Dive Brief:
- Trane Technologies saw about $5.3 billion in both bookings and net revenue in the second quarter of 2024, which organically grew 19% and 13% year over year, respectively, according to its earnings release.
- Commercial HVAC bookings in the Americas organically grew more than 20% year over year, driving global bookings in the business to increase by the high teen percentages year over year, per its earnings presentation. Revenue in the Americas organically grew 16% year over year to $4.29 billion as a result of strong volume growth, Trane Technologies said.
- “Booking strength continued to be led by our commercial HVAC businesses, where we’re seeing broad-based growth,” Trane Technologies Chair and CEO Dave Regnery said on an earnings call. “As the leading applied solution provider, we are driving significant market outgrowth in the most attractive high-growth verticals in commercial HVAC. As an example, Q2 revenues of our Americas applied solution are up approximately 90% on the three-year stack.”
Dive Insight:
Bookings drove a 16% year-over-year increase in Trane Technologies’ revenue in the Americas, according to the earnings presentation. In the first and second quarters, the company’s revenue over the past three years was up roughly 45% to 50%, Regnery said.
The company attributed the growth in its revenue and bookings to broad-based growth in systems and services across its portfolio, spanning nearly all verticals, with continued strength in data centers and the education, healthcare and high-tech industrials sectors, according to the earnings presentation.
“In top growth verticals, such as data centers, market projections call for an exceptionally strong multiyear [capital expenditure] cycle and high levels of project complexity play to our unique strengths,” Regnery said on the call. He noted that deep customer relationships, innovation and an “elite direct sales force” will enable the company to capitalize on opportunities ahead.
“We estimate that our applied systems carry an 8 times to 10 times multiple of higher margin service revenue over the life of the equipment. So, we’re also excited about the service opportunities that lie ahead,” Regnery said.
The company ended the second quarter with a backlog of $7.5 billion, up 8% from $6.9 billion at the end of 2023, and expects approximately $2.5 billion in backlog for 2025 and beyond, according to its earnings presentation.
“With our continued positive outlook and exceptional backlog position, we expect three-year stack revenue growth to remain at this high range in the second half of the year,” Regnery said. Commercial HVAC accounts for 90% of the backlog, with the majority being longer-cycle applied systems, per the company’s earnings presentation.
Trane expects reinvestments and a focus on its core strategy to drive continued growth in its commercial HVAC business. As a result, it increased its organic revenue guidance for the full year to roughly over 10%, including an expected organic growth of about 8.5% in the third quarter, compared with its prior full year guidance of 8% to 9%.
