TT Financial Analysis

Analysis Date: 1/31/2025

Business Model

Trane Technologies generates revenue through commercial HVAC, residential HVAC, and transport refrigeration solutions

Revenue Sources

• Commercial HVAC (~70% of revenue) - Equipment and services for commercial buildings
• Residential HVAC (~20% of revenue) - Home heating and cooling solutions
• Transport Refrigeration (~10% of revenue) - Temperature control for transport

Revenue Distribution by Channel

• Equipment sales: ~67% of revenue
• Services: ~33% of revenue

Income Statement Analysis

• Strong organic revenue growth of 10% driven by commercial HVAC momentum
• Operating margin expanded 110 basis points on volume growth and price realization
• EPS grew 20% on strong operational performance

Balance Sheet Analysis

• Strong cash position with $1.59B, up 45% year-over-year
• Healthy balance sheet with steady growth in assets and equity

Cash Flow Analysis

• Strong free cash flow conversion at 109% of adjusted net earnings
• Operating cash flow increased 31% year-over-year

Capital Allocation

Company deployed $2.5B in 2024 including $760M in dividends, $470M in M&A, and $1.3B in share repurchases. Maintains balanced approach with focus on organic growth investments, strategic M&A, and returning cash to shareholders through dividends and opportunistic share repurchases.

Management Commentary

Strong execution across diversified, resilient portfolio with continued strength in commercial HVAC

Backlog remains highly elevated at $6.75B entering 2025

Transport markets expected to bottom in Q1 2025 before recovering

Overall Sentiment: Positive and confident about 2025 outlook, supported by strong backlog and continued commercial HVAC momentum

Recommendation

Rating: Buy

Reason for Rating: Strong market position, healthy backlog, and solid execution support continued outperformance

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 7:46:15 AM