Trane Technologies (TT) 2 Feb 232022 Q4 Earnings call transcript

Good morning. Welcome to the Trane Technologies Q4 2022 Earnings Conference Call. My name is Lisa, and I will be your operator for the call. The call will begin in a few moments with the speaker remarks and the Q&A session.

[Operator Instructions] I will now turn the call over to Zac Nagle, Vice President of Investor Relations.

operator. Thanks, thank earnings us conference and fourth Trane for XXXX quarter call. you morning for joining Technologies Good This call is tranetechnologies.com, where being webcast on find accompanying our the presentation. you'll website at

our recording this and We are call also on website. archiving

the SEC Please of of are historical that are to federal Please that factors made securities go today's to some the statements our considered not to law. made facts anticipated X. our in filings Slide cause safe description call actual forward-looking materially pursuant differ are of results. for and a Statements harbor may see provisions results from

This our presentation non-GAAP news are which to the explained in also includes release. attached financial tables measures,

Dave me CEO; Chair and Kuehn, and Joining are and CFO. today's on Regnery, Executive call Chris Vice President

turn the Dave. to I'll over Dave? call that, With

everyone, joining today's call. and Zac, on for us Thanks,

Slide Let's turn to X.

I'd long-term our on differentiated Before to I purpose-driven financial value. drives dive shareholder results is strategy, in, few spend our a minutes and like which

is far-reaching to and That's climate Our low human was to strategy we megatrends, the weather transition extreme has Urgent again carbon is economy to one on warmest health. environment, effects serious and XXXX of like the which change on the years record, needed aligned is our to powerful accelerate green see action economy. uniquely Technologies where to Trane events. positioned continue a and lead.

sustainability advance own decarbonization accelerating homes Our their We're and our transforming of commercial buildings, innovation customers industry the is and transport. helping goals.

customers by by XXXX. contributing to challenge, tons metric While X billion to gigaton pledge emissions our a reduce

The team, and customers, superior growth for powerful margins customer across strong us relentless strong deliver planet. focus free end for a our driven our value is and strategy, board, creation purpose Our shareholders, strong result the enables our the innovation cash flow. and profile, to

strong delivered Moving in team XXXX. slide X, our global performance to

and fourth compare quartile revenue peers year. rank both the the for adjusted industrials, our organic top in results and for will and confident we growth the to quarter full broader we're the EPS again As

teams other have designed resiliency excellence, on record strength tenacity results demonstrated and delivered metrics. system executed navigating XXXX, in myriad supply for and related of persistent globally. macro operating global They've building virtually inflation, key a Throughout extraordinary all is and business Our challenges which XXXX. operational chain and across our

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XX% While we're based, global this seeing XX% HVAC, strengths been businesses a demand commercial broad levels. bookings up up our in organic record led by HVAC, in a the HVAC two-year than particular Americas absolute on driven nonresidential tremendous we've were growth nearly stack. commercial has commercial XXXX were years bookings on more past to The stack. bookings over two-year two has delivered

gain the We growth addition to of continue to of investors look in rates levels, more at our understanding to and businesses strength complete bookings encourage absolute to a our backlog.

backlog. would billion billion our with revenues and $XX.X fourth book-to-bill $X exceeded bookings organic revenues XXXX of XXXX, referenced of further XX%. disclose and release. revenue by $X.X organic XXXX bookings Customer XXXX $XX.X were by in earnings billion example, to in organic up record absolute in never number into more X%, to HVAC been revenues billion have anticipate billion Likewise, entering organic and XXXX rate XXX%. our quarter, total half up to per $X.X book-to-bill backlog were up $XX.X an was book-to-bill the heading would in that by in commercial As growth to midpoint bookings well norms. need absolute Still higher. historical higher were over demand, our while be in adding entering to excess $XXX quarter, That about were million was our bookings billion. decline revenues of still throughout absolute bookings fall XX% for XXX%. backlog while and for about guidance is of level enterprise Backlog segment backlog quarter approximately billion XXXX flat We by each revenues over At quarter. XXXX. elevated remain Further, backlog the XXX% bookings the over already XX% that order we than decline $X Xx to XXXX $X equate a compared to of I billion bookings when would expect the

$X to would to levels normal of return over billion, or $X decline more need billion than approximately to backlog bookings quarter. For per billion more by $X

we that have have $X we will bookings that of XXXX recognize backlog and billion or with robust, degree we of in comps enter high we a XXXX, difficult more. While remain confidence that will

for Turning guidance our to XXXX.

We strong growth, and continued flow. cash revenue free EPS expect growth

We strong deliver consistent proven despite markets a end outperform system to to have execution business macro our operating enables strategy and environments. us challenging

and shareholders deliver We positioned number the term. have track to turn of a over differentiated returns shareholder are financial Please to delivering slide multiyear strong X. performance long well for record

discussed we dividends delivering As revenue performance share teams exceeded repurchases. our cash XXXX of significantly I strong at in proud our flow and and returning despite significant EPS to growth and shareholders and outset, cash solid am while global persistent for delivering free targets I the through leverage macro challenges,

XXX% drove we XX% the fell of XXXX. which King December demand, year, While the flow target businesses of into HVAC first meet of of of commercial flow strong exceptional million cash net to an our month free of approximately and customer adjusted in receivables the Thermo our timing at $XXX volume in shifted conversion. quarter in shipments earnings the free cash for short was We

ensure cash safety the of supply Net inventory been We continuity of dynamic invested this free XXX%. have stock environment. in in in fourth million two $XX would quarter these areas about also to flow

number Please X. turn slide to

business drives Flywheel This our accelerate consistent growth. into refer growth, customer Trane as Flywheel reinvest competition. profitable more most the further investments relentless to between to in the problems. key elements drives and and we high-performance of of our is of to customers turn one which our Technologies cash innovation it is strategy the long-term our fueling back complex to One and solve important differentiators most innovation market our through Leading

unwavering to year, year shareholders We this ongoing our are that enabled after time. commitment to It's drive over our in good business, focus bad. us in financial and for has invest in in times performance differentiated heavily

to free the XXX since we growth past repurchases. conversion and of $XX expansion Over XXXX, with in dividends including flow XXXX, of in of compound more excess revenue return cash in margin the form $X.X five basis XXX% pandemic billion share than in capital, a annual years, the and delivered and deployed rate, well we've X% shareholders points billion

and the in Looking forward, us And which investments later consistently to are the accelerating track leveraging business. you continue about outlook performance record to we ways to of we'll see the can talk our presentation expect continue our positioned reinvest deployment XXXX, in long the entering some we of the strong well term. strong Overall, over exceptionally year. in are in capital we

to slide X. number Please turn

teens against discussed over we're dollar and confidence our of earlier which from revenue adding ratio to on low at innovative an double Americas Residential already record Bookings XX% and mid-teens single single expected was and stack, mid very And the for down bookings sell-through digits again high with a a were in low up to in that XXX%, growth up digit visibility digits continue our I nearly at demand. and businesses, prior in healthy of demand growth. was standout base The historical backlog XX% approximately particular guidance norms two year comprise up grow presentation, levels stock customer the and levels, comp, another were end In in decline our high now bookings. strength the of portfolio. bookings year still As services two-year XXXX. were nonresidential commercial products further is and residential, in are quarter. HVAC is revenues a mid-single high market with revenue normalize, XXs Xx up reflecting our resulting bookings to for digits. quarter as book-to-bill quarter services growth, continued absolute a high including in is

closely We and XXXX. them manage as in mix have positions IWDS residential to in or historically quarter business. Distributors fourth our continue our entered Wholesale we And inventory their help with to high they work backlog the Independent

across with our partnership was position, the entering result. are of I'm goal mitigate to the we IWDS in inventory We our risk inventory channel. pleased the believe with stranded Our channel. and the XXXX a took good a as approach

more follows XX% gains Overall, This up overview in business XX% Our backlog unprecedented growth. strong remains We've on than high good in traditional historical for the included than in but more were quarter presentation, levels, globally refrigeration down two-year Bookings strong market businesses which Thermo expected, America our historically shows growth revenue Thermo XXXX the Americas stack. another of the King back slide of this as Xx King had near still modestly transport into XXXX. very at share levels. our visibility a and business with future revenues. at providing is Backlog XX% QX.

more leveraged able in challenges in HVAC supply throughout impacting were also and were also conventional three low double in importantly the digits. We chain with two-year teens was are to which up highlighted In the robust results revenues EMEA, business, efficient challenges to Services bookings to revenue leverage. quarter delivered XXXX. more we've more quarter strong. up Turning times seeing systems growth up these excess with many of cooling. for commercial demand XX%. four heating very of and overcome our that than and acute been tremendous Thermal fourth have We're growth XX% stack strong again were once Bookings robust management than

business XX% growth of quarter We digits than detail strong that single refrigeration revenue business down in in the performance in the higher refrigeration transport historical EMEA presentation. digits. norms. slide was transport market double low in delivers the Our Overall backlog on elevated remains discussed XX EMEA a with also organic

XX%. strong in to team up HVAC delivered than And up revenues services QX Turning commercial the with Pacific, more another very quarter mid-teens. Asia

large still bookings sector up stack year resilient outside up approximately in the Asia XX% as was double down above digits. bookings revenue related high and high-tech single digits up Asia teens. were high Two-year historical remains bookings and quarter of China. tough to norms. elevated China in expected prior backlog with the were comps Overall, bookings

the to like to Chris. turn I'd over Now, Chris? call

performance XX% across Please XXX in encompassing was points EBITDA turn was quarter, enterprise overall job up XX% in does the margins adjusted board. conditions. is which the bolsters mix delivered of strong our resiliency We enterprise teens mix equipment services And market all throughout company's services Services organic growth XXXX. strong year. growth low and of adjusted services approximately Dave. to respectively. were up basis strong Strong and XX%, high teens both EPS Thanks, nice slide Organic was prior were the revenues. our in number consistently and revenues versus This X. a up slide virtually

Please the turn discuss number key slide to dynamics the revenue X to for quarter.

So key I'll delivered business each margins. for our each The on the are expansion focus strong drivers margin my margin same We our comments of businesses. in of segments.

So more than growth, productivity we've realization, of highlights side the the quarter. offset in persistent other on the right positive inflation and the page, price robust and positive volume modestly consolidated material

leverage innovation strong investments across also of a businesses number expansion in accelerate margin We across the to initiatives. key

pleased the we two made coupled As mitigating EMEA growth in businesses, to over in progress volume quarter. are with the quarters, mentioned challenges expansion significant the margin chain past which with acute we've led our significant strong supply previously,

to back Dave? over like I'd the turn to call Dave. Now

XX. turn slide Please number to Chris. Thanks,

strong and services gains strong innovation, with with and on leading a strong and fourth Americas, significant we've growth throughout verticals, the industrial for remain demand commercial driving order In historical products healthcare, positions. elevated higher, commercial demand high over bookings two-year HVAC. focus continues operational we strong full norms, been visibility robust the HVAC our of innovative exited our Xx is bullish market share we education, never outlook in into businesses. year relationships have positions, customer be with we datacenters, as across As is market and discussed customer growth providing excellence XX% market and call, And revenues. our of the hallmarks brands the and Relentless has to where The that demonstrated our out by the time. historically backlog nonresidential underlying levels are and for backlog is markets high-tech stack. more quarter are Demand us on than business that future XXXX

only underpinned by environmental business energy tailwinds secular which decarbonization efficiency, HVAC are and is commercial of long indoor Our stronger. term quality growing

tailwinds and and Science as the We related also from policy Act, Education, see Inflation drivers the such new regulatory Act. Stimulus, Reduction CHIPS ongoing and and

bookings that lie to process the term across is franchise to market business continuing the significant market revenue Our remains premier The and well residential the is Near see positioned outlook ahead. normalize as commercial dynamic. capitalize HVAC well opportunities and on the we market underway.

in the saw we third fourth quarters. As and

units range. believe For process pricing, believe regulatory down our this backlog, likely we With and will we the XXXX, supportive revenues flat. and in from tailwinds initiatives market policy in normalization results elevated mid-single share digit be relatively gains,

scenarios cliff our encompasses for plus We scenario XX% and about in business. single digits is see a don't minus guidance Our of low the or residential range. residential

a would for So headwind to continue term, residential XX% GDP a us. plus X% decline a to Longer the present see business enterprise. we as

to continue in be diversified the end portfolio plus business. significantly low XXXX. in about products outlook our for outperform see is calling markets And of Turning the refrigeration transport in Act transport digit aftermarket more topics to Americas refrigeration in for We'll XXXX. the refrigeration, transport XXXX XXXX. average and we transport flattish. as talk with our of track weighted growth a growth outperform single term, record, trailer markets end Consistent refrigeration strong Longer GDP to expect section. plus, interest to we in our and

Turning macroeconomic geopolitical with commercial and weighing. muted to HVAC, picture remains market growth EMEA, the challenges

momentum significantly are by four and solutions, innovative we've and forward, see thermal times of our which traditional out been over aided going markets systems, a heating outgrow and period more sustainability opportunities the management solutions EMEA HVAC market. market able long the than to growth are to continued Given time. efficient three cooling gaining for in leading We

outgrew the a driver was key EMEA Russian single EMEA high market end XXXX. decline digits transport year. removal market the in of the King of markets to the the refrigeration, for up Thermo Turning

digits low we to digits, mainly to mid-single single uncertainty As the in return XXXX, expect related market down the be to region. to economic

XXXX. solutions end to to Our provide outgrow continue do products expect with our to in us which strong innovative we and markets, platform again

strength the we could continues pharmaceutical, forecasts. We to verticals. electronics, market And environment in dynamic and markets healthcare add see relatively to XXXX. and in remains to well, Turning complexity stable continue and COVID continued Asia, the to perform to unpredictability these if continue growth datacenter, see

to dynamic one continues markets. more the of be Asia

this our which cautiously XX% represents we're So on optimistic about portfolio. of segment,

to the like turn over I'd Chris? back Now, call Chris. to

these turn our in Embedded Please our and XX. we're slide Dave a for how key Flywheel, Dave. for end XXXX at our business is levels reinvestment strong our out our leverage. Thanks, creation in looking of markets guidance framework number provided high our good markets, reflects to builds end around in value views. guidance innovation and which across philosophy growth

billion us of more in Regarding year, growth, about of $X.XX to per XX% at XXXX, X%, as level revenue to adjusted ending X% the growth. revenues. to $X talked record or back backlog. $X.XX of we're of EPS XXXX And the with XX% we Through XXXX and This in billion $X gives visibility into beginning share, sitting XXXX. a or good half last to approximately organic earnings

completed a in M&A that year for from on growth of of full expect we XXXX neutral into organic target. are X% leverage There We're in few approximately FX year. And leverage key to targeting plus organic XX% play from have our be XXXX. the We basis. bolt-on a factors acquisitions

So I'll help of guidance. these minutes couple covering factors a spend frame to the

solid drive First, we're price and margins. other and volumes incremental expecting incremental and material strong to inflation modest offset

of as chain, XXXX, normalized we've the fully not realization which at where thrives. slow into business continue expecting on put a it well is will we're system productivity, to expecting be earliest. pressure and our seen we're steady in strong This to supply while really XXXX improvement Second, throughout operating the until

In the trend quarter X fourth we deflationary year, and quarter a Tier around base prices. early environment the saw dynamic. of metals prices the metal last part third Third, for remains for

these XXXX. approximately increased each pricing and copper, months a in the However, aluminum on much earnings the metals aluminum in for potential spend To our deflationary two has roughly over last split update our steel. last of copper, steel, third negating you question is from a million on quarter, X and call $XXX Tier benefit

as in investments the XXXX see as on the an in We higher not the business in this inflation deflation incur normal at inflation and opportunity down or modest also environment X year. Net seeing significant logistics we're energy they costs. stage suppliers, we automation, platforms, across to guidance wage baking double from seeing than costs. in into early key Tier Fourth, using in and and manufacturing are deflation electrification favorable we're key and freight advanced among other digital our We're increases programs.

We targeting these XX be a in will XX segment incremental spend are areas, points to embedded basis of P&L. which across

points incremental of and This basis XX year. average approximately is spend above our per beyond

XX So XXXX We've reinvestment we're in long highlighted how we that in incremental guidance basis can these we're to term. make our And XX confident investments the range. total. points hitting of is while over spend we targeting business win

investments and well. additional corporate CapEx have We earmarked in our guidance as

transactions on strong quarter leverage X% year, our M&A X% cuts versus to will The transparency. than a it's that be at but as first not approximately have our amount, M&A. effect to while percentage years, about guidance, leverage leverage wanted to reported excludes stronger M&A. each We'll highlight about factor Lastly, consider organic provide revenue as add two organic inclusive will points payout something leverage the to we next in in the costs. our will referenced several highlight they our of to math reported It's over leverage I huge leverage a related integration off simply a earlier net enterprise our of the organic

QX. anticipate, free capital And we cash should issues which a year, XXX% we down be December cash specifically do flow to year, $XXX barring bring shifted to receivables better. about conversion not working levels Net inventory. in persistent have around expect be we early XXXX expect million cash, or all chain collection to supply we Turning into strong from that

track business incremental Please including rate to from We $XX an XX. remain of $XXX go million slide transformation, deliver XXXX. number run to on savings million in

savings transformation our we invest targeted our we the inflation. We cost across system and high portfolio. continue XXXX to a XXXX. into offset technologies, an operating investments discussed number be started gross Trane And year system ROI of launched improvement innovation business operating is our to projects other investments of program the other designed further is each well drive these continues part when in beyond To continuous mindset and clear, integral fuel to I to for business productivity that

impossible productivity While that past organic the been has level supply improving to it's tumultuous realize leverage recover is years, to been contributing given the XXXX. of chain productivity and gross over our target in macroeconomic plus three as backdrop, XX% slowly

to remain for XX. go focused with Please slide cash balanced We strategy shareholders. allocation our highest the number deploying to opportunities consistently capital returns excess committed on

continue we through our relentless to First, strengthen reinvestment. core business business

with Second, evolve. optionality a we're maintaining that continued balance us our to committed provides as sheet strong markets

we Third, time. excess consistently expect cash to of XXX% over deploy

approach Our calculated the trades balanced strategic shareholder repurchases stock that term long our M&A includes intrinsic below as returns, further and value. improves share

to XXXX dividends, $X.X in balanced allocation our on to XX. and of our capital to including $XXX update share million billion, we billion capital an deployment $XXX Please executed XXXX. And approximately turn I'll XXXX, approximately M&A. repurchases, and provide number to slide outlook and million In strong $X.X for

We cash over billion deploy and deployment excess targeting of to in are in $X.X expect time. XXX% capital XXXX,

we continue to our in active approach. remains M&A discipline pipeline and exercise Our

$X.X we remain our billion approximately remaining share current under authorizations. calculated have attractive value, shares repurchase and Our intrinsic trading below

balance to cash, Our powder continue moving free flow forward. strong allocation dry and us optionality excellent capital sheet, liquidity give and

turn Dave? to the back over Dave. Now to call I'd like

number digits. transport the outperform up XXXX, XX% Thermo Thermo turn the Thermo than North XXXX was and while to was markets In transport up The right-hand EMEA refrigeration markets significantly the illustrated in in have on markets EMEA on of King page. XX% XX, businesses table XXXX King refrigeration down their America Chris. high Americas X% were more up end single were the XXXX side as Please our Thanks, slide both King while

and the very are In XXXX, to again outperform to the our the be Thermo we've King flat with record. track markets We once years. achieved for over we with gains to pleased consistent expect two share strong down modestly past

gain global XX%, King We've added We roughly help understanding and investors the between better XX% information of and the XX%, that approximately a the Asia. split footnote enterprise businesses. Thermo slide the Thermo is King additional also quarter to size included and revenue to of EMEA analysts X% Americas has segments a the of our this

term data XX, turn slide time. The some trailers Please refrigerated we've to for been Act long through number forecast the their has updated view supports XXXX. highlighting for

Now point XX,XXX expected the market minus actual and to back takeaways XX%. rebound is low XXXX. to chart forecast XXXX at continue to mid-XX,XXX-unit to growing from units market a in about units in or in that forward XXXX. single The this flat XXXX. the plus plots key is be the that to digits is XX,XXX but And Dip XX,XXX that units

Additionally, our with portfolio transport refrigeration businesses a are a business. aftermarket healthy diversified

transport positions bus, and GDP proven refrigeration long is this believe the a small We the plus, to term. us large We trucks, in rail for plus have a over business outperform APUS, markets. track air, record strong and and

to decarbonization intensify, slide products go we innovative summary, positioned services. and to to number XX. increased efficiency, trends outperform are continue mega consistently, for Please demand and sustainability driving energy In

take XXXX our And questions. and we'd solid full a your performance in we differentiated team world's us of of accelerate place believe foundation business confidence to returns uplifting innovation our and over system, global technologies long We term. strategy, shareholder guidance. leading our power the The in delivering underpinned year be demand, are happy culture. deliver unprecedented the and in best and to the give address revenue Operator? customer engaging backlog right and operating the these team, EPS of progress now, high our to have trends We by the levels strength and continued strong

Instructions] [Operator

comes Our with Julian from Barclays. first question Mitchell

X% plus waiting question that the cost late the is core -- year? all? trend? price and sort kind is of of in first thoughts year, goal spend through waiting maybe sort and first the also around year, of that half just morning, the leverage any there any versus early second The in on the particularly anything sales cadence of versus Good investment or organic half that for skews Again, XX% the at that the

Right roughly being in growth it's innovation. terms really with full been in revenue it’s spends, investment now, throughout be it morning, good see first jump range really how equal $X.XX year I we XXXX, being of let as then years, the of in see is with quarter, project and QX add? course to we than and we would in XX% the Anything the our Julian. XX% want We about in. and start that year year. spin probably leverage Dave QX me I'll we $X.XX And to point. really see we've earnings. throughout start Hey, the roughly you of plus, really is we XX% quarter. the typically EPS, than But the ratable average, with throughout a of XX% to around This is started, stronger around, this may throughout our line kind the bit leading think I going Chris, it's to at full cadence XX% the see year, many investments think between to a in first historical that roughly adjusted full But year earnings. And The that really be balanced. of year.

a business, Sure, I my has where where bit a little well think, on higher? comments. referred from you, XX differentiated that our of doing? we that into there to that talked we an about reinvest just Flywheel track and on our us plan vantage in tell proven Julian, would drive the absolutely. on leader love Based be could the in top that's revenue future. the see as my of plus, something I opening we we to hi, to love how leverage opportunities, Chris industry, line, quarter First but find continuing I opportunities for a in growth the point, all, It's you record innovation to

the sort Is transport is at the And if markets half? half? second think and pronounced And about assuming on weakness you. sort that more basis, the residential of the of more Thank helpful. pieces? to very transport of weakness those are we're the two first that a looking we then global way right in That's resi

with I residential. mean, let's start

rates. be we half. comments as range. at you a Thermo clear On have x think or Julian of our in be specific I residential. strong first we're the be down backlog, second X%, strong actually able minus plus and we specifically will Americas, right we We We'll that if the there, have now, hit tailwinds pretty full half being around see IRA, will look for think changes, some as on our digit that King, they will probably year with you regulatory tailwinds But the to the think own that production the data, for we that to and in year, stronger later look see in at residential assumes business the price. that that mid-single trailer based OEMs some some

seen haven't demonstrate them that. We

towards we'll out. the that year some half, but first that of the is how plays second push belief volume half my from So the see will actually

two in in But our lot as the or both as think King far we've whether market will last outperforming cases, the Europe, demonstrated years. in conditions there. be that's of As economic we capability down a we the the markets Thermo Americas over plan Europe, on the

Gautam We'll take next question Khanna our from Cowen. with

the HVAC the in Thanks, just that seeing in on weakness I pipeline guys. project morning. any, commercial domain? evidence Thank about Hey, are you wanted any of to you. you forward ask Good

I'm sorry just – repeat

curious I'm just like.

sorry, am ahead. I go

weakness forward any – Yes,

across businesses our Yes, global I got sign. which strength this really, in good the foreword. slowing Yes, that no, is a in the basis, Americas, see on commercial right, a we're look verticals, at don't down. okay, lots HVAC We actually, if you always of many

regulatory with as as the changes CHIPS the In towards year tailwinds see Act. well as far with half fact, we as of some back IRA, the

that's front us. of Okay, all-in

be those tailwinds. nice So book-to-bill of will With a XXX%.

really We XXXX. our Europe have a fourth fourth been lot strong in quarter. just there challenges be winning issues business. about commercial supply chain blunt of HVAC, had Europe. lot just a it, to throughout in our In innovations. with we're with Americas in A we faced of really dramatically quarter, the those some backlogs And improved

growth COVID You revenue growth, surprise. our Asia, in of XX% And our of there. a continued strength About to were but double I as second teens, order see XX%. quarter our quarter, the in mean, of up up strong. revenue rates And XX%. digits, double then points they our that five strong kind high fourth were in bookings revenue very revenue specifically, the Asia up still was be the remain up - from so strong, problems rates was a growth to a mean, close and lot order digits. was hangover we with was And I China, was that was in the over In had

cautiously optimistic as we're China reopens on So it then. Asia

thorough the for quantify then lastly, you And in the sales much how Thanks have guidance answer. year? embedded just price this you could

Yes, against XXXX pricing. Chris. think XXXX. we're is with have this levels in of to I we record carryover be going Gautam, price comping Certainly comps Hey, modest tough going into

multiple year. out during remained about of remain environments. to actually two in X.X playing of how our years price to costs close positive. we've input on These XXXX. business think last the But inflationary see points Right XX to year. It's nimble price in price full costs a system not You had do highly the we of points react operating strength the full we we year planning now on we're ‘XX, It's increases price.

probably to So the be going range? X.X% for the nimble. in to range X% Could remain it in carryover. that it's Yes, that's we're

Stanley. next question from Morgan comes Joshua Pokrzywinski Our with

of if good items? some give you half morning. thinking probably wondering the mentioned, a just on stimulus how of detail think you're second Hi, you phenomenon. I more can about there's any I us guess

further the ‘XX conversion cushion of you on of more be would on you of sensitivity the that but maybe that think a terms can Dave cushion you source you you worth be a IRA And year? potential do the Is when think just about gave front? of orders have that? in story, a about versus that backlog maybe So kind bookings really what in think ‘XX growth?

Josh. question, nice Okay,

we're education what demand, within in with think I vertical. stimulus, now the we're obviously, seeing a I'll start right seeing that lot first of

business, in XX%. vertical you're looking education it's up in our If the to close the XXXX, Americas, at equipment

in XXXX, some XXXX, you Okay, for and I it’s was, have continue it think to change that order believe time have installed. that's actually I the if going an until booked, September now. to

we And certainly to the make IRA, that very We with obviously well that happen. residential to see in funds exactly space, that's really half right states, it's continuing to for with now we available. from in to we're education that's did at absolute the very that the the customer? are in make flow on in being is, We're that what able the you strong how commercial space. and as IRA. to as a the that's generate. do see we'll back going it see key simple And the both successful, different Fed the the in So framework, booking work will do and with that the to dollars our something that's take year, sure complex states then states same. we're happen. to and through the being the how of you clear good that we'll with worked going The really, pretty the really that funding IRA was operate as very, And still

lot of As that But to certainly a us. CHIPS in front all going of in go, I that's back front vertical, half. opportunity, all-in far some XXXX. we yes, of be Act we, customer of us. could an had great that have really And strength that's to But happen bookings in be that's mean, it's going we the relationships. as

here that first applying are start can the up they opened funds. these so quarter being think applications the in I for just

that's really bad plan So from operations. all given time of in it us, up duration front get to a takes planning actually to the

with next take our UBS. Chris question from We'll Snyder

supply the by heat back into you. benefits the the of feel the back available just half? year. I to following and IRA you on half capacity in do prior expected pickup around the wanted I commentary how through the in to Thank start potentially mean, some up coming about pump meet of demand

Yes, a good question. it's

start the I'll I chain. think with supply

fourth The I the supply quarters to quarter I'm third improve gets sure the than continues we've quarter. the the fourth supply better gradually. chain was we done quarter, first chain think see normal. in I quarter, the a would in before back what is several to call But that

concerns. capacity is as far As have don't capacity concerned, we

in As walls. embeds four thinking lean a with that company we're expand looking to, our for capacity our operating constantly system, ways our own to

happen very fourth in That So starts it we'll happen be hopefully comfortable, we're will demand. meet quarter. the to to and the able

drive good that. specifically Appreciate up transport which to on And ask the for I follow the sequential the Americas, in to seem of a you. chunk bookings, wanted slowdown. Thank

bookings as As forward, opened up. you. we pick look XXXX expect should bookings Thank the order we to there back half up

with opened been And up with means of in Thermo up Hey, time. the businesses King is We've last now second start is our at selective Chris, what this for we I'll half that years. the this backlog of the answer. Chris, opening it XXXX haven't orders couple

with what need. they are pricing not into quarter, backlog them end We're it's making therefore fourth the insights into and not so. that the at talking We at its customers; we or and getting just on from of bookings strong this are way units point

basis business OEMs more market get a we tell the their may that of But little into it is a seeing The as get business, will in a slightly that favorable. through Dave Americas points trailer up. half, one a the really we're and well. the year that markets how diversified the commented throughout being on transport have cadence business, year-over-year business, very their you strong depending two that output second I fleets lot innovation being up on so bit about to solid. shift For the

again And outgrow plans we've it so the have markets several we been for in to to years, do while last the those able XXXX.

Yes, large XXXX. Chris, look business stack, a you King and the on into Americas going only over if XX% I the rates order up are backlog two-year add very thing is Thermo would at

and extremely a performed the outperform continue well, has in will business it's XXXX, to So that markets in XXXX.

question Ritchie Joe We'll from take our Sachs. with Goldman next

order just teed Thanks. in know seems been it particularly on Dave, really lot great. remain business, There's rates trends today. Thanks. stimulus backlog about of as decelerating. as up commercial the about earlier too nonroad today liked morning, levels XXXX. discussion you on And way kind HVAC a from an kind bit the above your I issue. shouldn’t side Doing think the what's perspective, growth the like you exit rate Good probably I your like focus of the normal but well year, construction, the the early, it's of occurring backlog of mean I really a think beyond even guys. strong. you supply chain still

business XXXX And believe the billion normal our to they backlog as And plenty Yes, on, end for of going a only sure could to period we think a visibility for greater. not end range. backlog $X to which probably backlog what requirements and lot future that allows time, will of also elevated suppliers I think our have gives enter help of at be. a us of visibility a are or any us in XXXX revenues, our be make long to with years, our I we'll to you're be but the spot do Joe, and -- we $X billion

commercial there a I this some follow-up pump much anticipated. to color? heat quarter? maybe you Like, bit demand? guess specifically, strong drove to hear. great rate than really just EMEA, What growth stronger was more That's what you're this quarter, maybe Can little HVAC my really in seeing that one is we that that is And provide

the it's had proud year our in we had I'd commercial issues so say in we XX% great earlier some And supply quarter, in growth chain highlighted. plus a of we team HVAC Yes, I'm EMEA, question. that yes, the revenue

rectified of fourth lot so the Okay, in those, quarter. got a many of those

get But XX. order rates well. as look rates two-year And order the stack at out. us helped the the mid-teens, that volume I up up are So

We thermal tremendous demand systems. for seeing are management our

our innovation we function are the able we are that we've to rates So share really Europe, in been marketplace. our growth Europe winning to customers. are with And a in winning of our and deliver

great a our not long such a business. for it it's been was in in with And time. great strong really business business a was story days very, EMEA. is that with So today. the But very it I've when I

leadership there the We constantly team pushing that's innovation, have on expect envelope so such future. more great in the a

take our Steve with Tusa from next We'll JPMorgan. question

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

unitary XX%. equivalent We can the was here glasses my Steve, revenue really so an put Sure, our, basis. both. mean, Americas strong, I was let in in Americas of was on the me and Business mid-teens. up was The strong, our north on see. I were really Applied

So strong. both very very,

-- bookings ahead. go Our

go Yes. And then bookings. sorry, ahead,

about Sorry that.

digits unitary Yes, strong bookings were XX single and high very in result. around applied

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

the plays the it quarters, gradual in we've speak significant really the chain, just commercial pockets? maturity year, be in see of it year But which output stronger, better think the right terms top up Possibly, improvement and our stronger plans of in depends profile. the gradually high how seen Americas embedded just on single the to the revenue businesses, now strong talked backlog bookings out. a for But revenue on the that we of got stacking supply be. last kind it as these really and and visibility then really I'll we've perspective. about from some let's businesses gives guide, get full we about effect a Steve, if the EMEA over digits on Dave of see line? growth us Could Yes, the could And in several XXXX. could XX% got

it’s the for calling the for think backlog as dynamic. market, a strong Asia, year, throughout it We're year. work it now we're right calling closely, stable you dynamic I but watching but and very we're entering growth into

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

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

question next Citi. with our Kaplowitz take will Andy from We

HVAC. and Good, not are get guys. just XXXX. in commodity prices. you And up -- mid to to Chris, So you? couple in think XX% given good in the commercial morning, pricing rise not as of continued that and first know too mentioned weeks, much it carryover you in much to might the I recent Hey, raise But digits thought I Dave how call deflationary benefit as you've high HVAC single on rise last resi prices, you

should copper read the that good the quite because rising such for been we fact raise into price are still is increases, so recent lately ability as in and is demand in there have really, Trane price still to or commodities So the ’XX.

trying highly our are really to we to lock, within year one above, years this cadence start it's mix a the prior two the just the increases, last price of that's Andy, inflationary we Hey, of all the get been environment.

for we So commodity months. is work have year playing stage see three of we're we pricing we see couple these the as set of costs how XXXX. don't to the last inclusive price out increases of over the trying goal And where through how for the rounds we

XXXX. that entering it's information with of in today now, all right increase price really baking that So

Chris just materials, to as we And seeing, talked that, about add obviously, certainly is inflationary energy are costs. labor but

product have of cost all the at at look as teams a growth in which if So in allows to see the look are what inputs, them you to future. visibility detail. It lot to

King you ability grow that's increasing it the suggesting you're about despite Thermo Got talked then markets, ‘XX, seems again end And you like to performs guys. as about helpful know going probability just King’s down talked to less becomes primary Thermo flat and that cyclical. electrification that out it it, did about, but King on to as in it secular that's markets the being such we in Thermo raise tailwinds the all

or year you is a ‘XX a up like be forecast you even into XXXX. cyclical go as ACT is little talking So down in its go bit could that that where about not still

could I Yes. mean, over. the cyclicality we arm wrestle

XX,XXX-unit that market look Okay, in you the for the in range Americas, if trailer or it's at a minus time been long plus XX%.

market. very strong So

wait see customers, in from really I we're tell shorter would of especially that As the investments is we're down the demand seeing doubling and are doing we'll do what how our you the that. far on distances. one electrification, that that's as we are, electrification, there we expedite on, on we

truck of aspect think the So there.

come more our is So a I'm doing job innovation great King in about to expectations, business. but specifically their meeting the Thermo pipeline team very we're, excited our

next We'll take with from Coe Nigel Wolfe question Research. our

Thanks. Good everyone. morning,

converted? labor, construction, the backlog factor key thinking what skilled is getting is want in billion, guessing the would So HVAC. what a be Versus I equivalent think bit they even much I'm gating commercial I'm even TK stronger I'm mentioned gating $X the into of to your do. in well. moving wondering most I the here that is am an backlog to came billion today? just I more think conversion guessing chain, maybe down factor but backlog I late, $X as to level. question you from very But still But real how backlog would conversion? healthy But don't customers my come field. supply on that labor

I example. think backlog right? kind things, of you using of got the I billion, couple was an First the that a all, answer, $X of there's as of Nigel,

a with I backlog think or we're going to end more. billion XXXX of $X

be will lot. for burn so us there's, $X billion backlog Okay, to in a

to continue future, performance. happening. our job as and make fantastic it's improve improve visibility that's in to far them One hit reasons everything will A that chain, burn a faster? of teams we And couple it can't giving supply can why our we suppliers, you it you doing their is just are on, improving, right. As the working with sure

The that want before HVAC for site competitive across early, businesses, fact, lead have in especially ready. Trane especially Technologies side applied and side we're their sure, industry, is But commercial right, the customer means second to times, very really our a that's with is it, an of that the our order, that in customers applied times. order unique an to the to that's job And lead not going ship don't extended. so not you're on

well. And so the as that's elongating backlog

are and XX% Or okay, thesis? kind believe TK. this okay. about absorbing or a might is HVAC better, been problem, incremental that I trained pretty delineate low was growing residential of commercial year. is within margin, XX%, getting chain we've on you you TK businesses resi, real but margins I better are Okay. hoping better margin that it's talks wrong all And labor about you And think for commercial to supply the impressive mixed headwinds when between, that then plus? that's mean, the

Nigel, Chris. it's

can the all lot for business eliminate a out. incurred those the drive. in segments serve growing of the last nice us aware would chain to been businesses our ultimately, the costs freight, issues, and So of costs plants, which couple business our on solving I But supply chain are the issues buying investments. as last go next lots ensuring outstanding and drive baking our supply opportunity, leverage. to very we're two inefficiencies. lots year really that on both in supply productivity chain members team of in there throughout And markets, our and we've of see all opportunities think, having get of on expediting a think focused inability And commercial some the HVAC to challenges, normalizes the thesis. strong productivity, impacted customers solving years nice the operating drive with some the as productivity chain I of also inefficiencies, really of our that jobs, in supply doing we just that's they're the of system, margins. the years. of increased presenting we I say focus And components businesses we're when We're get to spot the incremental And I revenue

organic So incrementally next I year. investments, to or we think us do XX% under XX allows for with better of both outgrowth. drive do to We XX really drive leverage can basis both also market points and can

That's follow to job the the Technologies. able concern labor being to up We've Trane just Nigel, track a not concern. done a right great great for doing we're on labor, job. a

associates, resource we so human doing Our career for really salaried creating location, is and for doing there. only of department our be not but employees, great a hourly that also a our ladders job to we're training, employees destination just job fantastic want hourly

HVAC, as I'll it it's Maybe commercial Asia just plus add margin. teens business, our percent thing right call is high one EBITDA more majority XX and driving

there it So businesses can I think shows our that we drive really globally. for

from our question next Dray Markets. Deane take RBC Capital We'll with

of you. a backlog discussion lot thank There's well, just Doing do actually get like, you really struck when to due have Thank happens customers what expectations realistic the they'll here is on you. Good on everyone. morning, deliveries? set with me past on

times lead Yes, exactly that now. there's why right is elongated

I disappoint up it. You you delivery. constructing example, use with do if building other Think okay, being product. your a about whole products the as job end of will be has customer some a not if you're to our building, want end late. mean, you trust don't could call an entire up me, want holding to air handling slowed of an And phone you're on up that because the a of

that level And can it. sure basis. you, within So we But as business. operational providing level. have intensely, a of really our And detailed at and realistic we dates the we're at realistic that that doesn't happens have tell on look key a we're could hit to we the expect we the customers, one times I for our most that need at mean you making you a it metrics a when drive do, dues, our customer plant track managers very lead high that's it part, our to product give to past don't daily very to

I comment happen? That's rollout? with interested as in new real your inventory. And that whole you're saying situations stranded follow comment, a How really up, CA trying the does was helpful. to And on avoid just any

CA associated really was it was roll Yes, the it associated, on. with comment the

there's located date And this depending manufacturing little you're a in for on country. It's more that we're bit time, date. think I some complexity the where an installed

get for date, worked our really so So where was distributors stranded. we that's because don't with them that pump south, in really independent we non-heat installed the to the, wholesale where product want okay,

So that situation. I new And we mean, us. nature phase many pretty we're second it at to refer as so we this. good phase help to is in we out the products manage implement that it,

So really our we that just helped work process. IWDS through

next our question Brett take Linzey will with We from Mizuho.

have lot market. to transport these Or I then all. addressable equipment of want for a some with there the business, products got increasing just you Hi, total coming innovative point ’XX outgrowth just could some these to launches, solutions, been quite the you older hoping electrification I some on the to outperforming morning, actually a cannibalizing Looks there. come market like of finer you guys on are of Hey, time. good expectation And back was are the put you simply new technology? you specifically product offerings? new

of that. on A bit both

with that about, probably out delivery, But opportunities, you you solution. be obviously realm. electric right? that a relatively new your home cannibalize to of there any think best it's market. are that's That's think guess, think I I mean, would I a combustion there's example, also going it's engine like

Okay. It's quickly. quite expanding

to going your than just some our other be we're of specific there. And won't opportunities. able I to with excited market more think different create we pretty about new be question But see product, electrified I And was what you're capacity, higher that – that.

Just expectation outgrowth year. for the on the total

allows and in these residential, we King mark do. these commercial our hitting a very Thermo innovations customers. what a mean, line. for business that think that value top you're see to we that continue And our on too to an anticipate But couple last with customer a And the if the use to in years, better does just I mean, in best It's we Flywheel going growth innovations have could to, example. obviously share taking I Flywheel to creating great revenue we compelling bring. as on the XX% team that you that. we've I our able dealers, customer job opportunity mean, see I working get right. plenty we us are of product that that's than that proposition the mean, our value get we're to taken the in that vibrant. talk to I I efficiency of every differentiated that Yes, I in you won't have to innovations use our future, more I compelling. for And Europe the it share that's about keep and very specific going to dollars the we're seeing create sure to reinvest really save with and propositions market, that with referred really very there make

incremental sense. up And those you spend follow time Could Thanks. the makes on Yes, just more priorities. just one regarding a investment. little

factory said on you what you be automation, think structural benefits the anything paybacks or might do there? I think

start, Brett. I'll Yes,

King generally cost So specifically. and about digital to, and in heating. around And portfolio, and that our at as also think on and Dave automation. around the of spending that is commercial portfolios what you Thermo I'd look not focused HVAC spoke only our factory time future electrification also We're but electrification

investments to So they're great make.

and are backlogs them of Some immediately. driving revenues

been XXXX. we drive through factories, an us some And on more paybacks. look, term more in that contribute factory target productivity bit investment features back to investment a But and also And think and helps little go incremental XX%, the very coming the volume increased to for is or long we've business side. working have it's it's a to side, as get the I we several of for years. over in going us an as be the productivity it This drive for the On better. the strong you automation, the been the see into can when automation their more allows opportunity

take Bank We'll Andrew our with Obin America. question next from of

fitting Hey, guys, good thanks lot for morning. a me Hey, in.

industry the about very that Just the is fact changing. a question discussion interesting

that permanent here And if terms you. discussion future times? of it the cycle to customers that these given the becoming Because industry? of So are do the extended lead seems it more you've lead you industry think wondering of some times them you feature the a visibility seems perhaps and more much maybe stay? of in others that's I could push the is was and in training the live Thank deliveries? with it's we further. flexibility that But to

Yes. I a And way. I don't that question, provocative Andrew. mean it's it see

I Maybe chain it you'll think it's go what lead times little pandemic? back contract, maybe post to as see a it does supply longer. bit not, was that improves,

so that sees think in lot in with space will that those the stay. work setting everyone visibility more done the visibility. we've of value our of I that a And customers up some

tell I improve from So dramatically back them you, to I expect they've a And went I where from I if year a Sure. improved could today. they bit? are ago. a expect, year, would they don't extend

question. we'll how But it's see very provocative So plays it a out.

you just just, you? And up. is a safety area stock you. follow Thank specific related What the to? Thank investment? that Can

I'll coming specific. be out very of very It Asia. was, I nervous Yes, mean, what's about

range of the for we short It's correctly, reading of that's And supply. think want coming it's the China and so additional we we just get Asia. about want not caught million to of prudent. the that specifically, that reopening were very stock leaves safety And did We optimistic. we there anything sure tea although to put out cautiously make $XX and we're

remarks. Zack Nagel would that over closing any And to I additional turn to call or like for session. the the question-and-answer back concludes

I'd to quite on And And soon. to be a also, you weeks. Pat may road in in road days along operator. look joining we're everyone available, you here with going forward speaking and and be then. March. look you I always, and coming at like Thanks will call. on to on for into and have to Thanks be questions that thank forward today's to the safe. the take And February as We with seeing any Susan bit conferences the we

concludes for presentation. you now your Thank that And disconnect. may And today's participation. you