10-QPeriod: Q1 FY2022

Trane Technologies plc Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 4, 2022For Securities:TT

Summary

Trane Technologies plc reported solid revenue growth in the first quarter of 2022, with net revenues increasing by 11.2% to $3,355.5 million compared to the prior year period. This growth was primarily driven by inflationary price increases across all segments and higher volumes, partially offset by unfavorable foreign currency translation. Despite the revenue increase, gross profit margin saw a decrease of 210 basis points to 29.5%, attributed to significant direct material and freight inflation. Operating income increased to $388.2 million, up from $353.2 million in the first quarter of 2021, indicating effective cost management in selling and administrative expenses. The company also benefited from lower interest expense and a favorable swing in "Other income/(expense), net." Diluted earnings per share (EPS) rose to $1.10 from $0.97 in the prior year, reflecting improved profitability. The company continued its capital allocation strategy through share repurchases and dividend payments, demonstrating a commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$3.36B

29.5% Gross Margin

Net Income

$263.40M

7.8% Net Margin

EPS (Diluted)

$1.10

Total Assets

$17.64B

Free Cash Flow

-$263.00M

Financial Statements
Beta
Revenue$3.36B
Cost of Revenue$2.37B
Gross Profit$989.00M
SG&A Expenses$600.80M
Operating Income$388.20M
Interest Expense$56.00M
Net Income$263.40M
EPS (Basic)$1.11
EPS (Diluted)$1.10
Shares Outstanding (Basic)234.60M
Shares Outstanding (Diluted)237.10M

Key Highlights

  • 1Net revenues increased by 11.2% to $3,355.5 million, driven by pricing and volume growth, partially offset by currency headwinds.
  • 2Gross profit margin decreased by 210 basis points to 29.5% due to significant material and freight inflation.
  • 3Operating income grew to $388.2 million from $353.2 million, supported by stable selling and administrative expenses as a percentage of revenue.
  • 4Diluted earnings per share (EPS) improved to $1.10 from $0.97 year-over-year.
  • 5The company repurchased $350.0 million of its ordinary shares during the quarter and has $1.0 billion remaining under its 2021 authorization.
  • 6Liquidity remains strong with $1,348.4 million in cash and cash equivalents and $2.0 billion in unused revolving credit facilities.
  • 7The company continues to manage supply chain and resource constraints by working closely with suppliers and customers.

Frequently Asked Questions

Net revenues increased by 11.2% to $3,355.5 million, primarily due to inflation-based price increases across all segments and higher volumes. This was partially offset by an unfavorable impact from foreign currency translation.

The gross profit margin decreased by 210 basis points to 29.5% compared to the prior year. This was mainly due to significant direct material and freight inflation, which was partially offset by price realization.

Selling and administrative expenses remained relatively flat year-over-year, increasing by only 0.1% to $600.8 million. As a percentage of net revenues, these expenses decreased from 19.9% to 17.9%, reflecting improved revenue leverage.

During the first quarter of 2022, Trane Technologies repurchased $350.0 million of its ordinary shares. As of the end of the quarter, approximately $1.0 billion remained available under the 2021 share repurchase authorization. The company also authorized a new $3.0 billion repurchase program in February 2022.