On November 1, 2023, Trane Technologies PLC (TT, Financial), a global climate innovator, released its third-quarter earnings report. The company reported a 12% increase in revenues to $4.9 billion, with organic revenues up by 9%. The GAAP operating margin rose by 80 basis points, and the adjusted operating margin increased by 130 basis points. The adjusted EBITDA margin was up 100 basis points to 19.5%. The GAAP continuing EPS was $2.74, while the adjusted continuing EPS was $2.79, marking a 23% increase.
Financial Highlights
The company's bookings rose by 10% to $4.9 billion, led by a 14% increase in Americas Commercial HVAC. The backlog increased by 7% to $6.9 billion, 2.5 times the historical norms. The GAAP operating income was $864 million, up 17% from Q3 2022. The adjusted operating income was $879 million, a 21% increase. The GAAP continuing EPS rose by 15% to $2.74, while the adjusted continuing EPS increased by 23% to $2.79.
Business Segment Performance
The Americas segment reported strong bookings of $4.0 billion, with organic bookings up 7%. The reported revenues were up 12%, with organic revenues up 11%. The GAAP operating margin increased by 50 basis points, and the adjusted operating margin rose by 120 basis points.
The EMEA segment reported bookings up by 29%, with organic bookings up 12%. The reported revenues were up 21%, with organic revenues up 3%. The GAAP operating margin increased by 220 basis points, and the adjusted operating margin rose by 230 basis points.
The Asia Pacific segment reported bookings up by 12%, with organic bookings also up 12%. The reported revenues were flat, with organic revenues down 1%. The GAAP operating margin increased by 200 basis points, and the adjusted operating margin rose by 180 basis points.
Balance Sheet and Cash Flow
As of September 30, 2023, the company's cash flow from continuing operating activities was $1.5 billion, and the free cash flow was $1.3 billion. The company deployed approximately $172 million for dividends in the third quarter and $250 million for share repurchases in the third quarter and October. The company expects to continue to pay a competitive and growing dividend and to deploy 100 percent of excess cash to shareholders over time.
2023 Guidance
Trane Technologies PLC (TT, Financial) expects full-year reported revenue growth of approximately 10% to 11% and organic revenue growth of approximately 8% to 9% versus full-year 2022. The company expects GAAP continuing EPS for full-year 2023 of approximately $8.75 and adjusted continuing EPS for full-year 2023 of approximately $9.00.
Explore the complete 8-K earnings release (here) from Trane Technologies PLC for further details.
