Thermo King Maker Trane Technologies' Shares Are Surging: Here's Why

Trane Technologies PLC TT shares are trading higher by around 9% after the company reported Q3 FY23 results.

The company posts revenue growth of 12% Y/Y on a reported and 9% Y/Y on an organic basis to $4.88 billion, beating the consensus of $4.80 billion.

The company witnessed strong volume growth, positive price realization, and improved productivity in the quarter.

Bookings rose 10% Y/Y (+8% Y/Y organically) to $4.95 billion, led by Americas Commercial HVAC.

Adjusted operating margin expanded by 130 bps Y/Y to 18.0%, and the adjusted EBITDA margin expanded by 100 bps Y/Y to 19.5%.

Adjusted continuing EPS of $2.79 (+23% Y/Y), beating the consensus of $2.66.

Americas segment: Net revenue was $3.89 billion (+12% Y/Y), Bookings of $3.96 billion (+8% Y/Y), Adjusted operating margin 19.3% (up 120 bps Y/Y), and Adjusted EBITDA margin 20.8% (up 80 bps Y/Y).

EMEA segment: Net revenue was $618.6 million (+21% Y/Y); Bookings $585.6 million (+29% Y/Y), Adjusted operating margin 19.1% (up 230 bps Y/Y) and Adjusted EBITDA margin 21.1% (up 260 bps Y/Y).

Asia Pacific segment: Net revenue of $376.3 million (+flat Y/Y), Bookings $400.2 million (+12% Y/Y); and adjusted operating margin 22.0% (up 180 bps Y/Y), and adjusted EBITDA margin 23.3% (up 160 bps Y/Y). 

The company exited Q3 2023 with a backlog of $6.9 billion. Operating cash flow stood at $1.48 billion in the nine months, compared to $933 million a year ago. Free cash flow stood at $1.29 billion.

The company held $960.0 million in cash and cash equivalents as of September 30, 2023.

In Q3, the company returned $172 million in dividends. Additionally, in the third quarter and October, the company deployed $250 million for share repurchases.

2023 Outlook: Trane Technologies raised the adjusted EPS outlook to $9.00 from $8.80-$8.90 vs. the consensus of $8.87.

The company revised 2023 reported revenue growth to 10%-11% from about 10% earlier and organic revenue growth to 8%-9% from 8% earlier.

Also Read: Trane Technologies Acquires Connected Workplace Solutions Provider Nuvolo - What's On The Cards? 

Price Action: TT shares are up 8.63% at $206.73 on the last check Wednesday.