Trane Technologies plc (NYSE:TT) Q4 2022 Earnings Call Transcript

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David Regnery: Yes, it’s a great question. And I’d say I’m so proud of our team in commercial HVAC EMEA, yes, we had 40% plus revenue growth in the quarter, we had some supply chain issues earlier in the year that we highlighted. Okay, a lot of those, so many of those got rectified in the fourth quarter. So that helped us get the volume out. But I look at the order rates as well. And the order rates are up mid-teens, two-year stack up 20. We are seeing tremendous demand for our thermal management systems. So our growth rates in Europe are really a function of our innovation that we’ve been able to deliver to the marketplace. And we are winning share in Europe, and we are winning with our customers. So it’s a really great story with our business in EMEA.

I’ve been with that business for a long time. And I was in the days when it was not such a great business. But it is very, very strong today. We have such a great leadership team there that’s constantly pushing the envelope on innovation, so expect more in the future.

Operator: We’ll take our next question from Steve Tusa with JPMorgan.

Steve Tusa : Hey, good morning. Good. Can you just provide a little bit of color on the difference in Americas between unitary and applied just on the revenue side? And then maybe orders as well?

David Regnery: Sure, let me put my glasses on here so I can see. We were strong, really on an equivalent basis. The Americas was strong, really in both. I mean, our unitary revenue was up was north of 30%. Steve, and our, the Applied Business in the Americas was mid-teens. So both very, very strong. Our bookings — go ahead.

Steve Tusa : Yes. And then sorry, go ahead, bookings. Sorry about that.

David Regnery: Yes, bookings were high single digits in unitary and around 34 applied very strong result.

Steve Tusa : Got it. And then how do you kind of see just the high-level profile of these businesses? You said the revenue growth is going to be pretty consistent in throughout the quarter from a cadence perspective? How do you see the businesses, each of those businesses performing just at the high level of commercial HVAC, TK and resi, relative to the annual guidance?

Christopher Kuehn: Steve, as we think about commercial businesses, I’ll speak for Americas and EMEA really just our plans right now up high single digits in terms of revenue on the full year, the significant backlog just gives us really strong visibility to the revenue profile. And then Dave talked about the stacking effect from a bookings perspective. Could we see 10% growth in some of these businesses and pockets? Possibly, it really depends on the maturity of the supply chain, which we’ve seen gradually get better over the last several quarters, and we’ve got embedded in the guide, a gradual improvement in 2023. But if it got stronger, could that output be stronger on the top line? Yes, it could be. But let’s see how the year kind of plays out. I think for Asia, we’re calling it dynamic. We’re calling right now for stable growth as you work throughout the year, but it’s a dynamic market, and we’re watching it closely, but very strong backlog entering into the year.

Steve Tusa : Sorry, I mean for first quarter, I don’t know if that’s who you’re talking about just the first quarter high level on the three businesses.

Christopher Kuehn: Yes, I would say first quarter overall, enterprise, like I mentioned earlier, I see the revenue growth in Q1 in line with how we see the full year. That 68% kind of range, commercial HVAC, I would expect to be stronger as we work throughout the year, just given the profile, we’ve got some backlog, but certainly carrying into the first quarter. We’ll open up the bookings here for the second half shortly. But I would expect that to be at the enterprise level and that 68% range, and we’ll see how that plays out.

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