strong, education. funding saw has order we is strong. where very I on verticals a even But pipeline from quarter. the growth robust. ESSER And would very, standpoint, quarter, least now, in in very centers still

So look, Look, hard. you as opportunities growth decarbonization they and efficiency, as around energy all there's intensify. far tremendous If that there's we think verticals, we about opportunities get mega -- right? the still the comps for here continue trends believe do in to think

You United that the think reshoring about intensify. continues in activity to States,

multiyear the about think CapEx cycle that have mega with continues momentum. you If projects, to

you that's the that a and Trane the the solution we for you said Commercial greatest are on have great very I business. products green. have have a remarks, that's very know what green And When we're and it's there, my customer, we So the bullish in be. for and of tell sustainable to HVAC the has payback would I at I place prepared for our portfolio innovation you planet Technologies. that

sure. very I'm So bullish

Andrew Kaplowitz

I But they could QX. also in it for 'XX. QX, you quantify EMEA And then on incremental Americas thinking a comment strong and that mentioned quite durability investments and those APAC focusing margin bit, you're just your dropped And margins much transport margin what is in Very were 'XX? really think little in about surprisingly what was margin. maybe helpful, obviously how the then mix, Dave. talked is? just you that a on just in of you -- Is

Christopher Kuehn

I'll start. Andy,

to continue improvement policy. normalize the It's quarter. outperformed So time sequential -- versus to we our some to the in Asia, Asia to expectations. still take in to expected credit just in those Asia team And quarter we the fourth going tightened third in China, even

versus you're will that the right on third quarter. that into But come we half saw through extend seeing So the were of what XXXX. decisions, first in probably and decisions the improvement sequential their

outstanding productivity, Margins, investing their been team look, terms in has that business. managing just in their the ultimately investments still of and

a see grow given EMEA for as let's regions, and into where Asia go There's into and region. margins -- our us their largely forward. gives business that well, selling going margins certainly Americas margins So recall, is the that Commercial future lot of HVAC to it just the the across can confidence leading to they're continue

sure results We driving business very we've like the that's leverage XXXX. in that For and margin as off all the our of better can, really or making strong XX% drive leverage years, those last we've We're across many lid actually, other into that expansion. we investments. couple accelerating framework. taken for can The regions. investments terms as all X of We're of and of markets, strong of also -- we

Otherwise, answers the hopefully able confidence really of to making. we're think be grow the a going that leverage we're to lot I what investments that the margins the question. We got and

David Regnery

growth, that, order add of the I know Asia. But team XX% of had growth the teens. and just I super Asia. XX% is performance. China, only I'm the rest proud X% revenue, Asia it's just mean high of our had Asia, it XX% great I outside is that in I'll in of mean rest Yes. of look, the

and strong -- the executed the very the policy. there. reason, right very do. very well, new and performance thing China team right And tightening And commented, I credit was a just implementing our credit to So prudent as the is

made a I quarter, we And backlog going have adjustments if fourth payment. -- down order, our take everything it. don't not some not And to going we're We're backlog in sure that payments to make the the to quarter, in the on an down order. in we to was clear very have third the had we don't

at that level. a team executing just very high So is

Operator

UBS. from comes question with next of line Mehrotra Our Amit the

Amit Mehrotra

make trying the technicians conversation just predictive a in of time. know service it installed over lot Dave, more margin just the to technology of can to obviously there's to larger. hoping the if And growing years you from the coming to I'm talk efficient, Service now, and you be understand front could the quite opportunity maybe business given about quite rapidly. a margin business investments maintenance, at the is I there speak runway of the could in just base the X/X the call, -- back few the just

So that. can if you talk about

Christopher Kuehn

Amit, business. it's in I'll the when think to the Chris. margins start. about like sure Service products Look, are we're we higher that making customers It's margins and their what you delivering running efficiently.

As Dave has that business rapidly working described from equipment fix optimized not that's be to in making It service is the past, evolving something effectively, may the now go the running. to is running sure right? always

operating but think the operating it's it really opportunity for a inefficiently, and may You be may nice fact is us. that's therefore, well,

investments it confidence And we reminder, in making investments enterprise the that across of you're of our driving leverage the should Service be enterprise a include of our So or organic the portfolio right, we've better. portfolio. that And been lot It Service is gives X/X revenues. remains us XX% also revenues. X/X

So again, think part about great digital our lid and to keep of service diagnostics. an that -- of terms in technicians, area investing think front-end off that's tools, a in take that area portfolio. the It's about

David Regnery

going and of BrainBox quarter well one of announced was mean help acquisition, AI, our as the future. to service I too business the in things in the we that's really that Yes. closure the an

buildings. connected So about have XX,XXX you if think we roughly today,

AI when the asset call with efficiently. over to at a buildings you're we'll the operate data it and does assets. level X you able data. connected make and level, building lot is million combine We're that getting structured And that's unstructured of that augments that, where well really more have data. We at What

it so part service energy the I and past the that and if in after And future. thousands is to teams XX% into wasted. everything -- XX%, big know side of speak know to done save we've that to of our And our be operate. that opportunity environment the back the consumed get to there So And Look, we is you've where built was about audits, energy will demand the hundreds probably me of help goal in the designed we of future. well there's heard that a meter about being could much decarbonize management.

Amit Mehrotra

efficiently. today, obviously, next But acquisition just up will several even paybacks can continue just BrainBox wonder map years? then are Because if reaccelerate? power to to there years, a over if can this allows it payback the the the long is what's sustainable, compelling but expectation next of probably that, how get improve, few routinely driving And related the more run to how this talk Can you the is, which about go the you paybacks is evolves question lot the you because is over think equipment so there's I if growth. actually growth prices actually

David Regnery

was to go the right? in is spot least electricity running system at going of paybacks, I think not down designed. more you're is -- on. anyone future, you you're actually it's punitive the going I the don't cost energy of So if think is become think the projecting it if that or to the way

increase. So the paybacks will actually

us, executing we side and our opportunity within big part these side that we've to been be we're good there's So channels. technologies we're a In technologies. a a of -- the business BrainBox scaling can tremendous really it's but today, management, it in this software at demand taking on and strategy. case, think the small

about the going that excited it. future to really from in we're growth the we're So see

Operator

next comes Melius Scott Our from with question Research. line Davis of the

Scott Davis

audits And the quarter -- additional about some this what very you like a there energy kind confidence a Energy makes I'll, on that drives you do of audits, the as sales backlog that Do -- It measure lot call kind talked on percent just it, of audits that up back and is are year. I cycle. gives thing x frontlog or of thinking mean, strong you of internally such just each the ton go debt? a kind log. about quarter? as energy to on number it want seems I of a front sense. the you Congrats like that's

David Regnery

obviously, But we our energy operating Scott. do. It's that built have a a around managed we system audits into our question, great lot

different So be there. we I track that of as of would metrics others lot and too much are absolutely, disclose of a well. But won't and a lot okay, of lot leading one them we but track a metrics, them,

only to of when make now and the we end didn't the very bring you're is really of were you not drive addition get that it compelling. -- sure connected we've been you not past, possible years understand was going the -- drive to And they precious asset with to it's customers when it you're way equation learning day, that structure designed, data this think show able data X start energy. results we into the becomes the performing or asset, or to that wasting an the At the that And it, when and X the BrainBox, to we're ago. in with unstructured able machine to it

Scott Davis

Can point twin at in you Are there? use now than AI we the meaningfully Are digital faster a that we do to you yet? could past?

David Regnery

I'm always one to Obviously, to work a available saw you the we're we we're one The Yes. using speed tools. and we Street that when Water those XX better AI tools because that there. is of think went getting with is the have all digital lot not if tools sure We demonstrated twins. and do us, you I using. of

up have certainly really it's tools that sped there's -- as well other process. So that

sure and the it you see constantly very to visually that the at very, levels. digital and understand twin peak and customer -- have the by when impact and after, then the we're monitoring to able it's see it's constantly performance the But the for compelling it's you making the can you at equipment before see

Operator

the of line question Joe next Sachs. Ritchie comes Goldman from with Our

Joseph Ritchie

starting for maybe on Or just AI, CapEx at sent business some Commercial it to trade just are data us your worse, And backlog the to look, for the trajectory to you how data still that normalize? times above as give of also through of surrounding you from I progress. maybe you cycle better just your it guess sentiments is? normal on or you as here, of expect that you how So think long color on stock think well backlog, and in terms centers. -- your that is HVAC like center then kind

David Regnery

Why XXXX down including year-over-year adjustments in was center I is question. we X, something over currency our of Look, flat, have everyone one XXX%. worked to a understand is payment, it I've if within backlog, Asia, bit. clear backlog, a in we with couple in Yes. get I'll start data What little relatively been that -- book-to-bill in occurred And our our the needs the it's all was don't right? backlog we're to against had Two backlog. really don't is, There's year. China, specifically us [indiscernible] not a down very that was the

adjusted we that backlog. So our of out

which of accounts That of normalization billion $X.X the then the the adjustments year. took businesses, under about is for transport third our of backlog all our And we in pressure been have year. that

So if you actually we're think what up versus backlog be year-over-year reporting about now. would it, right our

we a great other and putting confidence activity It become before track that's lot visibility that gives speak elevated, much very, of could is That robust. guide that orders into these and said, of we're very gives the they and our XXXX, And lot thing pipelines, which remains I is forward. why the that Chris very, visibility. us about with so are us orders, a backlog the very

been vertical vertical be they'll and data future. As data for decades, us strong for look, us centers the far a as into a for go, well centers strong have

see. that, lot comment in data of centers. lot competitor what far a As comment we'll pipeline now. that I of I the the growth seeing And just we're of can't in impact as activity and on we're a on seeing and centers, new coming right news seeing China data have, out will about we're could

night. listen infrastructure, I have. earnings to advantage part of if had and meta to that them, And opportunity call of say last the would the to competitive their out that a they're building listen they they you that's

past. we're very, going But much good we it everyone just good than They've see. XX the appear other data that doesn't We're to in But strong. slowing more track strong vertical. are down. in that we'll anything verticals very as centers. But centers understand in closely. that though So they're needs Data wait be to been we're really and really

Joseph Ritchie

comments potential and And go Any for question your us thoughts playing let's you to The on a follow-up any quick background. Super helpful tariff how over maybe exposure to you out? there? question. just just there, and like see this

David Regnery

Joe. had Yes. we've in region now, of I Look, decades region. we mean, strategy for good question, for manufacturing -- a

So you think about in the Mexico. Americas, we have a plant in

have XX in plants over We the United States.

We have plants throughout Europe.

throughout We have Asia. plants

China, outside Some some in China. of

react. our of happen, there's chain? they they -- an there. we've we'll dealt the have sure, For could Should past, impact impact. we've I a flexibility But think Do supply with little bit look, in So will it tariffs.

part been quickly to is and system that going over -- we've make we're cost our sure of margin stay if see understand And something I inputs. time. change, we to very to we're neutral act But we react, our going we think operating able

Operator

question comes Steve next line of Tusa Our the JPMorgan. from with

C. Stephen Tusa

Always interesting times.

just this mix don't you'll resi from X.X%, benefit, is headwind I X%-ish on guide. this the I A which volume. So Roughly, know, maybe prebuy, call guess on annual. X% all

like the are year, about replacement you basis So and if thinking demand perspective, just an volume like events this what will? on underlying a like you from market

Christopher Kuehn

Steve, Chris. it's Yes,

X There's come residential. the right. guide mid-single-digit around into elements growth revenue You're that for of really

that one can first refrigerant multiplied of AXL think the as be X portfolio around mixed that would by, right? You the XX% on the change, X/X maybe from single-digit High X tailwind you gets points. impact, say, of of around year points. price The

of -- XXXX. to maybe that GDP+ returning Those year. money at would could consumer the a it's points be framework tax as that is IRA be really growth beneficial Think cuts. confidence, things be around of starting then element. from and that right, GDP+ X second a the for to GDP. around be to are view state the And a X level tailwind the The for to framework to items That could all tailwinds, deployed.

that the is would around points X dynamic, a then probably headwind. And percentage prebuy which third of element be

guide on X year to around So get residential. X-ish that the is range for altogether, you our growth, which into

XX softer impact would out our we've enterprise it the comfortable necessarily X were for got really, fair, and growth, turned less it's be really point. would be manageable that It to if guidance revenues that to we points. basis things be But it than the in the our And or wasn't XX feel year. markets, was flattish, but it within and

C. Stephen Tusa

guys for you see do the What commercial? light your sense. makes in light What's expectation year that on commercial? Yes,

Christopher Kuehn

we markets -- portfolio Yes. products. got harder will deliver about think of markets to certainly need We're will saves And solution, of the Trane than It's we'll the a the for out. the ultimately need. out of best where Technologies and is. are they kind applied broadest figure unitary versus it's products see we've unitary XXXX, for many plays energy applied, -- the it tons going to harder thing what is The to grow looking at customer the multiple that and involve faster

but see, let's more applied XXXX in unitary. probably So growth for than

C. Stephen Tusa

every said basically useful big And major X to something like spending guy Services like spend given to an that this thing, don't years like, buy? number a revenue? big are Dave, equipment think, Because an that? just Services. considered seems visible really that that a that every it XXx, X relative they people that do money is a like one sorry, a on just how last refurb more service. to life initial XX-year like really number I an annuity? or much Or for is or is I Like just a has seems multiplier like the Okay. such Is topic. like years, you like That the like asset to that owner X for a know,

David Regnery

And understand that yes, XX% and service in asset in million, renewals asset, time for to over added to going change the more tend run controls it of of I life useful advance. to you life, just $X the do over because obviously, you'll the the cost is $X at X% happens. maintenance right? some it years But or make the then think add our XX where the that technology I to mean just So efficiently there's it, about million point period. out continues

So a we're with analysis that with We've old on done very base. lot of number. comfortable the that

the with the I'm XXx the So to X asset. comfortable of over very life

Operator

Vertical Our next the line Sprague from Research. question with of comes Jeffrey

Jeffrey Sprague

not up recently. warmed well, some little need AC, HVAC chilly. It's we need. But don't yes, needing need we're the we an It's in that's what a any we H., --

David Regnery

You a Jeff. probably But heat need ahead. go pump,

Jeffrey Sprague

Yes. Yes.

covered, lot for a So ground little me. a nits maybe of

backlog. Just first on

staging, you and does reach. kind everything into could deliverable 'XX, backlog in Maybe of a reaches. regardless what's far think you color I just out it how give include it far backlog little the how out on of

Christopher Kuehn

I'll Chris. start. it's Jeff, Yes,

call going be $X.XX by majority the end at XX% it's the backlog So systems. HVAC billion of that, driven backlog, or revenue in XXXX. it majority be And to will That of applied that, is of globally. the XXXX. Again, to of it, going Commercial of then

that over with out amount XXXX, majority how majority at that's months. seen XXXX. will terms will But backlog the into in in small and a So demand. the push backlog that's that actually the the last fairly consistent of that years, the of growth customer few really will in, we've within There'll the XX be turn turn

David Regnery

in have don't Services we remember, the backlog. Jeff, And

Jeffrey Sprague

XX like majority the mean like. it something or And means XX that, or doesn't Right. XX% sounds

Christopher Kuehn

not tick then it's XX%. But a or right. above And XX% absolutely Yes. no,

Jeffrey Sprague

how channel X-step generations the the the of the here? pre-buy you just went quarter how And also in of channels your kind Yes. versus as resi, sort on all really just could internal we do weeds we through in think -- perform about

David Regnery

The that that said XX% QX. But We we pre-buy think, was of independent our in of will probably -- but as It's impacted we're obviously in quarter. we about of the that earlier, XX% also with majority QX, was to steps wholesale don't to as think it be all QX distributors, was the QX. happened in But Chris think in that estimating. the X because it and Jeff, hard between in IWTs, Think million $XXX QX, million, $XX prebuy, right? tell, first

the point. will when that into it probably update an you we of second guys that but on get go quarter, we Some give can

Operator

Our next of Coe question the Research. with from Wolfe comes line Nigel

Nigel Coe

services, on so one. here's Lots another of questions

cetera? differential? So I servers, et a margin So does where customer there's know there versus, probably should is just mean connected is. And a but where what involved, there's Is differential parts transactional? what is services between wondering type the matter? that guess, phone versus mix between from growth call mix a predictive, this, I it there connected transactional I

David Regnery

customers hey, for what the assets system of we're if is for want but agreements to we'll Nigel, then sure to doesn't that like we're disclosed that really make our matter. sign maintenance is reasons, I cold are that help have goal it Yes, we more up going my sure both. we if we to obviously, try call service we do down, different in -- me. we just more that sure lot encourage saying, mean, a is haven't make to agreement we that, that because But do customer assets, comprehensive performing. over then a get you the obviously, make the happens, to But And to respond can time. strong

Nigel Coe

Okay. is is between And a margin whether contract the differential more there transactionAXL?

David Regnery

doer because what's be a Yes. them charge on. a someone's not business. I'll usually long-term say going We way no, if one there on grow call, it's a but to, might more. depending a okay, to cold not need, in try That's

customer life. the competitive in because to be we both for we just So try want

Nigel Coe

a I it's It if quite can't be AI. BrainBox It looks on $XX million And then EV. BrainBox. or a seems said deal. like like question I chunky -- Okay. so

on sounds details Chris, note this expand How then really just question accounting I tangible this kind for the you wondering heavy really growth a any give So if can think very just business? of business. like could you like And size, profile? a

if amortization in years Trane think about curious coming amortization step we down the intangible the just down is So from ago? when XX that

Christopher Kuehn

with BrainBox. start Yes. I'll Nigel,

our over of we So that January with that box, less Europe in acquisition week to of meaningful in the on channels We there than a U.S. have another price. like similar actually did from the one million acquiring strategy brain very in first we $XXX we independent had purchase a closed

less perspective. EV that from yes, but an -- So than

company, We're around and Nuvolo got the to of of that's dissimilar will a amortization accounting on It's guide. FX in guide for acquired right, from that part XXXX the in about in with of newly of early-stage kind the amortization expense. -- not acquisition. headwind. impact earnings. But a the $X.XX And that And have business happen we've technology XXXX the our you're BrainBox. expecting negative the lot in terms rules has to incorporated

the It's amortization the of rules back higher going amortization right, Trane last stepping really million accounting expense, investments few lower over acquisitions down on XXXX. depreciation with start around On or the million being a also we in rising in Trane, you're from $XX years that's CapEx the few amortization we've $XX to the made offset comes and had well. some fully that. We've have that that as

XXXX, is X. of in net benefit the So impact that offset and really amortization Trane from the

in you then this Trane It's impact. bigger in step Let's XXXX. see neutral a on year. we'll for 'XX a update really down for amortization, it's next But XXXX,

David Regnery

we It's that we're but rates can far the pretty companies like as technology these we scale. go, small And as today, it. about excited Nigel, growth Yes.

have buildings, data the the start We So and XX,XXX running against to to right? with be increase algorithms we're together. on XX,XXX understand could have going what it customers and that data unstructured already we potential structured there's

business our to service earlier. And a to So this is it's going be going for like I said, be nice tail exciting.

Operator

comes the Our RBC next Dray of line Markets. from Deane Capital with question

Deane Dray

first. there what there's the was timing? didn't of that demand, always terms call on It cuts just anything of postmortem, surprised in play relatively terms in But And that anything back in circle expecting what you'd the seems uneventful, was just who positioning, how you out? nuance Maybe about positioned. back, of the least or you if at kind were prebuy. out you were But terms like of over it competitive you just step this the

David Regnery

Deane. AXL changeover time, would thought prebuy, a I we've job on it operational really, mean fully The team a refrigerant. did the the Not we of was. for product long be said XXXB nice it executing modest We're a to now.

mean But running will for can needed. not pretty of our capability so lot. support the XXX, which much we in model lines factories, have predicted. a as I it was aftermarket the be We we mixed

didn't a the bit got until thing QX. pre-buy would QX say The of than anticipated. had was little more probably realize into we of a maybe in only I I kind prebuy different we is we it

results. But So you prebuy until we're not that oddity. on going to makes really too. QX though, have would wait you the I were about relatively only a don't products. We a it have would Why have sense big been anticipated. quarter saw in might small you impact than and do that maybe numbers again, fourth talking probably more if the But

Deane Dray

because that. going around Good will to And that like be hearing of is user also to be you while say a hear. a I I for XXX

So...

David Regnery

probably on if a help price, Trane we while. We'll out. you it, do. have But worked need The don't for you you it ever

Deane Dray

of your It may happen to be units. one

payments maybe credit. turned credit, progress So circling about then back exactly that played question, some and out hear particular away It be, seems and down shying -- hear. me when from you I But some to it down payments. you China just tightening did way to that getting you said customers or that's second maybe whole verticals. just the also And the have you actually makes tightening the good think on would

So on credit has selectivity to sensitivity? there this been related maybe going any

David Regnery

payment tightening end call down What ship. comes a when credit. we're the the down and -- right? day, the at there before requiring just We're it mean we're requiring requiring looking down of say will is order I we're -- we -- Yes. doing additional order we're we payment in, we're payments, the

of channel, we're specific the So or any any one just not game that operating to that's it's the vertical one with. rules

the And of third to compared And the quarter nice we but our team made progress why. to customers the as job a the fourth doing -- nice educating is in quarter.

the front work new our of us. XXXX. this have But of is We way some in in in business of China. doing half first

Operator

Our of the Stephens. line with from Tommy Moll next question comes

Thomas Moll

we early the higher first quarter. at transport full I headwinds as given Chris, resi in quarter bit of contribution a call the the if provided, thought the the it's fraction it than you look year differently you've about average. first outlook earnings called that out a and just the in

Or is help just conservatism it X, changes about into triangulate us that So is as Just missing you what's some X? Qs dated go there. longer perhaps there X, here? something we're

Christopher Kuehn

Tommy, out, wanted a to It's EPS the normally call We around to Yes. of XX%. XX% full year is that percent as guide X%.

we a guide starting in quarter, and wanted understood. are lot to just confidence ahead So It's X-, for that of average, make X-year bit we which sure [ a have everyone little quarter the a it. strong ] first this of we

in the There's to year, the you the down growth single growth low though, in first expected is year exciting year, and recovery full the transport And the the maybe for As half minus work are in the the XXXX digits or in XXXX markets markets second be the to the expected going transport plus really, half. throughout Americas. be of in for roughly expectations flattish, what's but half. starting second

But see a more yes, how the the out. there's we'll half So plays year first from of of the in headwind year transport.

and the may impact quarter. first into a more We'll largely the It pricing. that normalize, from we're prebuy, we throughout quarter, growth the a then update We by first of conditions that from is the bit really say, where in AXL the year, market the beyond. headwind or think as Residential the will we'll go will little drip see getting half but let's based that on second and second tailwind year, of right? quarter

are me. the out that to X stand those So would

China in a in of that comps again, year. little that Maybe of the the executing Asia. more very business second in Much team, our first Again, get easier the well as the half there, new third you and would half could be be Asia. headwind into the year

X those really the probably dynamics think out be call I now. So would I'd

Thomas Moll

there. But a follow-up, this please if and ask in Europe. if let anything investment I Or think the in recent there's can in there's there, know if is anything terms ask out to mentioned of as a before comment one some just I as strategy you just I more to Dave, some opportunistic want same us call then made update transactions, want that. do. you investments And channel. you wanted on to about share

David Regnery

time. up buying buy HVAC been we've they're great a had They our off. it's in great Commercial business leaders. our us businesses. -- opportunistic Look, these for And them for And to long just are independence Yes.

actually the unfortunately, time. become more with changed not like left, nothing's that's we There's accretive great and had very, of lot very acquisitions almost So in there a just they they're because just instantaneously. this It in just -- our And Belgium of strategy. them But over one was same. Europe. quickly, it's

Thomas Moll

Yes.

turn been it's fully they're and of few as plus think channels them bring we've ready, points So when ready it XX% kind business. I'll it independent those of back. to direct, last percentage the into that of these we're Trane

David Regnery

Thanks, Tommy. Sure.

Operator

that And will question-and-answer to And session. over the conclude I back now for will remarks. our Zac turn closing conference Nagle

Zac Nagle

thank Thanks, for like today's call. operator. everyone to I'd joining

As and to usual, you road questions have weeks. answer We'll the months, the of we'll coming attending on in couple days in things. be available may conferences in next and, be the coming other also any frankly,

to we you very in person see so And soon. hope

great So Thank you. day. I everyone hope has a

Operator

you call. today's all conclude will this And for joining. Thank

You may now disconnect.

Trane Technologies (TT) 30 Jan 252024 Q4 Earnings call transcript