Executive Summary

Q4 delivered 10% organic revenue growth to $4.874B, adjusted EBITDA margin expanded 110 bps to 18.3%, and adjusted EPS rose 20% to $2.61; backlog remains elevated at $6.75B, reinforcing 2025 visibility .
Americas and EMEA Commercial HVAC were the key drivers (Americas revenue +12%, EMEA +5%), while Asia Pacific stabilized (+1% revenue) with outsized margin gains; sequential guidance implies a strong start to 2025 (Q1 adjusted EPS $2.15–$2.20) .
2025 outlook: reported revenue growth 6.5–7.5% (organic 7–8%) and GAAP/adjusted EPS $12.70–$12.90; FX (~100 bps) and M&A (~50 bps) expected to trim earnings by ~$0.20 .
Board increased the quarterly dividend by 12% to $0.94 (from $0.84), signaling confidence in cash generation and capital return strategy .
Street consensus from S&P Global was unavailable at the time of analysis, preventing a formal beat/miss assessment; near-term stock catalysts include backlog-to-revenue conversion, service growth durability, and data center/applied project pipeline .

What Went Well and What Went Wrong

What Went Well

Commercial HVAC strength across Americas and EMEA drove double-digit growth and margin expansion; management emphasized “green for green”—solutions that are good for the planet and the bottom line .
Services continued double‑digit growth; installed base from complex applied systems creates a durable service tail with lifetime spend “8–10x” the original equipment cost, underpinning margin resilience and future cash flows .
Asia Pacific showed sequential improvement with Q4 revenue up 1% and ~280 bps adjusted margin expansion, reflecting disciplined execution and productivity despite China credit tightening .

What Went Wrong

Transport refrigeration bookings fell high‑20s and revenues down low‑teens in Q4; management expects the market to bottom in Q1 2025 and recover in H2, leaving near‑term headwinds .
Residential faces a pre‑buy headwind ($75–$100M impact largely in Q1), muting early‑2025 growth despite A2L refrigerant mix tailwinds later in the year .
Asia weakness persisted through most of 2024 (Q3 APAC revenue −21% YoY) due to macro softness and tightened credit policy in China, though Q4 showed improvement .

Financial Results

Consolidated performance by quarter (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Net Revenues ($USD Billions)	$5.307	$5.441	$4.874
Bookings ($USD Billions)	$5.340	$5.213	$4.659
GAAP Operating Margin (%)	19.5%	18.8%	16.6%
Adjusted EBITDA Margin (%)	21.1%	20.7%	18.3%
GAAP Continuing EPS ($)	$3.33	$3.43	$2.67
Adjusted Continuing EPS ($)	$3.30	$3.37	$2.61

Notes: Q4 adjusted EPS is $0.06 below GAAP due to net non‑GAAP adjustments including a $16.1M non‑cash contingent consideration adjustment and other items .

Q4 2024 year‑over‑year

Metric	Q4 2024	Q4 2023	YoY
Net Revenues ($USD Billions)	$4.874	$4.424	+10%
Adjusted Continuing EPS ($)	$2.61	$2.17	+20%
Adjusted EBITDA Margin (%)	18.3%	17.2%	+110 bps

Segment breakdown – Q4 2024

Segment	Net Revenues ($USD Billions)	GAAP Operating Margin (%)	Adjusted Operating Margin (%)	Adjusted EBITDA Margin (%)	Bookings ($USD Billions)
Americas	$3.803	18.0%	17.6%	19.5%	$3.677
EMEA	$0.690	17.4%	17.3%	18.9%	$0.615
Asia Pacific	$0.381	24.7%	25.2%	26.5%	$0.368

KPIs and balance sheet

KPI	Value
Backlog ($USD Billions)	$6.75
Free Cash Flow (FY 2024, $USD Billions)	$2.789
Free Cash Flow Conversion (%)	109%
Days Sales Outstanding	57.9
Inventory Turns	6.4
Cash Balance (12/31/24, $USD Billions)	$1.590
Debt Balance (12/31/24, $USD Billions)	$4.770

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Reported & Organic Revenue Growth (%)	FY 2024	~10% (reported & organic)	~11% (reported & organic)	Raised
GAAP & Adjusted EPS ($)	FY 2024	~$10.80	~$11.10	Raised
Reported Revenue Growth (%)	FY 2025	N/A	6.5–7.5%	New
Organic Revenue Growth (%)	FY 2025	N/A	7–8%	New
GAAP & Adjusted EPS ($)	FY 2025	N/A	$12.70–$12.90	New
Adjusted EPS ($)	Q1 2025	N/A	$2.15–$2.20; midpoint $2.17	New
Quarterly Dividend per Share ($)	Ongoing	$0.84 (declared 10/9/24)	$0.94 (declared 2/5/25)	Raised 12%

Additional guidance color: FX (~100 bps) and M&A (~50 bps) expected to reduce 2025 earnings by ~$0.20 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
AI/digital building management	Focus in prior materials was on bookings/backlog and raised guidance; specific AI was not a major theme in Q2/Q3 press releases	Closed BrainBox AI acquisition; leveraging 42k connected buildings and >2M connected assets to augment structured data with AI/ML for efficiency	Increasing focus on AI-enabled services
Commercial HVAC/applied systems	Q2/Q3 showed strong bookings/revenue growth in Americas/EMEA with applied driving margins	Applied revenues up >120% (Americas, 3‑yr stack) and >90% (EMEA); broad‑based vertical growth incl. data centers and education	Strengthening, multi‑year tail
Transport refrigeration	Not specifically highlighted in Q2/Q3 press; enterprise strength dominated narrative	Bookings down high‑20s; revenues down low‑teens; bottoming expected in Q1 with H2 recovery; ACT mid‑teens growth in 2026–2027	Near‑term headwind; medium‑term recovery
Residential (A2L transition)	Not central in Q2/Q3 releases	Pre‑buy ~$75–$100M to mostly impact Q1; A2L (R‑454B) transition priced high single digits, reported as volume/mix; FY mid‑single‑digit growth expected	Temporary Q1 headwind; improving thereafter
Regional trends (Asia/China)	APAC down in Q3: revenue −21%, bookings −30%; margins compressed	Q4 APAC revenue +1%, adjusted EBITDA margin +280 bps; tightened China credit policy normalizing through H1 2025	Sequential improvement
Tariffs/supply chain	Not a key feature in Q2/Q3 press	“In region for region” manufacturing mitigates tariff risk; prepared to adjust inputs to remain margin neutral over time	Manageable, monitored risk

Management Commentary

“We achieved record financial results with strong organic revenue growth of 12%, powerful free cash flow conversion of 109% and adjusted earnings per share growth of 24% – our fourth consecutive year of earnings per share growth of 20% or more.” – Dave Regnery, CEO .
“Our solutions are green for green, good for the planet and good for the bottom line.” – Dave Regnery .
“We are initiating 2025 guidance with 7% to 8% organic revenue growth and adjusted EPS of $12.70 to $12.90… about 100 bps negative FX and roughly 50 bps from M&A… expected to negatively impact earnings by about $0.20.” – Chris Kuehn, CFO .
“Our Service business now… is $6.5 billion and just tremendous growth… think about $6.5 billion that’s growing at close to 10% rate per year.” – Dave Regnery .
“Applied Systems… present tremendous service opportunities with higher margins that are largely still ahead of us.” – Dave Regnery .

Q&A Highlights

Services durability: double‑digit multi‑year growth; ~$6.5B revenue base; continued investment in technician tools and diagnostics to sustain 25%+ organic leverage .
Commercial HVAC breadth: orders up high single digits; strong pipeline across 13 of 14 verticals; applied revenues up >120% (Americas) over 3 years .
Backlog staging: ~$6.75B with the majority expected to revenue in 2025; services not included in backlog .
Residential: Q1 headwind from pre‑buy; A2L mix/price tailwind (~4 pts); GDP+ framework and IRA tailwinds to support mid‑single‑digit FY growth .
BrainBox AI acquisition: purchase price less than $300M; near‑term amortization expense; step‑down in legacy Trane amortization offset by higher depreciation/amortization from recent investments .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable due to provider limits at the time of analysis; therefore, formal beat/miss cannot be assessed against Wall Street consensus [GetEstimates errors].
Directionally, company results were strong versus prior year and backed by elevated backlog and robust Commercial HVAC demand, but we cannot quantify deviations versus Street without the S&P Global consensus .

Key Takeaways for Investors

Backlog provides high confidence in 2025 execution; majority expected to convert within 12 months, supporting the 7–8% organic growth guide .
Services growth and applied installed base create a durable, higher‑margin annuity; management cites lifetime service spend of 8–10x initial equipment cost .
Near‑term watch items: transport bottoming in Q1 and residential pre‑buy impact; H2 ramps and A2L mix tailwinds should smooth quarterly cadence .
2025 EPS headwinds of ~$0.20 from FX/M&A are embedded in guidance; organic leverage target 25%+ and FCF conversion ≥100% intact .
Dividend raised 12% to $0.94, reinforcing capital return and FCF confidence; significant repurchase authorization provides optionality .
Strategic AI/digital initiatives (BrainBox AI) enhance building optimization and service differentiation, potentially accelerating margin accretion in Services .
Tactical setup: strong Q1 guide ($2.15–$2.20 adjusted EPS) despite transport/resi headwinds; focus on Commercial HVAC pipeline, backlog burn, and Services momentum for upside signals .

Non‑GAAP adjustments: Q4 adjusted EPS excludes items such as a $16.1M non‑cash contingent consideration adjustment and other costs; GAAP EPS of $2.67 vs adjusted $2.61 reflects net adjustments detailed in the release .

Trane Technologies plc (TT)·Q4 2024 Earnings Summary