Market Risks and Economic Factors - The company is exposed to various market risks, including fluctuations in currency exchange rates, which may adversely affect financial results [74]. - Non-U.S. operations have functional currencies other than the U.S. dollar, impacting reported results based on currency strength [75]. - Geopolitical conflicts, such as the Russia-Ukraine war, have negatively impacted the global economy and may affect the company's operations and financial performance [79]. - The company has faced supply chain disruptions and increased costs due to geopolitical tensions and public health crises, including the COVID-19 pandemic [83]. Risk Management and Compliance - The company utilizes derivative instruments for risk management to hedge against material exposures [76]. - The company is subject to significant expenditures to comply with various laws and regulations, which could adversely affect financial condition and results of operations [100]. - The regulatory environment surrounding data privacy and protection is increasingly demanding, leading to increased costs and potential fines [96]. - The company may incur additional costs to comply with increasing cybersecurity protections mandated by customers [94]. Cybersecurity and Technology - Cybersecurity risks pose a threat to the company's information technology systems, which could impair operations and financial results [92]. - The company continues to invest in technology systems to enhance operations and mitigate risks associated with cyber attacks [93]. - The company faces risks related to cybersecurity, including potential breaches that could harm business operations and reputation [94]. Environmental and Product Development - The company is committed to reducing one gigaton (one billion metric tons) of carbon emissions (CO2e) from its customers' footprint by 2030 [102]. - The company is on track to offer a full line of next-generation products by 2030 without compromising safety or energy efficiency [102]. - The company is developing next-generation products that utilize lower global warming potential solutions in response to environmental regulations [101]. Legal and Financial Liabilities - Legal proceedings related to asbestos claims may result in material adverse effects on the company's financial condition and operations [84]. - The ongoing Chapter 11 cases for subsidiaries Aldrich and Murray present uncertainties regarding asbestos liabilities and potential financial impacts [90]. - If the Distribution is deemed taxable for Irish tax purposes, significant tax liabilities may arise for Spin-off Shareholders, potentially impacting the company's financial condition [117]. - The company may incur substantial U.S. federal income tax liabilities if the Distribution does not qualify as tax-free under the Internal Revenue Code, which could adversely affect its financial results [121]. Taxation and Shareholder Implications - The company is subject to Irish dividend withholding tax at a rate of 25% on dividends paid to shareholders, which could impact share prices [126]. - Shareholders receiving dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax unless they have a connection to Ireland beyond their shareholding [127]. - The company emphasizes that dividends and share repurchases are subject to uncertainty and may be modified or discontinued based on various factors, including market conditions and business strategy [125]. - Changes in tax laws and regulations could materially impact the company's effective tax rate and financial condition [112]. - Changes in tax laws or interpretations could materially increase the company's tax burden and affect its financial condition [114]. - The company may face increased taxation if certain legislative proposals or regulatory changes are enacted, impacting its effective tax rate [115]. Corporate Governance and Strategic Positioning - The company continues to analyze and evaluate acquisitions and divestitures to strengthen its industry position and enhance product offerings [104]. - The company’s ability to protect its intellectual property rights may be limited, potentially impacting its competitive position [98]. - The company completed a Reverse Morris Trust transaction on February 29, 2020, distributing approximately 50.1% of Ingersoll Rand common stock to Spin-off Shareholders, resulting in a special cash payment of $1.9 billion received by the company [116]. - The company is governed by the Irish Companies Act, which may afford less protection to shareholders compared to U.S. corporate laws [123].

Fourth-Quarter and Full Year 2024 Results January 30, 2025 Forward-Looking Statements This news release includes "forward-looking" statements within the meaning of securities laws, which are statements that are not historical facts, including statements that relate to our future financial performance and targets, including revenue, EPS, operating income, operation margin and earnings; operating leverage; our business operations; demand for our products and services, including bookings and backlog; capital d ...

Core Insights - Trane Technologies plc (TT) reported better-than-expected fourth-quarter 2024 results with adjusted EPS of $2.61, surpassing the Zacks Consensus Estimate by 2.8% and increasing 20.3% year over year [2] - Revenues reached $4.9 billion, beating the consensus mark by 2.2% and rising 10.2% year over year on both reported and organic bases [2] Revenue and Bookings - The Americas segment generated revenues of $3.8 billion, exceeding the estimate of $3.7 billion, and increased 12.2% year over year on both reported and organic bases. Bookings rose 1% year over year to $3.7 billion [3] - The Europe, Middle East and Africa segment reported revenues of $690.3 million, up 5% year over year on a reported basis and 7% organically, but missed the estimate of $700.2 million. Bookings increased 8% year over year to $614.8 million [4] - Revenues from the Asia Pacific segment were $381.2 million, up 1% year over year, beating the estimate of $337 million. Bookings rose 8% year over year to $367.8 million [5] Balance Sheet and Cash Flow - Trane ended the quarter with a cash balance of $1.6 billion, up from $1.1 billion in the previous quarter. The debt balance increased to $4.3 billion from $4 billion [6] - The company generated $3.2 billion in cash from operating activities and $2.8 billion in free cash flow during the quarter [6] 2025 Guidance - For 2025, Trane expects revenue growth of 6.5-7.5% and organic revenue growth of approximately 7-8% compared to full-year 2024. Adjusted EPS is projected to be between $12.70 and $12.90, higher than the Zacks Consensus Estimate of $11.86 [7]

Group 1 - Trane Technologies reported revenue of $4.87 billion for the quarter ended December 2024, reflecting a year-over-year increase of 10.2% [1] - The company's EPS for the quarter was $2.61, up from $2.17 in the same quarter last year, exceeding the consensus estimate of $2.54 [1] - The reported revenue surpassed the Zacks Consensus Estimate of $4.77 billion, resulting in a surprise of +2.18% [1] Group 2 - Total bookings for Trane Technologies were $4.66 billion, below the average estimate of $4.96 billion from two analysts [4] - Revenue from the Americas was $3.80 billion, exceeding the five-analyst average estimate of $3.72 billion, with a year-over-year change of +12.2% [4] - Revenue from EMEA was $690.30 million, slightly above the average estimate of $685.59 million, representing a +5.5% year-over-year change [4] - Revenue from Asia Pacific was $381.20 million, surpassing the estimated $342.57 million, with a +0.5% change compared to the previous year [4] Group 3 - Over the past month, shares of Trane Technologies have returned -1.5%, while the Zacks S&P 500 composite increased by +1.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Trane Technologies reported quarterly earnings of $2.61 per share, exceeding the Zacks Consensus Estimate of $2.54 per share, and showing an increase from $2.17 per share a year ago, representing an earnings surprise of 2.76% [1] - The company achieved revenues of $4.87 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.18% and up from $4.42 billion year-over-year [2] - Trane Technologies has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $2.14 on revenues of $4.37 billion, and for the current fiscal year, it is $12.81 on revenues of $21.04 billion [7] Industry Context - The Building Products - Air Conditioner and Heating industry, to which Trane Technologies belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financial Performance - Fourth-quarter 2024 net revenues were $4.9 billion, up 10% year-over-year, with organic revenues also increasing by 10%[3] - Full-year 2024 bookings reached $20.3 billion, an 11% increase compared to 2023, with strong performance in Americas Commercial HVAC, which grew by 14%[3] - GAAP continuing EPS for fourth-quarter 2024 was $2.67, reflecting a 20% increase from $2.23 in the same quarter of 2023[3] - Adjusted EBITDA margin for full-year 2024 was 19.4%, up 140 basis points from the previous year[18] - The company reported a strong free cash flow conversion of 109% for full-year 2024, totaling $2.8 billion[24] - For the full year 2024, net revenues totaled $19,838.2 million, compared to $17,677.6 million in 2023, marking a year-over-year growth of 12.2%[53] - Adjusted EBITDA for the year was $3,846.3 million, compared to $3,184.4 million in 2023, indicating a year-over-year increase of 20.8%[74] - Earnings from continuing operations rose to $2,614.2 million in 2024, compared to $2,068.9 million in 2023, marking an increase of 26.4%[82] Guidance and Future Outlook - Full-year 2025 guidance anticipates reported revenue growth of approximately 6.5% to 7.5% and organic revenue growth of approximately 7% to 8%[24] - The company expects GAAP and adjusted continuing EPS for full-year 2025 to be in the range of $12.70 to $12.90[24] - The backlog at the end of 2024 was $6.75 billion, positioning the company well for growth in 2025[3] - Trane Technologies plc plans to continue its market expansion and product development initiatives to drive future growth[56] Segment Performance - Strong bookings in the Americas segment for fourth-quarter 2024 were $3.7 billion, up 1% year-over-year[8] - The Americas segment reported net revenues of $3,802.5 million, a 12.1% increase from $3,390.3 million in the previous year[60] - Adjusted operating income for the Americas segment rose to $669.3 million, with a margin of 17.6%, compared to $562.6 million and a margin of 16.6% in the prior year[60] - The Asia Pacific segment achieved net revenues of $381.2 million, slightly up from $379.2 million, with adjusted operating income increasing to $96.1 million, a margin of 25.2%[60] Cash Flow and Capital Management - Free cash flow for the year ended December 31, 2024, was $2,789.0 million, up from $2,151.2 million in 2023, reflecting a growth of 29.7%[85] - Net cash provided by operating activities increased to $3,145.6 million in 2024, compared to $2,389.6 million in 2023, an increase of 31.7%[82] - Capital expenditures for 2024 were $370.6 million, up from $300.7 million in 2023, indicating a rise of 23.2%[82] - The company achieved a free cash flow conversion rate of 109% in 2024, up from 103% in 2023, indicating improved cash generation efficiency[85] Earnings and Margins - Operating income for the year 2024 was $3,500.1 million, up 21.0% from $2,894.0 million in 2023[50] - The operating margin for the full year 2024 was 17.6%, consistent with the previous year’s margin of 16.4%[53] - Operating income for the quarter was $807.6 million, with an operating margin of 16.6%, compared to an operating income of $687.7 million and a margin of 15.5% in Q4 2023[53] - Adjusted net earnings attributable to Trane Technologies plc for 2024 were $2,567.9 million, compared to $2,023.9 million in 2023, reflecting a 27.1% increase[50] Shareholder Returns - Dividends paid to ordinary shareholders increased to $757.5 million in 2024 from $683.7 million in 2023, a rise of 10.8%[82] Inventory and Debt Management - The company reported a decrease in inventory from $2,152.1 million in 2023 to $1,971.5 million in 2024, a reduction of 8.4%[79] - The company’s long-term debt increased to $4,318.1 million in 2024 from $3,977.9 million in 2023, an increase of 8.6%[79] Tax and Share Count - The tax rate for Q4 2024 was 18.0%, compared to 16.0% in Q4 2023, indicating an increase in the effective tax burden[53] - The weighted-average number of diluted common shares outstanding was 227.3 million for Q4 2024, slightly down from 229.9 million in Q4 2023[56] Strategic Initiatives - The company highlighted ongoing strategic initiatives in sustainability and climate solutions, aligning with global trends towards decarbonization and energy efficiency[29] - The company emphasized the importance of non-GAAP financial measures in assessing financial performance and trends, which are detailed in the accompanying tables[46]

Company Overview - Trane Technologies is a designer, manufacturer, seller, and servicer of climate control products for HVAC and transport solutions, founded in 1885 and headquartered in Swords, Ireland [11] - The company generates approximately 72% of its revenues from the United States, with the remainder coming from over 100 other countries, and no single customer accounts for more than 10% of revenues [11] Investment Potential - Trane Technologies holds a Zacks Rank of 3 (Hold) and has a VGM Score of B, indicating a solid position in the market [12] - The company is particularly appealing to growth investors, with a Growth Style Score of A and a forecasted year-over-year earnings growth of 23.5% for the current fiscal year [12] - In the last 60 days, five analysts have revised their earnings estimates higher for fiscal 2024, with the Zacks Consensus Estimate increasing by $0.08 to $11.16 per share [12] - Trane Technologies has an average earnings surprise of 7.9%, further enhancing its attractiveness to investors [12][13]

Company Overview - Trane Technologies is expected to report quarterly earnings of $2.54 per share, reflecting a year-over-year increase of +17.1% [3] - Revenues are anticipated to reach $4.76 billion, which is a 7.6% increase from the same quarter last year [3] - The Most Accurate Estimate for Trane Technologies is higher than the Zacks Consensus Estimate, indicating a bullish outlook from analysts [10] Earnings Expectations - The consensus EPS estimate has been revised 2.4% lower over the last 30 days, suggesting a reassessment of earnings expectations by analysts [4] - Trane Technologies has an Earnings ESP of +0.81%, which suggests a likelihood of beating the consensus EPS estimate [11] - The company has a Zacks Rank of 3, indicating a hold position, which combined with the positive Earnings ESP suggests a potential earnings beat [11] Historical Performance - In the last reported quarter, Trane Technologies exceeded the expected earnings of $3.23 per share by delivering $3.37, resulting in a surprise of +4.33% [12] - The company has successfully beaten consensus EPS estimates in each of the last four quarters [13] Industry Context - In the Zacks Building Products - Air Conditioner and Heating industry, Lennox International is also expected to report earnings of $4.22 per share, reflecting a year-over-year change of +16.3% [17] - Lennox's revenue is projected to be $1.23 billion, up 6.9% from the previous year [17] - Lennox has an Earnings ESP of 2.74% and has beaten consensus EPS estimates in the last four quarters, similar to Trane Technologies [18]

Professional Background - Robert F Abbott has been managing his family's investment accounts since 1995 and incorporated options strategies such as covered calls and collars with long stocks in 2010 [1] - Robert F Abbott holds a Bachelor of Arts and a Master of Business Administration (MBA) degree and is based in Airdrie, Alberta, Canada [1] - Robert F Abbott is a freelance writer and operates a website aimed at providing information for new and intermediate-level mutual fund investors [1] Disclosure and Independence - The analyst has no stock, option, or derivative positions in any mentioned companies and no plans to initiate such positions within the next 72 hours [3] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with any mentioned companies [3] - Seeking Alpha emphasizes that past performance does not guarantee future results and does not provide investment recommendations or suitability advice [2] - Seeking Alpha's analysts are third-party authors, including both professional and individual investors, who may not be licensed or certified by any regulatory body [2]

Core Insights - Trane Technologies (TT) has demonstrated strong financial performance, with a significant increase in both earnings and revenues in the third quarter of 2024, surpassing market expectations [5][6] - The company has a consistent history of returning value to shareholders through dividends and share repurchases, indicating confidence in its business model [2][7] - TT's stock has outperformed both its industry and the broader market over the past year, reflecting positive investor sentiment [10] Financial Performance - In Q3 2024, TT reported an adjusted EPS of $3.37, exceeding the Zacks Consensus Estimate by 4.3% and marking a year-over-year increase of 20.8% [5] - Revenues reached $5.4 billion, beating consensus estimates by 2.4% and showing an 11% year-over-year growth [5] - Bookings increased by 5% year-over-year, both on a reported and organic basis [5] Shareholder Returns - TT paid out dividends of $507.3 million, $561.1 million, $620 million, and $683.7 million in 2020, 2021, 2022, and 2023, respectively, showcasing a commitment to enhancing shareholder value [2] - The company repurchased shares worth $250 million, $1.1 billion, $1.2 billion, and $669.3 million in the same years, further indicating a strong focus on returning capital to shareholders [7] Market Position and Growth Prospects - TT's strong performance is supported by favorable policies and regulations in the U.S. and Europe, with expectations for net revenue growth of 11.1%, 6.1%, and 6.2% in 2024, 2025, and 2026, respectively [6] - The company is benefiting from robust demand in the commercial HVAC markets, driven by its customer-focused solutions and energy-efficient product offerings [17] - Business transformation initiatives have led to annualized savings exceeding the target of $300 million in 2023, enhancing operational efficiency [13]