Trane Technologies reported strong third-quarter growth, led by higher orders and revenue across its climate-control businesses. The company raised its full-year revenue outlook while reaffirming its full-year earnings-per-share guidance.
Key details
- Orders grew faster than sales. Bookings reached $7.25 billion, up 21% from a year earlier and 20% on an organic basis. The company’s book-to-bill ratio was 107%, with orders exceeding sales in every segment.
- Backlog expanded sharply. Orders awaiting fulfillment totaled $12.5 billion, up 73% year over year. Backlog in Americas Commercial HVAC rose about 80%.
- Revenue increased 18%. Third-quarter revenue was $6.76 billion; organic revenue growth was 16%.
- Earnings per share climbed 25%. Diluted earnings from continuing operations were $4.79 a share under GAAP, while adjusted continuing EPS was $4.86, compared with $3.82 and $3.88, respectively, a year earlier.
- Operating income rose, but margins narrowed. GAAP operating income increased 15% to $1.34 billion, and adjusted operating income also rose 15% to $1.36 billion. Both GAAP and adjusted operating margins fell 0.4 percentage point, to 19.9% and 20.2%, respectively.
- Cash generation strengthened year to date. Free cash flow for the first nine months was $2.8 billion, up about 60% from the same period last year.
- Full-year outlook shifted on revenue, not EPS. Trane raised its full-year revenue guidance and kept its full-year EPS guidance unchanged. The announcement provided here does not include the revised revenue target or the EPS range.
The combination of bookings growth and a substantially larger backlog indicates a stronger order position than a year ago. At the same time, third-quarter operating margins were lower despite higher revenue and operating income.