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TT Trane Technologies

Participants
Zachary A. Nagle Ingersoll-Rand Plc
Michael W. Lamach Ingersoll-Rand Plc
Susan Carter Ingersoll-Rand Plc
Steven Winoker UBS Securities LLC
Andrew Kaplowitz Citigroup Global Markets, Inc.
Joe Ritchie Goldman Sachs & Co. LLC
Stephen Tusa JPMorgan Securities LLC
Robert Paul McCarthy Stifel, Nicolaus & Co., Inc.
Jeffrey Todd Sprague Vertical Research Partners LLC
Julian Mitchell Barclays Capital, Inc.
Timothy Ronald Wojs Robert W. Baird & Co., Inc.
Rich M. Kwas Wells Fargo Securities LLC
Joel G. Tiss BMO Capital Markets (United States)
Robert D. Barry Susquehanna Financial Group LLLP
Deane Dray RBC Capital Markets LLC
Call transcript
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Operator

Good morning. Welcome to the Ingersoll-Rand First Quarter 2018 Earnings Conference Call. My name is Chris, and I will be your operator. The call will begin in a few moments with a speaker remarks and then a Q&A session. All lines are on mute. you. Thank President you Vice conference. begin Investor of Nagle, may Relations, your Zac

Zachary A. Nagle

call on operator. you you XXXX first This thank morning will earnings being joining call. Thanks, presentation. and Ingersoll-Rand's find for the Good ingersollrand.com, website our at us accompanying for conference is where webcast quarter

pursuant explained materially this and to attached recording call facts from please release. SEC participants Carter, Mike. our the call website. go that Please to to actual not on and tables historical anticipated Please The are made go CFO. the of We differ are news law. the X description cause call Statements which that President to to today's I'll also to Sue and that, factors includes Chairman considered filings of this Senior in Mike results statements forward-looking Lamach, are are Vice turn made and are over the and and archiving provisions may securities morning's in CEO; Harbor call our slide on X. presentation a financial Safe of for This also results. non-GAAP slide measures are some federal our see With

Michael W. Lamach

brief details, Thanks, the slide I'd Zac, Please I creation like the of for for long-term strategy value everyone begin to fundamental review us a which start the our into go business shareholders. joining to X. call today. and thanks for to strong off elements before a drives with We're year. get of the But

durable growth is markets. deliver and through positions of element strategy our profitable first continually The leadership to

innovation emissions, solutions end to the products markets services gas and resource demand to customers. buildings, us preserving our and resources industrial and exponential reducing customers energy-efficient competitive delivering constraints in reduce efficiency, world. on megatrends such other here, our natural and transport Our be end for at markets energy support delivering energy excel underpinned the are digital reliable reducing We as and and dramatically winning and products and the food most generating focus enabled and environmentally-friendly sustainability, available, to and homes, We in our and continues by and around global greenhouse need with a heavily markets. formula for technologies. our invest this edge productivity waste, We by

continued Our advantage. reflect rates strong growth that

we reduce same we In seriously. our our related We increase XXXX, own advice gas to emissions XX% a The years by to of from the systems, of building XXXX, includes and schedule. systems, our committed emissions also results. validating, air operations and of greenhouse this customers facilities audit the our controls eliminated from two gas achieved we commitment large the take energy energy give our We reduction energy and our publicly which upgraded greenhouse efficiency products. own earlier measuring compressed and conducted while lighting, an operations reporting leakage air-conditioning year, and ahead

and our some investments own that purchases commitment a locations, are to the and with through energy business. a into in services engaged for agreement. provide purchase and to smarter good environment to energy, at power offsite our Trane our about roadmap our deepen on-site both large We organized continuing are renewable We be of for energy business our responsible investments how

the greenhouse As emissions, to talk. efficiency gas we're reducing and it proud to walking relates energy be

Second, the and margins line delivering over strong our to flow free incremental excel top operating at system term. cash designed business long is

term. experienced culture levels consistently our confidence we consistently a deliver Our built And long cash generate which and to in enables me team drives finally, system which dynamic of results high us and years over underpins to we management strong business our high-performance everything strategy. do, ability capital an free flow, operating over allocation gives the the

strategy, our deliver build for strong execute a stronger, returns. shareholder the positioned well consistently we to sustainable we more long continue to term, company As

discussing to shaping towards our some being slide the spend like way XXXX. that how things QX to seasonality fraction year. we are of It's just important note Moving weighted up business I'd stage given the and heavily at X. of are a to time QX, in this the into small early

As going earlier, I there a a we said well. lot that things to and are off are strong start of are

revenues our are markets Climate Industrial both our evidenced as levels are both by strong, bookings we end growth high executing and well segments. and Our globally in of and in

continues and transform ahead Industrial to team Our to and recovery our our costs is off. are business paying the work restructure steady make business which The steady to Industrial improvement Industrial positive. system to also out end segment of take commercially is signs operationally the hard done of has markets of showing expectations. the All the

seeing capacity, market HVAC Trailer China early continued financials. highlighting with perform positive better S. and North the as expected in Our industry than year, anticipated regulatory exceptional marketplace direct is sales reform. performing we've on also changes entering in will that U. based most with improving been American strategy signs since XXXX the tight had likely We're growth the tax

positive we're consistent targeted expectations with end achieving that our in inflation. material combat markets is Lastly, cost to pricing

are continues are competitive and and and still of of gives top Ingersoll-Rand in we that help guidance our and very to year, potential results are and margin positive year to are to consistent a that of our whilst volume, of and can level few of success wild level tariffs, after with of continue outlook it's cards pricing, in freight the cost play realized our XXXX. directional on XX our productivity well the drive Commodity has growth QX potential ratcheting call where We and and trade full positioned for On with through significant volatile is materially. balance, side strong across in There confidence including we a expansion basis be to freight earnings quarters balance performance tight challenges. and industry the on cost for update our detail are in the us P&L X. the managing wars, the structure and adopted Historically, share. go inflation slide markets annual and have We'll We're the also exceed mitigate actions belt On challenge encouraging programs price. bookings increasing combined headwinds. persistent, the the expansion QX guidance in from impacts X year earnings further margin inflationary headwind. into taking decisive uncertainty early provide of this investors but XXXX, visibility entire around tier geopolitical these industry couple and is quarter. offered per somewhat across cadence. volume up under ledger, material create other points revenues headwinds capacity to we different provide detailed broad-based changes X high our revenue. despite our a guidance format specificity a our operating for adjusted our provided the tier of transparency Please ranges both both headwinds strategic a to a on We've end for and across We'll

provide in a without best the over and additional intent the behind driving insight numbers the of should providing business, fundamental investors are the interest which time. company to greater of This Our format factors understanding provide our is a key performance believe qualitative is shareholders our roadmap. comparative into that we

growth the that positive analysts out quarter, but follow be first So trying we on the run in company, the and across we the board drive sell-side are indicated positive In to to the by drove we how you revenue chart. aren't we the on business. there really as trying crazy, pragmatic signs the bookings

and growth growth growth equipment, had equipment growth Over quarters, This in North Institutional globally, solid majority the and albeit business, closed ICS early the Please solid first in healthy quarter X. we're drivers go the year markets and recovery earnings and HVAC we and to the our at color fourth healthcare saw in growth in we contracting In first still an how're services, the by in early in end in services the we Middle the the and quarter. globally controls. stage. saw gains XXXX commercial growth in about quarter. positive into commercial of behind in positive we across board, our climate America was insights outlook have with growth positive solid the led strength Combined additional in with growth good key slide Industrial board particular with education for the call, rental the the our X, markets. seeing provides steady past seen slide across both signs East which discussed markets. businesses a the slide on few of chart continued was thinking and Africa and HVAC, services. Cool service number and from Europe, our Energy,

Our with direct expectations seeing improving XXXX. China where continued strong sales in expect strategy revenue growth our financials and track on in is we're

healthy and total indicators outlook HVAC for Our XXXX, key support economic view. and largely for our commercial market remains

were HVAC, share also continued with strong revenues to residential Turning gain.

installed rates in industry rates with Our that is through and growth Key in tough compares leads are pricing also although Investor during our the from conversion in this we our Go, significant lapping against delivering economic high transparency market leads market-leading growth indicators and high to sales. continued XXXX, support tool XXXX. growth versus Trane online our referenced Day expectations total year, we well last

important to that's an mind. continues news keep factor to story be a So for Transport in us. good

Europe, revenue Technology is growth the diversified nice signs certain should continued of an this improvements Cuts remains in and one industrial bookings reforms a time. we in strength fueled through The industrial mixed, of purchases. U.S. truck for again immediate by trailer moderate equipment that performance strength solid and be showing outlook marine base Overall, trailer. seeing a We was over us. particular XXXX, quarter, seeing seeing North We although the led solid relative rail We're for and originally services. have Quarter stronger modest capacity, for expensing and than Compression tight Jobs built we led order in continued with marine also market size for saw North America were primarily is off indicators. and growth Act in shipping remained resilient. key business a consistent APU We're in transport elsewhere. improvement expected benefit recovery, sized regulatory East one. XXXX in strong. the considerable and business quarter allows Tax the and America business. and other the first and us of the Middle Africa by trailer by production capital China, Our North sized market services American Bus relatively growth continued the with solid into and momentum

products. Small healthy, and to vehicle For markets to and expect successful of by consumer penetration continue see growth through largely XXXX, of we market was XXXX. electric our that in the growth majority expect solid our vehicle, we driven

see our seeing at provides like stage We on a also I in insight to to in to business which the provide to what hope And business, it additional with off the continued to Sue we're Products over Industrial is quarter Sue? growth now details expect I'd and our this quarter. strong year. into one. good start this in turn you more

Susan Carter

Inflation Mike. Please positive headlined We income volumes growth. by you, and in price Climate of by in share Industrial the delivered driven significant by results expansion. go XX% per to higher number driven on Thank primarily than was strong by the we adjusted operating was both our segments. year-over-year slide planned headwind Gains a quarter, growth margin strong and and were to realization improvement seven. earnings products. Revenue key first supported operating

$XX $X.XX restructuring the we for by guidance of primarily that netting business earlier, Technologies optimize was Compression into of revenue in we important both is a to out restructuring. note optimization on balance per driven we of to QX this business charges exceed QX continue in and planned that high performance our year, will are in and as QX annual We for approximately outlined our It's footprint of took that share. unchanged. our Mike the of This earnings the restructuring our As end confident to ranges visibility our guidance part peak work as performance. future million

operations in $XXX growth good expansion. Our points We shares. paid with dividends fundamentally paying the million adjusted Capital of business in in investments are made repurchased restructuring XXX balanced we've margin was quarter. allocation Industrial business off. well basis continues in and $XXX the to perform The and million

anticipate Our pipeline regulatory Please acquisition we JV and in the to remains slide with approval the of active, second Mitsubishi number Trane X. go quarter.

earnings adjusted to share quarter. operating per strong growth discussed, coupled with we've adjusted margin organic As expansion strong led growth revenue in the

improvement also $X.XX growth slide revenues. the for quarter. number in income the exchange Climate based of approximately earnings the and $X.XX acquisition-related Operating ROI and drivers go primary was stock-based expansion in expenses segments projects. nine. volume from number and higher margin company's continued tailwinds slide primarily our high with inflationary price, tied consistent headwinds per corporate the by of inflationary time-based expectations and despite rate points operating we to year-over-year vesting. positive by XX. negative our effective in reported headwinds expense We but the to for of higher our consistent projects, in of per Strong higher tax this offset was Foreign metric, Please strong balance material quarter compensation discrete and share primarily The on modestly combined the with associated about saw provided low the of quarter. $X.XX sequential debt in go interest the the share, XX% to partially quarter year. driven expectations in expect negative XX our and year-over-year. and were earnings $X.XX versus to for significantly a related from refinancing Industrial price impact from investments growth timing was both on Please Productivity on with inflation basis improvement improvement largely

in from also XXXX revenue quarter. XX. share impact benefit a and slide delivered go Climate year-to-date. XXXX Please Adjusted We to saw repurchases $X.XX in X% growth number organic the of the X primarily and price, volume positive lower by freight. basis and tier tier inflationary by offset points, strong were operating persistent more in than impacted X by and margins materials headwinds XX

Our sales as expected, Please China sequentially in and margins we throughout improve the strategy to direct as performed we year. expect slide move go to XX.

continues of In we solid Our the points improvements adjusted business Please growth steady turn strong quarter, as operating we evolve. with margin and its remain basis and make maintained a operating consistent to X% our in to cash organic deliver revenue slide Industrial balance track to cash sheet go than flow optionality XXX capital the delivered year. equal investments and are Free number providing which performance. expansion. maintain seasonality normal continued high was given a income Please QX, expectations XX. flow to shareholders. We cash our to on markets slide our in greater for ROI healthy with the and product opportunities that the committed level leadership deploys for market We dynamic of business excess technology highest returns net We to innovation, in allocation momentum. free a vital XX. consistently or strategy remain to to

a We earnings rate increases have at over dividend long-standing time. a growing strong reliable, that above of or commitment the growth and to

in strategic that make returns. channel acquisitions further to continue will investments We long-term technology value-accretive shareholder improve and

repurchase and strong us a as We provides commitment are minimum sheet to maintaining that a optionality committed to to markets with our evolve, balance continued dilution. shares maintain we offset sufficient

value. Please below repurchases We their intrinsic value go trade number XX. when share to see shares in also slide

topic our cover know Moving the prepared are worth we and minds we interest section, one our of that Tariffs. to topics addressing have to of in investors remarks. on on

be follow relatively the on I the that the for-region is from small. XX% of products the and are strategy. from foreign should most sold in-region, market think in important More an impact imports Net, tariffs the for U.S. manufacturing sourced takeaway U.S. U.S. our direct sourcing we than

details U.S. ongoing. Additional the those by and of tariffs implementation countries, and likelihood are but the is negotiations have been of and the proposed other uncertain their tariffs

So that play how it's will unclear out.

space closely. to We watch this continue

recovers are we through that an increases the in Over cost long term, industry price.

remarks turn Q&A. before for to call Mike? take we Mike closing like back I'd Now, the to

Michael W. Lamach

extremely the several over company is to Thanks, strong returns deliver next to well-positioned the shareholder go slide Sue. We years. XX. believe Please

committed consistent is to by a to sustainability. franchise firmly supported record a in have with heavily Our that and we years. happy to And do. culture and positions we excess lastly, Sue deployment the investing market to questions. attractive years high capital, track advance such global growth. operational enable and profitable shareholders leadership that, strong are and that management be will And team balanced breeds been strategy cash of excellence and to as megatrends I to and build end we take over performing deploying experienced We've tied everything markets to of healthy growing brands your We've our dynamic and efficiency profitably, energy are for

Operator

Your first of Winoker question comes Steve from UBS.

Your line is open.

Steven Winoker

Thanks good morning. all, and

Michael W. Lamach

Good morning, Steve.

Steven Winoker

Hey, Last earnings about kind sense. nice to had you talked to of XQ seasonal level want a see growth. get I contribution being of norm. lower than just this quarter,

still normal QX, expect for – that you in the to low look we kind late you XX%? think would I Should seasonality end hold, that now or I in guess, hitting XX% we changes anything believe range to this XX% to quarter, normal of normally about that us to are not of a when at XX% EPS. the talked lead XX%

Michael W. Lamach

way. business diverse. the in in generally. more is stripping quarter, in true where time Steve, major us to that's being Yeah, through our was The diversified thing over globally, We business commercial has same form about Transport contributor resilient, that growth more of the the a equipment with talked every contracts that's and HVAC service

sorts of fix of the So smooth not weather. a just bit earnings. repair things are on it's based out Those helping

going to say forward, just historical of smoothing back on the working been hard we've that the that's go many to trends years, over cash over probably out did because like company. we profile it's the So and cash time business with

is we strategy the normally as business, in consumer to got some can. we golf Car of it's has operating sure offsetting make that the way own quarters see of best So seasonality between of we a seasonality, that Even there. vehicle there's that which Club out company the an side are smoothing

Steven Winoker

of QX? in what seasonality think in we about the So what for terms that does should mean then

Michael W. Lamach

QX Yeah, QX just XX% take quarter XX% I I know XX% of can one be quarter that in and and one two quarter quarter XX% don't quarters. anymore. two, always our think four and or you to and quarter strongest will quarter of three and

top exceed do much. quarter back to we're get this in and to more time, once you how point we in we've at to guidance. quarter don't that think the two we'll two, end point be And We we're going in I by yet seen going at think our time. know I know accurate of

Steven Winoker

negative inflation, just I first other On you've quarters. one elsewhere. seen XX versus is investments Okay. and put – overall like think Maybe, that that's the productivity in I've

So be on that your may on of bit that. a color little clarity What's one?

Michael W. Lamach

are There that we that large executed example. and projects through a of in lot saw major an quarter structuring invested one. as And in you

we've we So XXXX up year think follow. with productivity to loaded and the good

So pipeline the need I saw projects, quarter, on we pipeline It's and offsetting we meaning it to change in into loaded XXX% to but for our the smaller for going there be heavier try of good the where what productivity probably that healthy. the doesn't we year projects inflation expect think normal just we be pipeline, get to remains the larger the year. were fewer

Steven Winoker

just pricing. Okay. on And

of pricing price kind you've already? increases you put parts already commodity are run increases through So the mean, the kind of resi. to of given where relative behavior commercial I

Michael W. Lamach

quarter thought a year priced quarter we're in four. back one. across throughout ship we've like thinking year in hitting We good about for little in quarter the we increases will significantly and look Pricing should QX, and closed the quarter bit is to price performance half do the And going of how forward one what quite what us. but the QX. really expectations believe achieved lead that might two, gap the We we would board from

you XX-basis points gave time of and that point, minus was basis point minus minus XX-basis then plus minus within window. we're the right we guidance the biasing towards sort points, which XX-basis basis operating point, really So XX last a XX

Steven Winoker

I'll hand it Thanks. off. Great.

Michael W. Lamach

Thank you.

Operator

next question Your comes of Andrew from Citigroup. Kaplowitz

open. is line Your

Andrew Kaplowitz

guys. morning, Good Nice quarter.

Michael W. Lamach

you. Hi, Thank Andy.

Andrew Kaplowitz

a HVAC. If the early. you had revenue that last for it But seen go bit Climate year, mid the commercial Mike, single-digit best couple trending are this for back the of growth was higher orders accepted than seems talked we that years. quarterly booking to guidance in your about we've organic

us seen So acceleration maybe the give orders. more a color on little you've in

in mentioned you or growth any you've bookings that that of some previously You applied can had. projects those the win bigger

Michael W. Lamach

a that Thanks, spiked Andy. we would next would difficult globe. year. broad nothing news there was for one The was have based comp are in quarter across bookings the It nice out. out called very is the That be

we growth for And so solid we're is shape be We're good. and think colleges are specifically the not going are are more news. up you in around generally and Healthcare been specialty would bond would or in strong so K-XX the education of issuances stable on institutional if lot dockets versus K-XX much strong. say coming, That's there. in globe, verticals America school passing that clinics mid-year is North shaping thought equipment. universities, There seeing updating about way seeing across And the infrastructure. it It's in the markets, acute that and positive. not more elections aging with typically up, that's Other That's hospitals is good a positive. them care. of

if of contribution single They're pipelines. Economic you that issue to from are and positive with above the acquired an healthy, Europe business the seeing ABI, a in a mid around us. Trane own at high we low think quarter. activity GDP indicators vacancy wild not bit they and construction, growth, would all very rental mid us, we're showing Brexit a strong good of up at particularly non-resi as right seeing that in We're would obviously North for now sales markets, card, are or that single-digits. to but single-digit it's much services is is our auto in point sales, there for the sales, will they good. fixed stable, rates, all we retail look look markets America. grow So

the by China. Asia fundamentally led for strong place. that's is sales put strategy us, in Very direct we

Singapore for about us single-digit. Realizing a bit. markets had Taiwan well. half other little Thailand in a important will seeing growth. modest service market us with that pleased very quarter. as we growth out strong and it's down see of nice like And We'll India just we're be for We the what probably will mid including be are Asia, there, is

anywhere there the Brazil good we and in So probably I in market and us was that as think to across world, Brazil on road recovery. would quarter that's a the well. for throw the

So just HVAC we're running growth. about every place we're operations, commercial seeing good

Andrew Kaplowitz

that's Mike, color. great

shifting Mike or just So for Sue, second. a gears

You get Is Ingersoll basis previously environment that to overall hit do than or from as maybe some of of margins that margin the XXXX. previous that expansion XX higher harder expansion? here, about mentioned productivity on do think price Climate you modest you get in to could of points going how margin sort guidance kind expansion and margin focusing well? growth, this and organic given for and you're specifically your better still your we increases, Like possible projects in guidance

Michael W. Lamach

year. leverage leverage, boil operating it's Yeah. back the to down see operating when in of And fundamentally But the early think that you better the it we'll I in half year.

price Some of this relationship. is cost

Some is that the see are good mix of of in based system. this the Part assumption the way portfolio. we continued productivity on and it's into volume products and loaded that

year we the to of full the what goes that lines it see along guided would would I then way go say the for XX%. leverage operating So for should the company that of we

Andrew Kaplowitz

Thanks, Mike. appreciate I it.

Michael W. Lamach

Andy. Thanks,

Operator

of question next from comes Goldman Joseph Sachs. Your Ritchie

Joe Ritchie

is name easy my guys. but Usually good pretty pronounce, to morning,

Michael W. Lamach

morning. Good are. know who we you Joe,

Joe Ritchie

you is actions year cost of this for a talk kind cost I XQ basis a watermark headwinds points this the typically price about XX guys you've is. of Mike, it's the cadence. low your the kind cost to XQ? what it to price or discussion. expectation like touch is don't taken, I'm to right to so quarter. nice that I But to for trying of about on to going love way look pricing quarter. given think just want know sense Yeah, price similar the for the is that that just get

Michael W. Lamach

will QX will QX relatively QX and Yeah, QX similar, I think look up. but pick and

flat, at particularly is cost QX relatively we're meaning quarter matching increase. QX, point think I four, that

Now the a given market. all us from are best with layering our we're to understanding the prices of prices to in But on happening that's having ability. what's perspective predicated pricing of an where inflation

So unique for have well. into as an increase a example the pricing, project tools on it's HVAC pricing market factored as into which have specifically, those as May But will place. well

how the is think basis XX the basis kind that the I of points of and minus back we So points half year. XX , of get that's to year stronger, minus end the for

Joe Ritchie

And it. little that increased and heard quarter, inflation freight talk maybe well, talk to Got how just the seeing maybe side on you you're what both. doing then impacted what I wage about about earlier. the bit offset a But as and you're

Michael W. Lamach

in couple a terms XX% going on up about we've our of about dry growth because the perspective year. what advantage taking reform, sword, are it's that in flipside if a and industry it's tax they what specifically freight, over Well, on from the the seeing comment I'm refrigeration if But their double-edged they seen, seeing prior you're customers, think about industry, doing increase rate are of not you I'm if you and an of in you transport per transport mile with great demand. on a tell to market. the think that, refrigeration XX% you And but

So number there, like companies and is what would ours. I of is say that to marketplace in the number a meaningful sort it's that out

Joe Ritchie

to are one wars that to the progresses? year things the at thinking update just helpful. wildcard and one. guys point, for the to going trade be just have year; even this Is the decided about it really a why guidance play your provided better tariffs commentary point an you at in on suggests last wait though this XQ. That's the Maybe as And until historically, you QX just

Michael W. Lamach

lot until time, give there being wars minds. larger also or the a frankly, of of But And that in of tax but either tariffs trade where that's somewhere the being generally lot else that for concern by U.S. opposed customers industrial Yeah, we people's out a plants location us, decisions always over and is there as wildcards one, customer reform. I long about I later one year and in that, Joe particular we're of there, expanding think update. To that input in inflation think speaking period there, projects, on we've it's to and that was something cost a quarter the be the a on year. did reserved more seeing are or would about thinking lines set, of made tariffs they

taken We're as transportation about example, actions. delaying tariffs. advantage some customers, in different seeing markets, have Industrial of worried our reform, an trucking customers think our I with a not response the So where little tax as

Joe Ritchie

you. Got Thank it. Very helpful.

Michael W. Lamach

Welcome.

Operator

next question Tusa comes from of Your JPMorgan. Steve

Your line is open.

Stephen Tusa

Good guys. morning. Hey,

Michael W. Lamach

Steve. morning, Good

Stephen Tusa

Can price you headwind, I first a the in I the how quarter, how that points basis said back the the into second of kind about half. year? would little worse trends – negative How cost in you that just worse much gets XX then throughout recovers and talk that assume think it

Michael W. Lamach

quarter. Well, the again a think second creeps in price in inflation bit up gets We the that's better probably second, that so little true.

relatively So basis you of QX number kind up a XX good end probably is points flat, QX, minus there. think pretty

pretty relatively point then more And a back because offsetting increase the through year, inflation point, inflation in which price. meaningful be half lapping flat you're at that numbers there's of should that you're trend you really well. As the at as high

minus front to look year that flat. XX half back the points. at I the of year look the The basis of tends think half So tends to

points points, So XX XX you're basis basis range. in that minus minus

Stephen Tusa

bookings talk sure then gave about – what perspective? you was the and can but from just you this, not quarter when I'm performance in your resi And Okay. a revenue you

Michael W. Lamach

Very solid. very solid. Yeah,

for indicators Continued and single-digits be conversion both us our low that. know favoring us. GDP platform, some to other share expectations. think, QX, to for the we driven Replacement rates, consistent gain share for seeing as significant and unemployment and expect higher well. Steve, that's The obviously is driving new construction, up share us, leads, tougher tool, and we whole but us, think by gain, still that QX again higher installed healthy was Trane and to compares are you market and very for gain is this the growth which market we're there mid being I transparency delivering that there pricing And really the stable will continue well, the there, with Go total

Stephen Tusa

up the you in first Were quarter? double-digit

Michael W. Lamach

that Not quarter. all gain there. was good the obviously, that a going pretty there And I specifically for it would the to share you was in But know comment on say quarter industry.

Stephen Tusa

Thanks. Okay.

Operator

Your next of question McCarthy is from Robert Stifel.

line is open. Your

Robert Paul McCarthy

everyone. morning, Good

Michael W. Lamach

morning. Good

Robert Paul McCarthy

Yeah.

see incremental be third questions. the should your become in I and kind what third But you just two cause expect or guidance amount turn, stand margin is this year? guess, the as cadence. your your line association fair in in in mean, business. conversion on team the to of the for quarter get the making pressure the the the know to about into we sand I And puts quarterly quarter? quarter to a expectations the the to right? you you raise for third think business want will seasonality quarterly for full a to Climate You in you margins implied, What think the guidance do quarter because one, Mike, deliver, third with of So don't I

Michael W. Lamach

half with being on I'd here in Yeah. to the other and half business. the service we relying good drive business in being there's as really visibility start QX of really book-and-turn that Most equipment and the the around April not being with equipment. backlog heavily stand

The be being The made. the backlog that that is is have is think were we is, I really if deliveries it, you built. along. wildcard on humming about So service set be going inflation. Pricing business think only will to

that two. I So we to about be want ability that we more this what until say happens about actually don't point the see I in feel guidance going at time. that the in to specific to gave top we're quarter just good

Robert Paul McCarthy

tougher or And then given looks stocks thinking investments of just maybe a bit turning a kind like your bit, own industrial you're little of to of have how capital mean back concern. or any pulled allocation, about there the is cycle there things, particularly a thinking what way about stock underlying acquisitions I through any market? of prism little definitely you're update

Susan Carter

is So strengthening first think think continue I start to Ingersoll-Rand, we with a to part as balance allocation about capital we sheet. want and have that Robert, that we about the

managing been flow, good cash and investment to around has be will good. continue process Our around

is and to some don't be CapEx, to the dividend in our we've think cash that than then the the a side, how and on do showing that in invest two, business on remainder that are for cash capital to repurchase dilution. M&A and smart things really have flow and guidance right. a products, months is We've allocation. we about cash the income. prepared in I force, Shares what on the remarks, and pipeline our couple turns out like and new between from year. offsetting you in to and about value of dividend that of think invest said can being million the think which it of business that It's allocation, investing we in highly going greater be and how sales we before. are in than toggle at it different us. talked it's side share like work be M&A and strong out. our but those growth and I'd or equal to we dependent we'll some when what to We to really guided when stream other ability growth that. that repurchase, of on this a the business do So I share think you I about active capital see what the and important flow, of share $XXX we to what having really but And of four us in It M&A, side told earnings to don't is months original We're intrinsic But can that us. that, tell going the then can come the come to anything some continuing of repurchase. out earnings transpires five the in side as the we modeled M&A through with the see continue see grow you the flow, timing M&A. deploy for be you or some the last excess to And well deploy committed net from had on of And work pieces you're to have that million grow the flow We we've positive, can have the turned would we cash the is on long-term $XXX other technology, last aspects of pipeline the good had channel,

Robert Paul McCarthy

answers. Thanks for your

Operator

Your next of from Vertical Jeff question comes Sprague Research.

Your open. line is

Jeffrey Todd Sprague

Good Thank you. morning everyone.

Michael W. Lamach

Jeff. Hi,

Jeffrey Todd Sprague

solid was elaborate in Mike, of comment. back playing do you lumpiness project answered Obviously, may elements? wonder there. had some a business could of the shorter the in half I orders But you maybe if trajectory the kind side business you and my partially could have industrial stronger the been thinking pretty kind question Industrial the on capital of see how the larger there's Industrial there, on But out maybe of versus quarter. you have the some cycle kind I of

Michael W. Lamach

Yeah.

equipment really continue technology of in grow the two we stronger Industrial to first great talk is our the And thirds Let's to services growth business. is saw to focuses. strong and here, services expect than which about compressor which segment,

short saw rotary. a do, saw we in we a selling on compressors. OEMs. We good cycle also work We saw growth with And OEM other growth oil-free really to some components growth nice

Processed about being associated large some the centrifugal I made micro separation and well. the delays do indicators All of to a in the some aerospace related regionally. expect we're America projects, strong seeing North air verticals this we at uncertainty do there, it We recover supportive driven healthy. that is a already Industrial excellent manufacturing be as growth, are there. was that expected North well. production stronger here. is And lumpiness to Key and high. and and but very looks So forecast economic strong. year strong. as see are America two-year and Asia Defense-related though comment gas there risk are tariffs to by is

seeing will us. GDP, think the but that we're think still AP we is tapering strong China regionally that good. the will markets as it's well. We X% So little growth regionally, be good there for be strongest market a in there's from there bit probably

the fluid for growth, us. going to high the our third, growth in if business which the us is we And the business, growth On as to small vehicles, for billion good other $X material management in saw market, a relates of not is the it handling, going be Industrial products, which our really excellent strategy. consumer other electric particularly to Industrial be and it's tools margin very strong

Jeffrey Todd Sprague

really to kind in has been it's more just that in here increases? things probably shifting then try there of But channel resi front back or a the question. Does out of as pre-buying kind And then kind figure of we and price kind there of the next HVAC of was of wave of QX? distort to

Michael W. Lamach

the Yeah, have than the in been that I year. expectation given or prior don't were was different the they what price the increase would time think

done across inventories at more where need than that at point they backlog, for they're be distributors would the there So to have appropriate this time. But might could specific look they we have in pretty as done. be

I see don't So tremendous risk there.

Jeffrey Todd Sprague

whipping one to be don't other the just materials more, strategy to they there quick with do How want on hedge be items. to change, are, your around mean, one. want "betting" But kind I hedge would maybe you about you do color want obviously And hedging? less? helpful. of way any these You

Susan Carter

Jeff, exactly on for today, don't options to doing maybe and let give speculation what Yeah. want we're you've me business. future. I thoughts that couple you be right. the in a got the think, But We of

steel. today, we've visibility So again, got on

six pricing months, it. We've inventory. You can't of lock, visibility about got hedge and on three on you months about three months can't

copper supply of of base locked lock like, for is, throughout We side know pricing getting the base. so the supply any given on we're what we XX% we're know year our we commitment think what that I year. about the volumes enter locking and commitment So On Actually terms to this the we and the and giving steel on of quarter price prices, in out happens on about we copper. locked looks we're with copper, that on have copper. at lock, is But we're volume do market. and important what XX% in

other on done are words, side that in fluctuations house. any so that price are belong hedges the copper actually So supply of the base, being the on to financial

even your we hedged do you buying Now, doing copper is in averaging commodities. there the and that? bit I that type The is of layer more on to of those pressure so it's like would in if accounting answer purchases to in what for But is you the a that take do or cost rules a little and things think hedge still with move way change would that. maybe us almost perhaps aluminum, on actual perhaps, in you're $X

about I the same probably with versus place think are the hedge in end you that up a financial out locks there.

around we that. continue our thinking to refine So

on does on We the need those, really with today kind work of react costs really processes, projecting is projecting we volumes and to us if which pricing so the timing it getting good of good really continue it visibility be. think the works getting like can but that and with do I our

Jeffrey Todd Sprague

you. Thank

Operator

Barclays. of Mitchell Your next the of line comes Julian from question

open. is Your line

Julian Mitchell

Hi. Thank you.

Michael W. Lamach

Julian. morning, Good

Julian Mitchell

That happening Climate big in a out a China. something as few last margin year being first times your in called you business headwind. Morning. was Maybe question what's pretty the just on

I slightly financials think better you mentioned that the are looking there.

And bit. with that also So share market push? just how little maybe progressing strategically, that a you're flesh out

Michael W. Lamach

I'm well a happening specific your on exceptional organic businesses. question But the to going answer Yeah, different us. results little equipment and to regarding of probably bit going a bookings which gets Steve very maybe or Tusa's add question going little actually kind is I'm guidance of there. strategy in to There's for then bit last

Just are we put meaning visibility that that that would to pipeline our in a there for all pipeline projects a you to XXX% pursue project of out were us into the they point doubled. up we have color, year-over-year, give

prior provided many twice to of number The that year. proposals as So we XXX%. as have the projects visibility were up we

at. distribution or projects So that company-owned our or albeit longer were be pursue getting but cycle, are projects larger our wasn't even for they getting finding the is might perhaps better to resources at, direct go team actually projects us

for is map, should in that would and base means see say mapping how much year-over-year. there getting us be we I've that margins higher as very level we'll will it on grows. is bookings beyond revenue for a of getting that and and planned as high the was growth I I So there it better XXXX financial which thing. most there, wanted strong the be pressure very as to that, that a tailwind And service important got is And margin the the nice growth are to in year. it flat in well, the XXXX confidence margins on strong think service XXXX business That

Julian Mitchell

business, you that Thermo refrigeration Thank realize overall year. the or within you did transport into see get Trane in the improvement accelerating late also the in you Understood. last commercial in too I guess was from King an did QX see the color. for but to secondly, then I want organic about growth or detail, side? Climate some much you And business, don't acceleration all the bookings

Michael W. Lamach

versus drove Yeah. business. was what other One the terms not in the remarkable of

good question and a particularly is resources the relates to wasn't the for in that put sort into we're well, bit we all a little years, better over beating. do marketplace back tough our of I've pricing say So from covering bull's-eye the ability who invest an mapping we another. to calls, a detail then us as multiple to so often seen there planned, talent we performance what and asked one a these identify a the the strategy growth business. they're to in for to up never of the much linkage the provide of And out in as environment, where it around and Steve And salespeople exactly really and execution programs, on getting of growth strategic back those, the underlying business rate last penetrating outstanding what results sort of we're get is five into

really which to means it of help It really that. the for much too it blowout way that of business. short-termism to a a change shareholder So company, dynamics the because we're be help the people around doesn't do providing us what a would lot whether have the long-term doesn't the trying or into don't, growing number quarter, business about think also invites doesn't strategically the we of

that, granular of we long-term, don't use but a sell-siders much and information but the to again, so question, And in it's your about. to the the around America, business back provide I The the hard shareholders HVAC in apologize TK long believe for model, talked also the which been that to that interest good trailer that about has on we who growth company's TK. business, But we in that really thought specifically really best and strengthening strengthening globally, certainly surprise basis. go-forward is North in both us

Julian Mitchell

Great. Thank you. makes It sense.

Michael W. Lamach

Thank you.

Operator

Baird. of Wojs Tim from comes question next Your

line open. is Your

Timothy Ronald Wojs

morning. Hey, Good everybody.

Michael W. Lamach

Hey, Tim.

Timothy Ronald Wojs

I just just growth help margins to Climate maybe relative what and we in on kind the for us just of the about saw half question to a XX what back and or backlog, maybe just think order kind this terms maybe a orders your of ago? are the the what's had with backlog booking or months what year. little of in will bit in XX of Anyway

Michael W. Lamach

backlog think on margin. being going have about the backlog price higher because higher you margins Well, to they're

you're pricing think plus seeing, the higher hopefully different the through change revenue. the about same into you roughly the volumes What's cost year. to coming half if absorption not to back being So standard we're additional standards into the going that, first half, midway on coming seeing factory is

half in and better the sort margin and year the we've that of the got half year on outlook the of back happens. expansion the for ultimately margins So year, are that's leverage front the of than the why full

Timothy Ronald Wojs

with the any think about the in terms should Okay. expense debt then quarter, on the the some just Great. movements interest side year? And for update we in of how of

Susan Carter

and and that which then information Yeah. the XXXX. we let there, put parts, XXXX X-K is out this two post so parse into the Tim me

look QX, I having benefit about we that guidance the of gave the XXXX, On the on up refinanced on $XX and expense XXXX tranches is interest beyond interest million. period the of specifically, benefit in as slightly So actually, of XXXX, was both interest expense is because well our very short for $XX If beyond. about a as time. million tranches, new actually

Timothy Ronald Wojs

Good Great. the luck rest on the year. of

Michael W. Lamach

Tim Thanks,

Operator

of comes Securities. Rich Fargo Your from Kwas next question Wells

line is open. Your

Rich M. Kwas

Hi. Good morning, everyone.

Michael W. Lamach

Rich. Hi,

Rich M. Kwas

Just following cost. the of one up on around price questions earlier

minus band a year, was XX in of there range, year like standpoint? part basis the beginning, the how from lower guidance that is obviously the points going way sounds for but XX comfortable and basis plus of the at an interpret with So points to this? that you're out Mike. It to the for play to the earnings right Is

Michael W. Lamach

Yeah.

you typically that to the let's In the leverage points, so so so plus get it's XX was that be say, managing communicated P&L. We we're because much we're we volatile that had plus points, And plus basis we'd XX we intent. the about inflation let's business it's fact, to look, confident window, basis points. that not basis be precise said within what XX that and by going minus at able thought here we've talked XX points. fact time But basis in and point be entire to had that's about the in the that,

we bias toward the range. it bottom that within let's end Now that, of said,

safe. Let's play it

points. with what being we've XX the within minus basis reality. XX the band are points seeing to price certainly we're closer at transpire as look the And Let's communicated, that is probably basis in marketplace that say minus we

looked points at forecast, spot volatility we say Understand bit. today. the a XX in quite that you basis a minus could moving is If

point, XX of bps in kind that year these will as minus about good out. being range feel minus the evolve wildcards course I of So and bps, this that XX at over play the

Rich M. Kwas

mean, you it's but from early we into for there thoughts there, any productivity early, And think months I XX obviously, out But some know a so. this at looking early planning to think time you impact point, curious really, I on it. about or reads about here have XXXX standpoint Okay. from commodity things. some really how just lap-over execute and as you're as this,

Michael W. Lamach

Yeah.

it As looking the for we're at right happening is what's year. certainly volatile now, as

can about this We thinking want not to stretching we'd make to not in QX but prognosticate and that QX. really point be time. we at much it's we're sure XXXX, So call

back So there. in at I'd time, comments hold on this point

Rich M. Kwas

so much. Thanks Okay.

Michael W. Lamach

Thank you.

Operator

question Your Joel next Tiss comes BMO. of from

Your line is open.

Joel G. Tiss

a I give but of going? of a you of wondered has pieces, Thermo How's do I me, again. better Almost us apart happening little just could you the – and Yeah, it usually King? of some been pieces everything the across what's if just for made break answered bit it. can You sense I that

Michael W. Lamach

here. trailer, is. Yeah. minute which again shipping North first is a And you've tight where let's And of about news it'll business capacity. a is it got America But here take diversified talk the some because

got I've mentioned. You've supply tight that of All of labor increase drivers. the in terms driving industry sort XX%

got You've which changes regulatory here also impacting. are

this the specifically. then is Cuts And and got devices Tax S. of So benefit electronic logging the Act. Jobs you U.

Act XX,XXX. So to raised outlook their

of around a time last plan XX,XXX better spoke, original which is we biasing was think than were around we I the kind that XX,XXX. little and

through which even and constraints XX,XXX it's the frankly, cabs between thought somewhere or the think, what in Act some inventory marketplace. is have about not I around Act XX,XXX, may has. of

as all number is a than in Europe trailer as about It's is less truck, some the good Russia Europe a stronger little markets for be And the solid for than Interestingly, than and are news. well X,XXX growing of market it's so or should broadly, XX% perhaps whole. units faster so very that. others.

for at where in year this further a over business cabs that for market The And over marine in air us. really is up and looking cabs is say there to Bus was Analyst out market and The like of moved So ago us, portfolio then there our are sleeper at But X route. rail there. projects from tracking up it's Russia. a happen rate mixed. more small growth. transit in that's good the air growth plan units an this Day is anything sanctions want lot good be on and increasing the strong the our the there it relatively was good market seeing longer It's bolt-on for of larger through strong. APU is point speaking, XXX%. is you over sleeper these XXX%. but quarter, Rail is generally and wildcard we laid buses kind Class bolt-on on and of with measure would the a would bus, I then is we is we're small biopharma that where but The kind city to interesting time.

the via seeing of for market refrigerated biopharma You're in XX% air. moving increase containers sort in

bus, of air portfolio. XX% those like businesses of around and collectively, portfolio, those Brazil, sign Asia. growth rail, so But strong are not in businesses. Good good something growth a that's a the America, part So specifically continued in large Latin the

Joel G. Tiss

expect acquisitions And of more overall methodical try count approach kind or enough to drop are the a high are point that keep the prices your going this little we you of to and bit balance at guys should share everything to out?

Michael W. Lamach

is keeping acquisition. to the intrinsic really approach front and an as The looking value in around of at just methodical decision us we're trying right acquisition make the long-term

But the we price it come share difficult. acquisitions little down value acquisitions obviously, So bit as it what as drops, look, makes intrinsic persists, the if see makes should greater, more the price well. too of

let's just pay the and we XXXX made I but generating a into disciplined good thing few company. we acquisitions the this well what looked years for. decisions and integrated over buy tell why play we've repurchase And in what versus is intrinsic So at bought about look, far because you past EPS share than that's XXXX I shown and XXXX value greater out, process very think could the and in but let we we've them that

Joel G. Tiss

very right. much. All you Thank

Michael W. Lamach

you. Thank

Operator

from comes Robert of question Barry Susquehanna. next Your

Your line is open.

Robert D. Barry

Good taking morning. for questions. Thanks the guys. Hi,

Michael W. Lamach

morning. Good

Robert D. Barry

spending point through to expected to stay wanted the walk, does just at sense basis how that get XX, maybe margin investment a I on guess as to, the year? of the I headwind Yeah, you track progress, XX we a

Susan Carter

Yeah, let's XXXX investment I think we through that call spending, as on similar to year. the go

what the what going itself is Robert, investment spending think that I is into. important, on actually is

of IT. terribly board that right the throughout to work to that review There's small continuing the new similar of that investments we sure got that we're do looks do this we're changes a as that's operational a components may as amount and part but terms value different our investments go important this to in impact excellence the it business at we've and really all be all timings products. expect of don't on operating system creation business is of on sound those of may we cases, for make investment XXXX. look I year, the we we've our right practice And for initiatives. an to it how process to some see of We're work that But somewhat, of through got the the us would and of different. an part So going is, that continuing our

Robert D. Barry

and this Got you to say it, but don't out got have touched X.X% you this. and guiding were if can X%, others more want started I But X% appreciate any on XX%. – front, you up Climate on listen, up And it. orders with

season what, heads materially maybe kind or there. what like all factored to around something get on... or in So I we're just there some plan your like seeing so shoulder just different But is any thoughts think if is we're of anything, volatility our trying

Michael W. Lamach

– and cases, point product strategy that teams my here It these the think, the around programs very very in to mapping is growth surprising it that's markets. actually much I much growth and success closely gets, gets the some strategic we're yeah, great. is growth And in point very gets my ourselves it a

to quarter to progress. strong have put very delighted a into and quarter and was sort it book and backlog three we're going how of that two see it So, quarter the

Robert D. Barry

Got it.

congrats solid you. start. Thank Well, on great. the Okay,

Michael W. Lamach

Thank you.

Operator

Dray Your next question comes from RBC of Capital Markets. Deane

is line open. Your

Deane Dray

Thank you. morning, Good everyone.

But on that you quarter basically lot aren't prices, have in your you not? each out. that I follow-up locked for or you engage could expect Jeff's you purchasing, each in that ladder commit Sue. is so of just here. steel, for I locking Is volume in that did advance question question the pre-buy or us the So ground still but quarter really time? XXX% can't the to said the that then Now in you we've think same and practice? covered of inflation you my lock a if a answer In understanding in refresh

Susan Carter

great to steel, hedge a question. of Deane, something nature meant do be or financial comment my was On you steel. So what cannot on that is

three lot visibility like where a out commitments, prices commitments program months. is get on that it However, go steel suppliers the from we and will from contractual a locking spot

got pricing also that the So we've we've and to got visibility inventory. then

mechanism about of or got of aluminum. hedging be could there copper visibility It's price decreases. steel, a there months isn't a increases which and that's to on we've matter on So financial six just out

Deane Dray

analyst rate whole of a focus That's at buildings. And would kind is, connected investment the you be helpful. but could the That any the making, of us around helpful. number color then buildings, Mike, on update you're the initiative Great. meeting. take was the What big there for

Michael W. Lamach

quarter business for it we're digital Yeah. I'd whole the product connected across definitely through specifically when you on the around the much strategy take growth. as investment just controls the rates around XX% talked of our It the that property lot meter hundreds results rates the thousands an that small another made company, a the say We that look look into why in company the is. was to many, you and we're is of And strategy growth seeing smart growth see there, shape. company in largest intellectual acquisition we probably and is if the at of as a connections up through technology then about sort many platform. company compound of continuing and

So and footprint. get there growing larger is and we're XX%. the well to But investment a happening strategy roughly as more extend is there trying

You all controls were about could business our show it's say in seeing and up intentional. I there. That's that

Deane Dray

you. Thank

Michael W. Lamach

you. Thank

Operator

now this to for at questions further call closing will no return Nagle comments. Zac time. I are There the

Zachary A. Nagle

the Great. joining you, Thank for call. everyone

has questions a hope available day. to your forward take on in the look be I'll road well. as investors several We great and and Shane weeks. And the to our everyone weeks always large and you. of upcoming As the in seeing days today, Thank tomorrow coming

Operator

today's concludes This call. conference

disconnect. now may You