Trane Technologies(TT) - 2025 Q1 - Quarterly Report

Financial Performance - Net revenues for Q1 2025 increased to $4,688.5 million, up 11.2% from $4,215.5 million in Q1 2024[10] - Operating income rose to $818.9 million, representing a 29.2% increase compared to $633.8 million in the same period last year[10] - Net earnings attributable to Trane Technologies plc reached $604.9 million, a significant increase of 38.6% from $436.3 million in Q1 2024[10] - Earnings per share (EPS) for continuing operations was $2.74, up 41.2% from $1.94 in Q1 2024[10] - Comprehensive income attributable to Trane Technologies plc was $728.2 million, compared to $360.8 million in Q1 2024, reflecting a substantial increase[11] - Net earnings for the three months ended March 31, 2025, were $609.1 million, a 38.5% increase from $439.8 million in the same period of 2024[20] - Net cash provided by operating activities was $339.5 million, up from $247.2 million year-over-year, reflecting a 37.2% increase[20] - Total net revenues for the three months ended March 31, 2025, were $4,688.5 million, a 11.2% increase from $4,215.5 million in 2024[57] - Gross profit margin increased by 120 basis points to 35.8% for the three months ended March 31, 2025, compared to 34.6% for the same period in 2024, primarily due to gross productivity and price realization[124] - Free cash flow for the three months ended March 31, 2025, was $230.2 million, compared to $175.0 million in the same period of 2024, indicating improved cash generation[153] Assets and Liabilities - Cash and cash equivalents decreased to $860.5 million from $1,590.1 million at the end of 2024[14] - Total assets slightly decreased to $20,117.4 million from $20,146.7 million at the end of 2024[14] - Long-term debt decreased to $3,919.6 million from $4,318.1 million at the end of 2024, indicating improved financial leverage[14] - The company reported a currency translation gain of $110.5 million, contrasting with a loss of $76.6 million in Q1 2024[11] - Total commitments of $2.0 billion were unused as of March 31, 2025, and December 31, 2024[37] - The fair value of the Company's debt instruments increased from $4.6 billion on December 31, 2024, to $4.7 billion on March 31, 2025[38] - The balance outstanding in the supplier financing program decreased from $272.8 million at the end of 2024 to $270.6 million by March 31, 2025[40] - The company maintains two $1.0 billion senior unsecured revolving credit facilities, with maturities in June 2026 and April 2027[36] - Total debt remained stable at $4,771.3 million as of March 31, 2025, compared to $4,770.3 million at the end of 2024, with a debt-to-total capital ratio of 38.8%[144] Segment Performance - Revenue from the Americas segment was $3,800.7 million, up 13.9% from $3,334.8 million in the previous year[57] - Americas segment revenue increased to $3,800.7 million in Q1 2025 from $3,334.8 million in Q1 2024, a growth of 13.9%[78] - EMEA segment revenue rose to $573.5 million in Q1 2025 compared to $553.4 million in Q1 2024, reflecting a growth of 3.8%[78] - Asia Pacific segment revenue decreased slightly to $314.3 million in Q1 2025 from $327.3 million in Q1 2024, a decline of 4.6%[78] - Total Segment Adjusted EBITDA for Q1 2025 was $916.4 million, up from $775.0 million in Q1 2024, representing an increase of 18.2%[78] - Segment Adjusted Operating Income for the Americas segment increased to $676.6 million in Q1 2025 from $545.2 million in Q1 2024, a rise of 24.1%[78] - EMEA segment Adjusted Operating Income decreased to $83.4 million in Q1 2025 from $95.7 million in Q1 2024, a decline of 12.9%[78] - Asia Pacific segment Adjusted Operating Income remained stable at $66.5 million in Q1 2025 compared to $66.4 million in Q1 2024[78] Shareholder Returns - Trane Technologies plc declared cash dividends of $0.94 per share, totaling $210.6 million[16] - The Company repurchased approximately $477 million of its ordinary shares during the three months ended March 31, 2025, with $0.8 billion remaining under the 2022 Authorization[54] - The Company declared dividends of $0.94 per ordinary share for the three months ended March 31, 2025, an increase from $0.84 in 2024[74] - A total of 1,441.6 thousand shares were repurchased at an average price of $354.67 per share during the first quarter of 2025[178] Acquisitions and Investments - The Company completed the acquisition of BrainBox AI Inc. on January 2, 2025, with a total consideration of $190.7 million, including $73.9 million in intangible assets[71][72] - Cash used in investing activities was $385.1 million for the three months ended March 31, 2025, primarily due to capital expenditures of $118.9 million and business acquisitions totaling $265.3 million[150] Tax and Compliance - The effective income tax rate for the three months ended March 31, 2025, was 17.9%, down from 19.2% in 2024[68] - The effective tax rate for the three months ended March 31, 2025, was 17.9%, down from 19.2% in the same period of 2024, primarily due to excess tax benefits and earnings in non-U.S. jurisdictions[126] Legal and Regulatory Matters - The Company is involved in various litigation matters, including asbestos-related claims, but management believes these will not have a material adverse effect on financial conditions[79] - The Company plans to create a trust to resolve asbestos-related claims, with a funding commitment of $545.0 million, including $540.0 million in cash and a $5.0 million promissory note[88] - The company believes that pending legal matters, including asbestos-related bankruptcy cases, are not expected to have a material adverse impact on its financial condition[175] Sustainability and Innovation - The company continues to pursue its 2030 Sustainability Commitments, aiming to reduce customers' carbon emissions by a billion metric tons[108] - Research and development costs account for approximately 2% of annual net revenues, reflecting the company's commitment to innovation and sustainability[139] Market Conditions - The company reported strong demand in the Americas and EMEA for its Commercial HVAC markets, driven by energy-efficient product installations[114] - The company is facing mixed market conditions, with soft demand in transport refrigeration markets, particularly in the United States[114] - The company is actively monitoring macroeconomic indicators and potential supply chain challenges due to recent global trade policy changes[116]