Trane Technologies : Presentation PDF 3.91 MB

First-Quarter 2021 Results

May 5, 2021

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 acquisitions (if any); 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 audits 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 at www.tranetechnologies.com. Unless otherwise indicated, all data beyond the first quarter of 2021 are estimates.

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C L E A R P R I O R I T I E S

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		Powerful cash flow		Uplifting culture - integrity, ingenuity,
performance culture			community & engagement

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Q 1 2 0 2 1

Exceptional Q1 2021 Performance and Steadily Improving End Markets; Raising FY Revenue and EPS Guidance Above Prior Range

• Exceptional financial performance highlights strength of focused strategy, business operating system & high-performance culture
• • Broad-basedoutgrowth / share gains across improving global end-markets
  • Double-digitQ1 bookings growth in all segments
  • Record backlog exiting Q1, with backlog growth of more than 30% both sequentially and YOY; growth in all segments
  • Enterprise organic revenues +11%, with significant margin expansion & EPS growth
• Raising 2021 revenue & EPS guidance on strong Q1 / improving market conditions with increasing global vaccination rates
• • 2021 revenue growth of ~+10.5% (up from +6.5% to +8.5%); Adj. EPS raised to ~$6.00 (up from $5.30 to $5.50)
  • Organic revenue growth of ~9% (up from +5% to +7%) with 35%+ organic leverage; driving strong margin expansion
• Transformation savings contributing to strong leverage in 2021
• • On track for ~$90M incremental savings in 2021 after delivering stranded / fixed cost take-out of $100M in 2020
  • Expected $300M total transformation savings by 2023 funds superior innovation, market outgrowth & sustainable strong leverage
• Powerful FCF, financial position, liquidity and balance sheet optionality support balanced capital allocation strategy
• • Deployed ~$614M in Q1; expect to deploy ~$2.5B+ FY 2021, up $500M vs. prior guidance
• Purpose-drivensustainability strategy remains focused on long-term secular tailwinds towards sustainability megatrends
• • 2030 emissions reduction targets validated by SBTi; 1 of 47 companies to have two targets validated (2014 and 2021)
  • Leadership in addressing sustainability challenges, delivering top-tier financial performance & differentiated shareholder returns
  • • Includes certain Non-GAAP financial measures. See the company's Q1 2021 earnings release for additional details and reconciliations.

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Q 1 2 0 2 1 O R G A N I C B O O K I N G S A N D R E V E N U E S

Robust Bookings w/ Growth in All Businesses; Strong Revenue Outgrowth in Improving End Markets

Q1 Organic* Y-O-Y Change

		Bookings	Revenue
Enterprise		+ 31%	+ 11%
Americas		+ 36%	+ 9%
Commercial HVAC		+	flat
Residential HVAC		+	+
Transport		+	+
EMEA		+ 18%	+ 12%
Commercial HVAC		+	+
Transport		+	+
Asia Pacific		+ 14%	+ 34%
Commercial HVAC	+	+
Transport		+	+

Americas

• CHVAC bookings up LSD and revs flat on tough comps (2-year stack bookings of high-teens, HSD 2 yr avg; revenues of MSD, LSD 2 yr avg); Svcs revs up LSD; Cont'd impacts from low building occupancy / school / other closings; IAQ demand remains healthy
• Res HVAC revs up 30+% on strong end market demand; Strong backlog headed into 2Q21
• Transport bookings up substantially, revs up mid-teens, outpacing improving transport markets (trailer markets up LSD and truck markets down in Q1)

EMEA

• CHVAC bookings strong (up HSD) w/ growth in both equipment and services; CHVAC revs up mid-teens
• Transport bookings strong (up 20+%); revs up HSD

Asia Pacific

• CHVAC bookings up HSD; Revs up 30+% against soft 1Q20, led by China growth
• Transport bookings up 40+% and revs up 20+%

*Organic bookings and organic revenues exclude acquisitions and currency

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