10-QPeriod: Q3 FY2018

Trane Technologies plc Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 24, 2018For Securities:TT

Summary

Trane Technologies plc (TT), formerly Ingersoll-Rand plc, reported strong financial results for the nine months ended September 30, 2018. Net revenues increased by 11.3% year-over-year, reaching $11.77 billion, driven by robust volume growth and improved pricing across both the Climate and Industrial segments. Operating income saw a significant increase of 19.3%, reaching $1.47 billion, with operating margins improving to 12.5% from 12.1% in the prior year period. This performance was supported by operational excellence initiatives, new product launches, and productivity programs. The company also demonstrated effective capital allocation, with a substantial increase in share repurchases during the period and a 18% increase in its quarterly dividend. Liquidity remains strong, with $1.02 billion in cash and cash equivalents and ample availability under its credit facilities. Investments in acquisitions and a joint venture with Mitsubishi Electric Corporation were noted, indicating strategic growth initiatives. The company anticipates continued growth in both segments for the remainder of 2018.

Financial Highlights

50 data points
Beta

Revenue

$4.03B

32.6% Gross Margin

Net Income

$519.40M

12.9% Net Margin

EPS (Diluted)

$2.06

Total Assets

$18.30B

Cash & Equivalents

$1.02B

Free Cash Flow

$519.70M

Financial Statements
Beta
Revenue$4.03B
Cost of Revenue$2.72B
Gross Profit$1.31B
SG&A Expenses$725.60M
Operating Income$587.00M
Interest Expense$48.50M
Net Income$519.40M
EPS (Basic)$2.09
EPS (Diluted)$2.06
Shares Outstanding (Basic)246.40M
Shares Outstanding (Diluted)249.50M

Key Highlights

  • 1Net revenues increased by 11.3% to $11.77 billion for the nine months ended September 30, 2018, compared to the prior year period.
  • 2Operating income grew by 19.3% to $1.47 billion, reflecting improved operational performance and pricing.
  • 3Operating margins improved to 12.5% for the nine-month period, up from 12.1% in the prior year.
  • 4The company repurchased approximately $514 million of its ordinary shares during the first nine months of 2018.
  • 5Quarterly dividend increased by 18% to $0.53 per ordinary share, effective with the September 2018 payment.
  • 6Acquired several businesses and entered into a joint venture with Mitsubishi Electric Corporation, totaling $281.5 million in investments.
  • 7Strong liquidity with $1.02 billion in cash and cash equivalents and $2.0 billion in unused revolving credit facilities.

Frequently Asked Questions

Revenue growth was primarily driven by higher volumes in both the Climate and Industrial segments. Improved pricing, incremental revenues from acquisitions, and favorable foreign currency exchange rate movements also contributed to the 11.3% increase in net revenues year-over-year.

Trane Technologies plc actively managed its capital through significant share repurchases, amounting to approximately $514 million in the first nine months of 2018, and by increasing its quarterly dividend by 18%. The company also strategically invested $281.5 million in acquisitions and a joint venture.

The company maintained a strong liquidity position with $1.02 billion in cash and cash equivalents. Additionally, it had $2.0 billion in unused revolving credit facilities, providing ample resources for operations, investments, and shareholder returns.

The Tax Cuts and Jobs Act (the 'Act') significantly impacted the effective tax rate. For the nine months ended September 30, 2018, the effective tax rate was 12.5%, which was lower than the U.S. statutory rate primarily due to $75.5 million in measurement period adjustments related to the Act. This included adjustments for the remeasurement of U.S. deferred tax balances, the transition tax liability, and the assertion for unremitted foreign earnings.