“Our global team delivered strong financial performance again in the second quarter through focused execution of our purpose-driven strategy,” said Dave Regnery, chair and CEO, Trane Technologies. “We drove organic revenue growth of 11 percent, expanded adjusted EBITDA margin to 19.7 percent and delivered adjusted EPS growth of 24 percent. Bookings remained near record levels, reflecting healthy end-markets.
“Our solid operating performance through the first half of 2023, resilient portfolio and unprecedented backlog give us confidence in raising our full-year revenue and adjusted EPS guidance. Our leading innovation positions us to leverage energy efficiency and decarbonization megatrends and continue delivering superior growth and differentiated shareholder returns over the long term.”
Highlights from the Second Quarter of 2023 (all comparisons against second-quarter 2022 unless otherwise noted)
- Delivered strong second-quarter revenue, operating income, EBITDA and EPS growth.
- Strong bookings of $4.5 billion with a book-to-bill of 96 percent. Bookings were up 33 percent on a 3 year growth stack.
- Enterprise organic bookings up 1 percent excluding residential HVAC bookings decline.
- Enterprise reported revenues were up 12 percent; organic revenues were up 11 percent.
- GAAP operating margin was up 180 basis points, adjusted operating margin was up 110 basis points to a quarterly record of 18 percent, and adjusted EBITDA margin was up 100 basis points.
- Strong volume growth, positive price realization, and productivity more than offset inflation, supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.
- Enterprise exited the second quarter of 2023 with backlog at 2.5 times historical norms.
Second-Quarter Business Review (all comparisons against second-quarter 2022 unless otherwise noted)
Americas Segment: innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating, cooling and ventilation systems, building controls, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.
- Strong bookings of $3.4 billion with a book-to-bill of 93 percent. Bookings were up 30 percent on a 3 year growth stack.
- Americas organic bookings down low single digits excluding residential HVAC bookings decline.
- Reported and organic revenues were both up 9 percent.
- Americas segment exited the second quarter of 2023 with backlog at approximately 3 times historical norms.
- GAAP operating margin was up 220 basis points, adjusted operating margin was up 100 basis points and adjusted EBITDA margin was up 70 basis points.
- Strong positive price realization, volume and productivity more than offset inflation, supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.
Europe, Middle East and Africa (EMEA) Segment: innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
- Reported bookings were up 24 percent; organic bookings were up 14 percent.
- Reported revenues were up 18 percent, including approximately 9 percentage points related to acquisitions and approximately 1 percentage point of positive foreign exchange impact. Organic revenues were up 8 percent.
- Strong book-to-bill of 99 percent.
- EMEA segment exited the second quarter of 2023 with backlog approximately 70 percent more than historical norms.
- GAAP operating margin was up 40 basis points, adjusted operating margin was up 100 basis points and adjusted EBITDA margin was up 140 basis points.
- Strong positive price realization, volume and productivity more than offset inflation, supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.
Asia Pacific Segment: innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
- Reported and organic bookings were both up 6 percent.
- Reported revenues were up 40 percent including approximately 4 percentage points related to acquisitions offset by approximately 5 percentage points of negative foreign exchange impact. Organic revenues were up 41 percent.
- Strong book-to-bill of 117 percent.
- Asia Pacific segment exited the second quarter of 2023 with backlog approximately 70 percent more than historical norms.
- GAAP operating margin was up 650 basis points, adjusted operating margin was up 670 basis points and adjusted EBITDA margin was up 660 basis points.
- Strong volume growth, positive price realization, and productivity more than offset inflation, supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.