Trane Technologies : 2020 Irish Annual Accounts

TRANE TECHNOLOGIES plc

Directors' Report and Financial Statements Financial Year Ended 31 December 2020

TRANE TECHNOLOGIES PLC

TABLE OF CONTENTS

	Page
Directors and Other Information	3
Directors' Report	4
Statement of Director's Responsibilities	37
Independent Auditors' Report (Group and Parent Company)	38
Consolidated Profit and Loss Account	45
Consolidated Statement of Comprehensive Income	46
Consolidated Balance Sheet	47
Consolidated Statement of Changes in Equity	48
Consolidated Statement of Cash Flows	49
Notes to the Consolidated Financial Statements	50
Parent Company Balance Sheet	111
Parent Company Statement of Changes in Equity	112
Parent Company Statement of Comprehensive Income	113
Notes to the Parent Company Financial Statements	114

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DIRECTORS AND OTHER INFORMATION

Board of Directors at 7 April 2021	Kirk E. Arnold
	Ann C. Berzin
	John Bruton
	Jared L. Cohon
	Gary D. Forsee
	Linda P. Hudson
	Michael W. Lamach
	Myles P. Lee
	April Miller Boise
	Karen B. Peetz
	John P. Surma
	Richard J. Swift
	Tony L. White
Company Secretaries	Evan M. Turtz (Company Secretary)
	Sara Walden Brown (Assistant Secretary)
	Computershare Inc. (Assistant Secretary)
Registered Office	170-175 Lakeview Drive
	Airside Business Park
	Swords
	Co. Dublin
Registered Number	469272
Solicitor	Arthur Cox
	Ten Earlsfort Terrace
	Dublin 2
Auditors	PricewaterhouseCoopers
	One Spencer Dock
	North Wall Quay
	Dublin 1
Principal Bankers	JP Morgan Chase Bank,
	125 London Wall
	London EC2Y 5AJ
	England

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DIRECTORS' REPORT

Directors' report for the year ended 31 December 2020.

The directors present their report and the Financial Statements and related Notes of Trane Technologies plc for the financial year ended 31 December 2020.

Principal Activities

Trane Technologies plc (Plc, Parent Company or Company), a public limited company, listed on the New York Stock Exchange, incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, we, our, the Group) is a global climate innovator that brings efficient and sustainable climate solutions to buildings, homes and transportation driven by strategic brands Trane® and Thermo King® and an environmentally responsible portfolio of products and services. We generate turnover and cash primarily through the design, manufacture, sale and service of a diverse portfolio of climate control products and services for Heating, Ventilation and Air Conditioning (HVAC) and transport solutions.

To achieve our mission of being a world leader in creating comfortable, sustainable and efficient environments, we continue to focus on growth by increasing our recurring turnover stream from parts, service, controls, used equipment and rentals; and to continuously improve efficiencies and capabilities of our operations and products and services for our customers. We also continue to focus on operational excellence strategies as a central theme to improving our earnings and cash flow.

Separation of Industrial Segment Businesses

On 29 February 2020 (Distribution Date), we completed our Reverse Morris Trust transaction (the Transaction) with Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand Inc. after the Transaction) whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained our former Industrial segment (Ingersoll Rand Industrial), through a pro rata distribution (the Distribution) to our shareholders of record as of 24 February 2020. Ingersoll Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. Upon close of the Transaction, our existing shareholders received approximately 50.1% of the shares of Gardner Denver common stock on a fully-diluted basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Gardner Denver on a fully diluted basis. As a result, our shareholders received .8824 shares of Gardner Denver common stock with respect to each share owned as of 24 February 2020. In connection with the Transaction, Ingersoll-Rand Services Company, an affiliate of Ingersoll Rand Industrial, borrowed an aggregate principal amount of $1.9 billion under a senior secured first lien term loan facility (Term Loan), the proceeds of which were used to make a special cash payment of $1.9 billion to a subsidiary of ours. The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the Transaction is a wholly-owned subsidiary of Gardner Denver.

In connection with the Transaction, we entered into several agreements covering supply, administrative and tax matters to provide or obtain services on a transitional basis for varying periods after the Distribution Date. The agreements cover services such as manufacturing, information technology, human resources and finance. Income and expenses under these agreements were not material. In accordance with several customary transaction-related agreements between us and Gardner Denver, the parties are in a process to determine final adjustments to working capital, cash and indebtedness amounts as of the Distribution Date, as well as another process to determine funding levels related to pension plans, non-qualified deferred compensation plans and retiree health benefits. As of 31 December 2020, both are ongoing in accordance with the transaction-related agreements. Upon finalization of these agreements, any adjustments will be recognized within Profit and loss account reserve.

Reportable Segments

Prior to the separation of our Industrial segment on 29 February 2020, we announced a new organizational model and business segment structure designed to enhance our regional go-to-market capabilities, aligning the structure with our strategy and increased focus on climate innovation. Under the revised structure, we created three new regional operating segments from the former climate segment, which also serve as our reportable segments.

• Our Americas segment innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating and cooling systems, building controls, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions. This segment had 2020 turnover of $9.7 billion.
• Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating and cooling systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions. This segment had 2020 turnover of $1.6 billion.
• Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport refrigeration systems and solutions. This segment had 2020 turnover of $1.1 billion.

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DIRECTORS' REPORT (continued)

This model is designed to create deep customer focus and relevance in markets around the world. Each segment reports through separate management teams and regularly reviews their operating results with the Chief Executive Officer, the Company's Chief Operating Decision Maker (CODM) determined in accordance with applicable accounting guidance. All prior period comparative segment information has been recast to reflect the current reportable segments.

Products and Services

Our principal products and services include the following:

Aftermarket and OEM parts and supplies	Hybrid-powered trailer refrigeration
Air conditioners	Ice energy storage solutions
Air exchangers	Indoor air quality assessments and related products for
	HVAC and Transport solutions

Air handlers

Airside and terminal devices Auxiliary power units Building management systems Bus and rail HVAC systems Chillers

Coils and condensers

Container refrigeration systems and gensets Control systems

Cryogenic refrigeration systems Diesel-powered refrigeration systems Ductless systems

Electric-powered trailer refrigeration systems Electric-powered truck refrigeration systems Energy management services

Facility management services Furnaces

Geothermal systems Heat pumps Home automation Humidifiers

Hybrid and non-diesel transport refrigeration solutions

Industrial refrigeration Installation contracting Large commercial unitary Light commercial unitary Motor replacements Multi-pipe HVAC systems Package heating and cooling systems Performance contracting

Rail refrigeration systems Refrigerant reclamation Repair and maintenance services Rental services

Self-powered truck refrigeration systems Service agreements

Temporary heating and cooling systems Thermostats/controls

Trailer refrigeration systems Transport heater products Unitary systems (light and large) Variable Refrigerant Flow

Vehicle-powered truck refrigeration systems Water source heat pumps

These products are sold primarily under our name and under our tradenames including Trane®, Thermo King® and American Standard®.

Competitive Conditions

Our products and services are sold in highly competitive markets throughout the world. Due to the diversity of these products and services and the variety of markets served, we encounter a wide variety of competitors that vary by product line and services. They include well-established regional or specialized competitors, as well as larger U.S. and non-U.S. corporations or divisions of larger companies.

The principal methods of competition in these markets relate to price, quality, delivery, service and support, technology and innovation. We believe that we are one of the leading manufacturers in the world of HVAC systems and services and transport temperature control products.

Distribution

Our products are distributed by a number of methods, which we believe are appropriate to the type of product. U.S. sales are made through branch sales offices, distributors and dealers across the country. Non-U.S. sales are made through numerous subsidiary sales and service companies with a supporting chain of distributors throughout the world.

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