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Dive Brief:

• Trane Technologies’ organic net revenues rose 6% year over year to $4.4 billion, led by a 9% increase in enterprise revenue, according to its Q4 2023 earnings.  
• The company reported that net revenue in its Americas segment increased 8% year over year to over $3.3 billion, with organic bookings up 13% to $3.6 billion. Trane attributed this growth to its commercial HVAC business, which was up by mid-teen percentages year over year and increased more than 50% over the past three years.  
• “Our applied bookings, where we estimate an 8 to 10x multiplier of higher-margin services for every dollar of equipment sold, are up over 100% on a three-year stack,” Trane Technologies CEO Dave Regnery said on the company’s earnings call. “As we look at our commercial HVAC end markets over the next several years, we see a strong pipeline of projects increasingly playing to our unique strengths.” 

Dive Insight:

As global commercial HVAC markets “continue to be robust,” the firm is “thriving in key verticals such as data centers and high-tech industrial, working alongside these highly sophisticated customers to solve their most pressing challenges with ultra-efficient bespoke solutions,” Regnery said. 

Backlog in Trane’s commercial HVAC business has nearly tripled over the past three years and grew by about $700 million in 2023, Regnery noted. He pointed to a shift in backlog composition toward commercial HVAC systems, including a large percentage of long-cycle applied systems. In addition to a mid-teens increase in commercial HVAC bookings across the Americas, the firm grew its revenues in the mid-20 percentages, with revenue for equipment up more than 30%, the CEO said. 

“Services growth was also outstanding, up mid-teens as our service business continues to compound at a rapid rate,” Regnery said. 

In its Americas segment, Trane reported that its adjusted operating income increased 23% year over year to reach $562.6 million and that its adjusted operating margin improved by 200 basis points to 16.6%. The Americas segment spans commercial heating, cooling and ventilation systems; building controls and solutions; energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions in North America and Latin America. Growth in this segment was led by strong volume growth, positive price realization and productivity, which more than offset inflation, the company said in a Feb. 1 release.