Trane Technologies (TT) Q4 2024 earnings summary

Executive summary

• Achieved record 2024 results with 12% organic revenue growth and 24% adjusted EPS growth year-over-year, marking the fourth consecutive year of 20%+ EPS growth.

• Free cash flow reached $2.8 billion (109% conversion), supporting M&A, dividend increases, and share repurchases.

• 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%.

• Strong execution and outperformance in commercial HVAC, with multi-year growth in Americas and EMEA.

• Continued high levels of business reinvestment and balanced capital allocation.

Financial highlights

• Q4 2024 organic revenue grew 10%, with revenues of $4.9 billion; adjusted EBITDA margin expanded by 110 bps to 18.3%, and adjusted EPS increased 20%.

• Full-year organic bookings up 11%, organic revenues up 12%, and full-year revenues at $19.8 billion.

• Q4 GAAP operating margin rose 110 bps to 16.6%; adjusted operating margin up 70 bps to 17.2%.

• Q4 services revenue up low-teens, equipment revenue up high-single-digits.

• Since 2020, revenue CAGR of 12%, adjusted EBITDA margin up 400 bps, and $12 billion capital deployed.

Outlook and guidance

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

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

• Free cash flow conversion expected at 100% or greater in 2025.

• Residential expected to grow mid-single digits; transport markets to bottom in H1 and recover in H2.

• EMEA commercial HVAC to remain strong; Asia-Pacific to be flat due to China softness, offset by growth elsewhere.