Trane Technologies (TT) Q4 2024 earnings summary

Executive summary

• Achieved record financial results in 2024 with 12% organic revenue growth and 24% adjusted EPS growth year-over-year, exceeding targets across all key metrics and segments, and marking the fourth consecutive year of 20%+ EPS growth.

• Sustained momentum driven by innovation, strong free cash flow conversion at 109%, and a proven business operating system.

• Bookings reached $20.3 billion, up 11% year-over-year, with a $6.75 billion backlog entering 2025 and a book-to-bill ratio of 102%.

• Broad-based growth across 13 of 14 commercial HVAC verticals, with data centers and education as notable contributors and multi-year outperformance in Americas and EMEA.

• Strategic investments in AI and digital solutions, including the BrainBox AI acquisition, to enhance service and efficiency.

Financial highlights

• Organic revenue growth of 12% for 2024, with Q4 organic revenue up 10% and full-year revenues at $19.8 billion.

• Adjusted EPS grew 24% year-over-year; Q4 adjusted EPS up 20% to $2.61.

• Adjusted EBITDA margin expanded by 110 basis points in Q4 to 18.3%; Americas saw 140 basis points expansion.

• Free cash flow of $2.8 billion for 2024, with 109% free cash flow conversion.

• Book-to-bill ratio of 102% for 2024, with a $6.75 billion backlog entering 2025.

Outlook and guidance

• 2025 guidance: 7%-8% organic revenue growth and adjusted EPS of $12.70-$12.90 (13%-15% EPS growth).

• Q1 2025 guidance: 6%-7% organic revenue growth, adjusted EPS of $2.15-$2.20.

• Residential markets expected to return to GDP-plus growth; mid-single digit growth forecast for 2025.

• Transport markets to bottom in Q1 2025, with recovery in the second half and strong growth projected for 2026-2027.

• EMEA commercial HVAC to remain strong; Asia-Pacific to see flattish performance with muted China offset by growth in rest of Asia.