February 2021
Investor Presentation
Safe Harbor
This presentation includes "forward-looking statements" which are statements that are not historical facts, including statements that relate to our future performance, statements relating to the continued impact of the COVID-19 global pandemic, capital deployment including the amount and timing of our dividends, our share repurchase program including the amount of shares to be repurchased and the timing of such repurchases and our capital allocation strategy including projected acquisitions; our projected free cash flow and usage of such cash; our available liquidity; performance of the markets in which we operate; restructuring activity and cost savings associated with such activity; our projected financial performance and targets including assumptions regarding our effective tax rate.
These forward-looking statements are based on our current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from our current expectations. Such factors include, but are not limited to, the impact of the global COVID-19 pandemic on our business, our suppliers and our customers, global economic conditions taking into account the global COVID-19 pandemic, disruption and volatility in the financial markets due to the COVID-19 pandemic, improvement in market conditions (if any) with global vaccine administration, the outcome of any litigation, the outcome of the Chapter 11 proceedings for our deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC, demand for our products and services, and tax law changes and interpretations. Additional factors that could cause such differences can be found in our Form 10-K for the year ended December 31, 2020, as well as our subsequent reports on Form 10-Q and other SEC filings. We assume no obligation to update these forward-looking statements.
This presentation also includes non-GAAP financial information which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. The definitions of our non-GAAP financial information are included as an appendix in our presentation and reconciliations can be found in our earnings releases for the relevant periods located on our website atwww.tranetechnologies.com. Unless otherwise indicated, all data beyond the fourth quarter of 2020 are estimates.
2
CLEAR PRIORITIES
Focused Strategy Delivers Differentiated Shareholder Returns
1 | 2 | 3 | 4 |
Win | Grow Margins | Maximize | Continue |
Through | and Cash Via | Value As | With |
Sustainable | Execution | Focused | Dynamic Capital |
Innovation | Excellence | Climate Co. | Allocation |
Strong Foundation | |
Strong operating system and | Uplifting culture - integrity, ingenuity, |
Powerful cash flow | |
performance culture | community & engagement |
3
Pure-Play Climate Control Business with Leading Brands and Market Positions; High Aftermarket Mix
TRANE TECHNOLOGIES TODAY
Americas
Total $12.5B
APAC
Sales
EMEA
Revenue Streams
Equipment
Aftermarket
Regional Segments
67% | 33% |
Franchise Brands
4
All figures are FY 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations.
Commercial HVACTransport RefrigerationResidential HVAC
Global Megatrends Continue to Intensify - Demanding Bold Action
Heating and Cooling
Buildings
Global emissions from heating / cooling buildings*
15% + 10% = 25%
Food Loss
Global emissions come from food loss / waste*
GHG Emissions
Combined share of global emissions
5
* Source: Project Drawdown and BCG
Uniquely Positioned with Innovative Solutions to Lead a Movement to Reduce GHG Emissions
Accelerating clean technologies
Addressing system energy efficiency
Reducing food loss from cold chain
Transitioning out of high GWP refrigerants
Like minded companies to join movement
Key Actions We are Taking
Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction
7
SOCIAL BENEFITS
Defines Our Culture
Generates uplifting culture that builds engagement and empowers people
Drives innovative solutions
Creates purpose driven performanceFosters employee retention and safety
FINANCIAL BENEFITS
Focuses Business Priorities
More targeted investments
Simplifies business model
Increases speed and agilityImproves productivity and execution
More value to shareholders, customers and employees
Highly Regarded ESG Performance
8
10 Years
Listed on North America Index
#26
On Corporate Knights Top 100 Global Most Sustainable Corporations
61%
Higher score than industrial machinery average
Gold Medal Winner 35th annual award for International Achievement in Sustainable Development
A-
Climate Change disclosure submitted 10+ consecutive years
9 Years
Listed on most admired companies list
Top Decile Globally
Identified as "Industry Leader"
The New Trane Technologies: Reimagined to Unlock Our Full Potential
2 | 3 | |
Sustainability innovation | Exceptional performance | Structural transformation |
fuels our growth | maximizes our margins | unlocks our potential |
Customer-focused innovation 100% tied to sustainability secular mega trendsRelentlessly focused on leaning out processes and driving excellent execution
Redesigned to maximize our value as a pure-play climate focused innovator
Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise
+
Startup
Essence of a
Purpose-driven alignment
Fit for purpose organizational designStrategic choice budgeting
Built for speed
Market Leader
Credibility of a
Long track record of executionTrusted industry & technical expertiseDeep customer relationships
Strong performance culture
Why Pure Play Matters? - Purpose Drives Performance
1 | World class climate innovator relentlessly reinvesting to bend the curve on climate change |
2 | Lean-based, customer-focused model |
3 | Increased speed and agility in the marketplace |
4 | Strong competitive position with full spectrum of product and service capabilities |
5 | Global reach provides scale to deliver next generation technologies through unequaled channel expertise |
TRANE TECHNOLOGIES REIMAGINED
Business Transformation Delivers $300M in Cost Savings by 2023 to Fund Continued Market Outgrowth With 25% Sustainable Leverage
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
* Operating leverage calculated based on change in historical Climate segment adjusted operating income less adjusted unallocated corporate costs divided by change in Climate segment revenues,
INNOVATION
Megatrends are Powerful Drivers of Growth and Accelerate Need for Innovative Trane Technologies' Solutions
Continuing Megatrends
Accelerating Megatrends
Climate | Resource | Indoor | Digital |
Change | Scarcity | Environmental | Connectedness |
Quality |
Urbanization
Demographics
Trane Technologies Innovation Advantage
Leader in innovative climate solutions at nexus of environmental sustainability and impact
Proven Business Operating System Delivers Results
• World class sales, service capabilities / offerings
• Sustained market outgrowth
• Margin expansion
• Continuous improvement and sustainable performance
Results
Driving Sustained Growth and Operating Margin Improvement 2017-2020
Revenue* ($B) | $12 $9 $6 $32017 ~4% CAGR 2018 2019 2020 |
Adj. Op. Inc. Margin † | 13% 11% 9% 7% 5%2017 +110 bps 2018 2019 2020 |
FCF % of Adj. Net Earnings** | 160% 120% 80% 40% Avg. = 116% 0%2017 2018 2019 2020 |
Adjusted EBITDA Margin* | 18% 16% 14% 12% 10%2017 +110 bps 2018 2019 2020 |
* 2017, 2018, 2019 and 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations ** 2017 and 2018 free cash flow conversion history based on pre-RMT transaction consolidated Ingersoll Rand financial statements
† 2018, 2019 and 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations. 2017 calculated based on historical Climate segment adj. op. inc. less adj. unallocated corporate costs divided by Climate segment revenues
Long Track Record of Disciplined and Balanced Capital Deployment (2016 to 2020)
~$2.2B on 25 acquisitions as of January 2021
M&ACAPEX
Capex lite business model ~1.6% of revenue
Share Repurchase
~$3.2 billion on share repurchases
* Historical information based on pre-RMT transaction consolidated Ingersoll Rand financial statements through 2019; 2020 reflects Trane Technologies.
Dividends
~12% CAGR dividend per share.
Long history of growing dividend.
Positioned to Outperform. Consistently.
IN SUMMARY
The markets we serve will continue to outgrow GDP fueledby long-term sustainability megatrends
We are positioned to outgrow the market and expand margins with market-leading sustainable innovations
Our execution excellence and transformational work position us to maximize margins and cash generation
Our strong balance sheet, exceptional cash generation and balanced capital allocation strategy deliver significant value to shareholders
18
Adjusted operating income in 2020 is defined as GAAP operating income plus restructuring costs and transformation costs. Adjusted operating income in 2019, 2018 and 2017 is defined as GAAP operating income plus restructuring costs.
Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.
Adjusted earnings from continuing operations attributable to Trane Technologies plc (adjusted net earnings) in is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus / minus certain adjustments applicable to each respective year such as restructuring costs, transformation costs, gain on M&A transaction, legacy legal liability adjustment, gain from deconsolidation of certain entities under Chapter 11, debt redemption premium and related charges, net of tax impacts as well as separation-related tax costs, tax reform/tax legislation adjustments and other U.S. and Non-U.S. discrete non-cash tax adjustments.
Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net less the gain on M&A transaction. Adjusted EBITDA in 2019, 2018 and 2017 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net.
Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues.
Free cash flow is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs.
Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. 2020) less the prior period (e.g. 2019), divided by the change in net revenues for the current period less the prior period.
19
February 5, 2021
Fourth-Quarter 2020 Results
CLEAR PRIORITIES
Focused Strategy Delivers Differentiated Shareholder Returns
1 | 2 | 3 | 4 |
Win | Grow Margins | Maximize | Continue |
Through | and Cash Via | Value As | With |
Sustainable | Execution | Focused | Dynamic Capital |
Innovation | Excellence | Climate Co. | Allocation |
Strong Foundation | |
Strong operating system and | Uplifting culture - integrity, ingenuity, |
Powerful cash flow | |
performance culture | community & engagement |
Strong Performance in Q4 and 2020 Against Challenging Covid-19 Backdrop
• Resilient financial performance highlights strength of focused strategy, business operating system & high-performance culture
− Broad-based outgrowth / share gain across challenging global end-markets
− Strong Q4 bookings growth in all segments, Enterprise revenues ~flat, with strong margin expansion & EPS growth
− FY 2020: +2% bookings growth, -5% rev decline, ~13% deleverage, +20 bps adj. EBITDA margins
− Exceptional 2020 FCF of $1.7B, 158% conversion - strengthens balance sheet, adds capital allocation capabilities / optionality
• Aggressive offense through downturn to emerge even stronger post-pandemic
− Maintained high levels of business reinvestment supporting greater innovation & market outgrowth / strong leverage
− Further extended pure-play competitive advantages (IAQ, cold storage, leading sustainability solutions)
• RMT completed Q1; Business transformation savings accelerated; targeted savings 3X original $100M cost reduction target
− Expected $300M total transformation savings by 2023 funds superior innovation & growth profile, sustainable strong leverage
− Stranded / fixed cost take-out of $100M achieved in 2020; on track for $140M run-rate savings in 2021 and $160M add'l savings by 2023
− Strong performance culture maintained through downturn and transformation; world class employee engagement up in 2020 survey
• 2021 guidance reflects improving market conditions with expectation of global vaccine administration
− 2021 revenue growth of 6.5% to 8.5%, adj. EPS of $5.30 - $5.50
− Organic revenue growth of 5-7% with ~30% leverage (better than ~25% long term target)
• Exceptional FCF, financial position, liquidity and balance sheet optionality support balanced capital allocation strategy
• Deployed ~$1.2B in capital 2020; expect to deploy ~$2B+ in capital in 2021
• Purpose-driven sustainability strategy unchanged & focused on long-term secular tailwinds towards sustainability megatrends
−
Leadership in addressing these challenges delivers top-tier financial performance & differentiated shareholder returns
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
* Includes certain Non-GAAP financial measures. See the company's Q4 2020 earnings release for additional details and reconciliations.
2020 YEAR IN REVIEW
Strong Performance and Improving Outlooks Throughout 2020 Despite COVID-19 Impacts
2020 Scenarios (Q1)**
2020 Guidance (Q2)**
2020 Guidance (Q3)**
2020 Results
Net Revenue
-15% to -25% | -10% to -15% | -6% | -5% |
Deleverage*
~Gross Margin % | ~Gross Margin % | Better Than Gross Margin % | ~13% |
Free Cash Flow*
≥ 100% Adj. Net Earnings | ≥ 100% Adj. Net Earnings | ≥ 125% Adj. Net Earnings | 158% Adj. Net Earnings |
• Resilient revenue, end market outgrowth and strong margin performance
• Modest deleverage of ~13%, well below GM% target
• Exceptional free cash flow of ~$1.7B, or 158% of adj. net earnings
• Successful RMT & transformation driving savings / fueling investment in 2020
* Includes certain Non-GAAP financial measures. See the company's Q4 2020 earnings release for additional details and reconciliations.
** Reflects COVID-19 pandemic downturn scenarios, May 5, 2020 (Q1), July 29, 2020 (Q2) and October 28, 2020 (Q3)
Bookings Growth and ~Flat Revenues, Outpacing Weak End Markets
Enterprise
Americas
Commercial HVAC Residential HVAC Transport
EMEA
Commercial HVAC Transport
Asia Pacific Commercial HVAC Transport
Q4 Organic* Y-O-Y Change
Bookings Revenue Americas
+ 3%
- 1%
+ 2%
+ 1%
- + +
- + +
• CHVAC bookings / revs down MSD on tough comps (Bookings up ~25% across 2018/19; N.A. revs up high-teens 4Q19); Svcs performance stronger than equipment; Svcs revs up LSD; Cont'd impacts from low building occupancy / school / other closings; IAQ demand remains healthy
• Res HVAC revs up 20+% on strong end market demand; Strong backlog headed into 1Q21
• Transport bookings up 40+%, revs up LSD, outpacing largely soft transport markets (truck / trailer markets significantly lower in Q4)
EMEA
• CHVAC bookings up high teens w/ growth in both equipment and services; CHVAC revs down MSD
• Transport bookings positive / revs down HSD, outpacing weak transport market declines (trailer market down mid-teens)
Asia Pacific
• CHVAC bookings up LSD. Revs down HSD. Bookings and rev growth in China more than offset by decreases in rest of Asia driven by continued pandemic challenges
• Transport bookings and revs up MSD
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION *Organic bookings and organic revenues exclude acquisitions and currency
ENTERPRISE
Consistent Execution Drives Strong Performance Despite Ongoing COVID-19 Impacts
Net Revenue
$3,184 flat$3,179
Q4 '19
Q4 '20
• Resilient rev performance despite ongoing COVID-19 impacts; Res HVAC revs particularly strong
• CHVAC Americas and Asia Pacific svcs outperformed equip
• Transport Americas revs returned to growth in challenged markets
14.4% 13.0%
Adj. EBITDA %* +140
Adj. Operating Margin*
12.4%
Q4 '19
Q4 '20
Q4 '19
Q4 '20
• Strong margin expansion despite modest revenue decline
• Strong price / cost and productivity in every region more than offset COVID-19 related volume declines
• Maintained high level of business reinvestment in safety, innovation, technology
Adj. Continuing EPS*
$1.03 $0.92
Q4 '19
• Primarily driven by strong operating performance, higher op income, op margin expansion
• FY20 adj eff tax rate (20.2%) consistent w/ FY20 outlook of ~19% to ~20%
*Includes certain Non-GAAP financial measures. See the company's Q4 2020 earnings release for additional details and reconciliations. **2019 restated to reflect Ingersoll Rand Industrial segment in discontinued operations.
Q4 '20
Q4 SEGMENT RESULTS
Strong Execution, Cost Controls, Productivity, Positive Price / Cost Delivers Margin Expansion in Every Region
$M
Americas
$2,386 +1%
16.2% +130 bps
14.0% +120 bps
• Market outgrowth, cost controls, productivity, price / cost drive margin expansion while maintaining high levels of business reinvestment
AsiaPacific
$328 -6%
18.2% +200 bps
17.7% +280 bps
• Strong execution / cost controls / productivity more than offset COVID-19 pandemic-related volume declines to deliver margin expansion
• Strong execution / cost controls / productivity more than offset COVID-19 pandemic-related volume declines to deliver margin expansion
MARKET UPDATE
Expect Improving Market Conditions With Global Vaccine Administration in 2021
Americas | Commercial HVAC
Residential HVAC
Transport
|
EMEA |
|
Asia Pacific |
|
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
2021 GUIDANCE
Leveraging Value Creation Framework To Outgrow Markets With Strong Operating Leverage
Organic Revenues
Adj. EPS
w/ M&A
Operating Leverage
Free Cash Flow
+ 5% to + 7%*
(Up 6.5% to 8.5% w/ M&A)
$5.30 to $5.50*
($5.25 to $5.45 Organic)
Organic ~30%
= / > Adj. Net
Earnings
• Guidance reflects current view of market conditions, improved pace of vaccine production, administration
• ~1.5% M&A growth
• M&A modestly accretive in year 1 (~$0.05)
• Impact of transformation savings and higher transport mix
*2021 FX unknown. FX revs leverage at translational OI% (~13% in 2020); ~1pt of FX rev growth = ~$0.05 EPS **See pg. 17 for additional details
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
• | Anticipate FX revenues to leverage at translational OI % (~7% in Q1 2020); ~1.0 pts of FX rev growth = ~$0.01 EPS |
• | Current exchange rates suggest ~1.0 pts of FX in Q1, albeit too early call |
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION | |
29 |
Q1 2021 GUIDANCE
Strong Q1 Growth and Operating Leverage
Organic Revenues
Operating Leverage
Other Items
(for modeling purposes)
~5%*
(Up ~7.5% w/ M&A & FX)
Organic ~30% to ~35%
~$70M Corporate Costs ~$60M Interest Expense ~15% Adj. Eff. Tax Rate ~243M Share Count
• Strong organic growth
• ~1.5% M&A growth
• ~1.0% FX growth
• Strong enterprise leverage (includes corporate)
• Transformation savings plus higher Transport mix
• Corp costs weighted to Q1 due to spend timing; seasonally higher stock based comp
• Tax rate seasonally low in Q1, majority stock based compensation vests in Q1
TRANSFORMATION SAVINGS
Fixed Cost Reduction Programs Delivered $100M Savings in 2020; On Track for $140M
Run Rate Savings in 2021 & Total Transformation Savings ~ $300M Annually by 2023
$140M
2021 Run Rate
Fixed Cost Savings
Repositioned IT & Supply Chain Savings
$160M
2021-2023
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
Expect ~1/3 savings in 2021
Expect ~2/3 in 2022 / 2023
1. Expenses Related to Achieving Cost Reductions $100M - $150M through 2021; ~$4M spent in Q4; ~$95M year to date 2020
Strong FCF Drives Continued Balanced Capital Deployment Strategy
• Strengthen the core business and extend product & market leadership
• Invest in new technology and innovation
• Fully invest in strategic, value-accretive M & A
• Expect to deliver FCF ≥ 100% of adjusted net earnings
• Strengthening balance sheet
• Strong BBB investment grade rating offers optionality as markets evolve
• Expect to consistently deploy 100% of excess cash over time
• Pay competitive dividend and grow dividend at or above rate of earnings growth over time
• Repurchase shares with excess cash when intrinsic value provides high returns
Resumption of Balanced Capital Allocation in 2020; Strong Deployment in 2021 After Full Business Reinvestment
Balanced Capital Deployment
(2020 & 2021)
2020
• $507M dividends
• $183M M&A (primarily channel acquisitions)
• $300M debt retirement
• $250M share repurchases
2021
• ~$564M dividends, (increased 11% in Feb, $2.36 annualized)
• ~$1B between M&A and share repurchases
• ~$100M add'l share repurchases through Feb 5, $350M Q4/Jan
• $1B share repurchases for modeling purposes; ~241M Diluted Shares
• $425M debt retirement at maturities
• Q1 $300M
• Q3 $125M
32
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
Topics of Interest
Recent Acquisitions
3 CHVAC Channel Acquisitions Completed
Through January 2021
• ~1.5% revenue: ~80% / ~20%, Americas / EMEA
• ~$0.05 EPS accretion in 2021
• Utilizing proven playbook to integrate into Trane
Technologies' business operating system
• Accelerates Trane Technologies' growth, end-to-end customer relationships
• Acquisition of high-value services business
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION 34
TOPICS OF INTEREST
Strong 2021 Organic Leverage; Positive Impact from EPS Accretive M&A in First Year of Integration
FY 2021
Revenue
Organic Acquisitions Combined*
+ 5% to + 7% ~1.5% + 6.5% to + 8.5%
Adj. EPS
$5.25 to $5.45 ~$0.05 $5.30 to $5.50
Commentary
• ~30% organic leverage; transformation savings plus higher Transport mix
• ~5% OI contribution in year 1; impact of integration costs
*Anticipate FY FX revenues to leverage at translational OI% (~13% in 2020); ~1pt of FX rev growth = ~$0.05 EPS
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION
Other Items
• ~$220M Corporate Costs
• ~$240M Interest Expense
• ~19% to ~20% Adj. Eff. Tax Rate
• ~241M Diluted Shares
• ~$75M in transformation and other restructuring costs (excluded from adj. EPS)**
*Includes certain Non-GAAP financial measures. See the company's Q4 2020 earnings release for additional details and reconciliations. **Supports initiatives to deliver ~$300M in annualized savings by 2023 (3X initial $100M stranded cost target)
North America / EMEA Transport Markets Poised for Growth in 2021
N.A. and EMEA Market Results / Forecast
2020 Transport N.A.
Market Results
Trailer / Truck / APU wtd avg
-33%
2020 Transport EMEA
Market Results
Trailer / Truck wtd avg
-23%
Source: ACT / IHS / Company Estimates
2021 Transport N.A. Market Outlook*
Trailer / Truck / APU wtd avg
+34%
2021 Transport EMEA
Market Outlook
Trailer / Truck wtd avg
+9%
*Includes 2021 N.A. Trailer build fcst up ~39% (44.9K)
N.A. and EMEA 2021 markets expected to emerge from prolonged downcycle / COVID-19 pandemic
• Trailer/Truck/APU: ~2/3rds of Total Transport Revenue
• N.A. growth estimates up ~34%;
• EMEA growth estimates up ~9%
• Marine/Bus/Rail/Air/Aftermarket ("all other"): ~1/3rd of Total Transport Revenue
• N.A. and EMEA wtd avg. growth estimates both up +5% to +10%
• Total Transport: Truck/Trailer/APU/Marine/Bus/Rail/Air
• Americas** weighted avg. growth estimate +26%***
• EMEA** weighted avg. growth estimate +8%***
• Diversified Americas / EMEA business outperformed end-markets in 2020; Expect continued outperformance 2021
• Global vaccine storage/distribution remains developing opportunity as countries/states firm up needs/availability
Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION ** Americas and EMEA represent ~50% and ~40% of global Transport revenues, respectively *** Weighted avg calculation assumes midpoint of "all other" range (7.5%)
Positioned to Outperform. Consistently.
IN SUMMARY
The markets we serve will continue to outgrow GDP fueledby long-term sustainability megatrends
We are positioned to outgrow the market and expand margins with market-leading sustainable innovations
Our execution excellence and transformational work position us to maximize margins and cash generation
Our strong balance sheet, exceptional cash generation and balanced capital allocation strategy deliver significant value to shareholders
Appendix Appendix
2030 SUSTAINABILITY COMMITMENTS
Trane Technologies Core Sustainability Strategy: Challenge Possible
Global Megatrends
CLIMATE CHANGEURBANIZATIONRESOURCE SCARCITY
DEMOGRAPHICSDIGITAL CONNECTEDNESSINDOOR AIR QUALITY (IAQ)
Our Commitments
The Gigaton Challenge
Reducing one gigaton of carbon emissions (CO2e) from our customers' footprint by 2030
Leading by Example
Achieving carbon neutral operations, 10% absolute energy reduction, zero waste to landfill and net positive water
Material Issues to Focus Our Efforts
Operations
Emissions intensity Renewable energy
Water usage Heating electrified
Products and
Services
Energy efficiency Low-emission products Technology & innovation Emerging market innovations
Product life cycle
Supply Chain
Responsible sourcing Supplier diversity
Employees
Diversity and inclusion Ethics and integrity
Safety Development Engagement
Opportunity for All
Creating gender parity in leadership, workforce diversity, investing in STEM education
Communities
Access to cooling Food and wellness
Education Workforce development
Governance
Board oversight
Financial performance Public policy
Targets Align with Global Priorities
2 Zero Hunger
4 Quality Education
5 Gender Equality
6 Clean Water & Sanitation
7 Affordable & Clean EnergyDecent Work & Economic GrowthIndustry, Innovation & Infrastructure
11
Sustainable Cities & Communities
12
Responsible Consumption & Production
13 Climate Action
Q4 Organic Bookings Up 3% Year-Over-Year; Organic Revenues Down 1%
Organic* Bookings | 2018 | 2019 | 2020 | ||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |
Americas | +10% | +18% | +17% | +27% | +18% | -2% | -4% | +2% | -7% | -3% | +11% | -5% | +8% | +2% | +4% |
EMEA | +16% | +10% | -1% | -5% | +5% | -9% | +0% | -2% | -1% | -3% | -2% | -20% | +6% | +9% | -3% |
Asia Pacific | +10% | +18% | +0% | +8% | +9% | +0% | -6% | +3% | -5% | -2% | -17% | -2% | -5% | +2% | -6% |
Total | +11% | +17% | +12% | +20% | +15% | -3% | -4% | +2% | -6% | -3% | +6% | -7% | +7% | +3% | +2% |
Organic* Revenue | 2018 | 2013 2019 | 2020 | ||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |
Americas | +7% | +8% | +11% | +11% | +9% | +12% | +7% | +10% | +9% | +10% | -2% | -13% | +2% | +1% | -3% |
EMEA | +12% | +11% | +9% | +1% | +8% | +1% | -3% | +3% | +1% | +1% | -3% | -15% | -6% | -6% | -8% |
Asia Pacific | +13% | +12% | +4% | +8% | +9% | +2% | +0% | -4% | -1% | -1% | -34% | -5% | -2% | -6% | -11% |
Total | +8% | +9% | +10% | +9% | +9% | +10% | +5% | +8% | +7% | +7% | -5% | -13% | +50bps | -1% | -5% |
*Organic revenues and bookings exclude acquisitions and currency
Restructuring and Transformation Costs GAAP to Non-GAAP Adjustments
Restructuring and Transformation Costs
• Restructuring costs of ~$4M included in Table 2 of the Q4 2020 earnings release includes ~$2M of restructuring costs related to transformation activities as well as ~$2M of restructuring costs supporting other cost reduction programs, not directly related to transformation.
• Total transformation costs of ~$4M on slide 30 include both the ~$2M of restructuring transformation costs mentioned above and ~$2M of non-restructuring transformation costs also disclosed in Table 2 of the earnings release.
Costs
Restructuring Transformation Slide 30 Total
Transformation-related (restructuring and other) | $2M | $2M | $4M |
Restructuring related to other cost reduction programs | $2M | $2M | |
Table 2 Total (Q4 2020 earnings release) | $4M | $2M | $6M |
Organic bookings is defined as reported orders in the current period adjusted for the impact of currency and acquisitions. Organic revenue is defined as GAAP net revenues adjusted for the impact of currency and acquisitions
• Currency impacts on net revenues and bookings are measured by applying the prior year's foreign currency exchange rates to the current period's net revenues and bookings reported in local currency. This measure allows for a direct comparison of operating results excluding the year-over-year impact of foreign currency translation.
Adjusted operating income in 2020 is defined as GAAP operating income plus restructuring costs and transformation costs. Adjusted operating income in 2019 is defined as GAAP operating income plus restructuring costs.
Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.
Adjusted earnings from continuing operations attributable to Trane Technologies plc (adjusted net earnings) in 2020 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs and transformation costs less the gain on M&A transaction, net of tax impacts plus separation-related tax costs. Adjusted net earnings in 2019 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs, net of tax impacts plus separation-related tax costs.
Adjusted continuing EPS in 2020 is defined as GAAP continuing EPS plus restructuring costs and transformation costs less the gain on M&A transaction, net of tax impacts plus separation-related tax costs. Adjusted continuing EPS in 2019 is defined as GAAP continuing EPS plus restructuring costs, net of tax impacts plus separation-related tax costs.
Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net less the gain on M&A transaction. Adjusted EBITDA in 2019 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net.
Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues.
Free cash flow in 2020 and 2019 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs.
Working capital measures a firm's operating liquidity position and its overall effectiveness in managing the enterprise's current accounts.
• Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabilities that exclude short-term debt, dividend payables and income tax payables.
• Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of December 31) by the annualized revenue for the period (e.g. reported revenues for the three months ended December 31 multiplied by 4 to annualize for a full year).
Adjusted effective tax rate for 2020 is defined as the ratio of income tax provision less the net tax effect of adjustments for restructuring costs, transformation costs and the gain on M&A transaction less separation-related tax costs divided by earnings from continuing operations before income taxes plus restructuring costs and transformation costs less the gain on gain on M&A transaction. Adjusted effective tax rate for 2019 is defined as the ratio of income tax provision plus the tax effect of restructuring costs plus separation-related tax costs divided by earnings from continuing operations before income taxes plus restructuring costs. This measure allows for a direct comparison of the effective tax rate between periods.
Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q4 2020) less the prior period (e.g. Q4 2019), divided by the change in net revenues for the current period less the prior period.
Attachments
- Original document
- Permalink
Disclaimer
Trane Technologies plc published this content on 16 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 February 2021 14:46:03 UTC.