Trane Technologies : Press Release PDF 614 KB

Trane Technologies Reports Strong First-Quarter 2021 Results;

Raises Full-Year Revenue and EPS Guidance

Highlights (first-quarter 2021 versus first-quarter 2020, unless otherwise noted):

• Reported bookings of $4.1 billion, up 34 percent; organic bookings* up 31 percent
• Reported revenues of $3.0 billion, up 14 percent; organic revenues* up 11 percent
• GAAP operating margin up 590 bps; adjusted operating margin* up 500 bps
• GAAP continuing EPS of $0.96; adjusted continuing EPS* of $1.01, up 135 percent

*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations.

Swords, Ireland, May 5, 2021 - Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $0.96 for the first quarter of 2021. Adjusted continuing EPS was $1.01, up 135 percent, which excludes $14.7 million related to planned restructuring and transformation costs.

First-Quarter 2021 Results

Financial Comparisons - First-Quarter Continuing Operations

$, millions except EPS	Q1 2021		Q1 2020		Y-O-Y Change	Organic Y-O-Y
		Change
Bookings	$4,131	$3,074	34%	31%
Net Revenues	$3,018	$2,641	14%	11%
GAAP Operating Income	$353	$154	129%
GAAP Operating Margin	11.7%	5.8%		590 bps
Adjusted Operating Income*	$368	$191	93%
Adjusted Operating Margin*	12.2%	7.2%		500 bps
Adjusted EBITDA*	$437	$261	67%
Adjusted EBITDA Margin*	14.5%	9.9%		460 bps
GAAP Continuing EPS	$0.96	$0.21	357%
Adjusted Continuing EPS	$1.01	$0.43	135%
Restructuring and Transformation Costs	($14.7)	($36.5)	$21.8

"Given exceptional first-quarter performance and steadily improving end markets, we have raised our full year 2021 guidance above our previous ranges for both revenue growth and EPS. We now expect revenue growth of approximately 10.5 percent and adjusted EPS of approximately $6.00, $0.50 above the high end of our previous range," said Mike Lamach, chairman and CEO of Trane Technologies. "During the first quarter, our global team's relentless focus on sustainability and disciplined execution of our strategy led to robust bookings growth, revenue growth and margin expansion both at the enterprise level and in each of our business segments.

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We are extremely well-positioned as we enter the balance of 2021, with record backlog and transformation-related savings to invest in innovation that drives market outgrowth, maintains strong leverage and generates powerful cash flow. This flywheel powers our balanced capital allocation strategy and will enable us to continue delivering strong and differentiated returns for our shareholders."

Highlights from the First Quarter of 2021 (all comparisons against the first quarter of 2020 unless otherwise noted)

• Strong execution drove revenue, operating income and continuing EPS growth despite ongoing COVID-19pandemic-related impacts.
• Enterprise reported bookings were up 34 percent and organic bookings were up 31 percent driven by growth in all segments.
• Enterprise reported revenues were up 14 percent; enterprise organic revenues were up 11 percent.
• Enterprise reported revenue growth included approximately 2 percentage points of growth from acquisitions and approximately 1 percentage point of foreign exchange impact.
• GAAP operating margin was up 590 basis points, adjusted operating margin was up 500 basis points, and adjusted EBITDA margin was up 460 basis points, driven by strong performance across all three segments.

First-Quarter Business Review (all comparisons against the first quarter of 2020 unless otherwise noted)

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.

$, millions	Q1 2021		Q1 2020		Y-O-Y Change	Organic Y-O-Y
		Change
Bookings	$3,251.6	$2,367.5	37%	36%
Net Revenues	$2,325.7	$2,097.8	11%	9%
GAAP Operating Income	$323.1	$184.8	75%
GAAP Operating Margin	13.9%	8.8%		510 bps
Adjusted Operating Income	$324.5	$205.6	58%
Adjusted Operating Margin	14.0%	9.8%		420 bps
Adjusted EBITDA	$383.8	$262.1	46%
Adjusted EBITDA Margin	16.5%	12.5%		400 bps

• Americas delivered strong revenue growth and margin expansion despite ongoing COVID-19pandemic-related impacts.
• Americas reported bookings were up 37 percent and organic bookings were up 36 percent.
• Reported revenues were up 11 percent and organic revenues were up 9 percent. Commercial HVAC organic revenues were flat. Residential HVAC organic revenues were up over 30 percent. Transport organic revenues were up mid-teens.

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• Americas reported revenue growth included approximately 2 percentage points of growth from acquisitions.
• GAAP operating margin increased 510 basis points, adjusted operating margin increased 420 basis points and adjusted EBITDA margin increased 400 basis points. Price, volume and productivity more than offset material and other inflation.

Europe, Middle East and Africa (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.

$, millions	Q1 2021		Q1 2020		Y-O-Y Change	Organic Y-O-Y
		Change
Bookings	$570.6	$442.6	29%	18%
Net Revenues	$443.9	$364.3	22%	12%
GAAP Operating Income	$67.2	$36.4	85%
GAAP Operating Margin	15.1%	10.0%		510 bps
Adjusted Operating Income	$67.9	$37.0	84%
Adjusted Operating Margin	15.3%	10.2%		510 bps
Adjusted EBITDA	$76.7	$43.2	78%
Adjusted EBITDA Margin	17.3%	11.9%		540 bps

• EMEA delivered strong revenue growth and margin expansion despite ongoing COVID-19 pandemic- related impacts.
• EMEA reported bookings were up 29 percent and organic bookings were up 18 percent.
• Reported revenues were up 22 percent and organic revenues were up 12 percent. Commercial HVAC organic revenues were up mid-teens and Transport organic revenues were up high-single digits.
• EMEA reported revenue growth included approximately 8 percentage points of foreign exchange impact and approximately 2 percentage points of growth from acquisitions.
• GAAP and adjusted operating margins increased 510 basis points and adjusted EBITDA margin improved 540 basis points. Price, volume and productivity more than offset material and other inflation.

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.

$, millions	Q1 2021		Q1 2020		Y-O-Y Change	Organic Y-O-Y
		Change
Bookings	$309.1	$263.3	17%	14%
Net Revenues	$248.0	$179.2	38%	34%
GAAP Operating Income	$39.2	$6.5	503%
GAAP Operating Margin	15.8%	3.6%		1220 bps
Adjusted Operating Income	$39.3	$7.6	417%
Adjusted Operating Margin	15.8%	4.2%		1160 bps
Adjusted EBITDA	$43.5	$10.6	310%
Adjusted EBITDA Margin	17.5%	5.9%		1160 bps

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• Asia Pacific delivered strong revenue growth and margin expansion despite ongoing COVID-19pandemic-related impacts.
• Asia Pacific reported bookings were up 17 percent and organic bookings were up 14 percent.
• Reported revenues were up 38 percent and organic revenues were up 34 percent. Growth in Asia Pacific was led by China.
• Asia Pacific reported revenue growth included approximately 4 percentage points of growth primarily from foreign exchange impacts.
• GAAP operating margin improved 1220 basis points, adjusted operating margin improved 1160 basis points and adjusted EBITDA margin improved 1160 basis points. Price, volume and productivity more than offset material and other inflation.

Balance Sheet and Cash Flow

$, millions	Q1 2021	Q1 2020	Y-O-Y Change
Cash From Continuing Operating Activities Y-T-D	$263	($129)	$392
Free Cash Flow Y-T-D*	$236	($122)	$358
Working Capital/Revenue*	1.5%	5.1%	360 bps decrease
Cash Balance 31 March	$2,838	$2,648	$190
Debt Balance 31 March	$4,972	$5,575	($603)

• First-quarter2021 cash flow from continuing operating activities was $263 million and free cash flow was $236 million.
• The Company continues to expect 2021 free cash flow to be equal to or greater than 100 percent of adjusted net earnings.*

Capital Deployment

• The Company continues to reinvest in employee safety, innovation and technology projects, and capital expenditures to support its core sustainability strategy.
• During the first quarter, the Company paid $140 million in dividends. The Company expects to pay a competitive and growing dividend, currently at $2.36 per share annualized, reflecting an approximately 11 percent increase over 2020.
• The Company deployed capital of $70 million for acquisitions and investments, $104 million in share repurchases and $300 million in debt retirement in the quarter.
• The Company expects to deploy approximately $2.5 billion as part of its balanced capital allocation strategy in 2021, inclusive of approximately $564 million in dividends, $1.5 billion between strategic value-accretive mergers and acquisitions and share repurchases and $425 million in debt retirement.
• The Company expects to continue to deploy 100 percent of excess cash to shareholders over time.

Full-Year 2021 Guidance

• Reported revenues up approximately 10.5 percent; organic revenues up approximately 9 percent versus 2020.
• GAAP continuing EPS of $5.75, including EPS of $(0.25) for transformation and other restructuring costs; adjusted continuing EPS of $6.00, up 35 percent versus 2020.
• Additional information regarding the company's 2021 guidance is included in the company's earnings presentation found atwww.tranetechnologies.comin the Investor Relations section.

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This news release includes "forward-looking statements," which are statements that are not historical facts, including statements that relate to our future performance during 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; 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, the outcome of any litigation, the outcome of 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 news release 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 and reconciliation to GAAP are attached to this news release.

All amounts reported within the earnings release above related to net earnings (loss), earnings (loss) from continuing operations, earnings (loss) from discontinued operations, adjusted EBITDA and per share amounts are attributed to Trane Technologies' ordinary shareholders.

Trane Technologies (NYSE:TT) is a global climate innovator. Through our strategic brands Trane®and Thermo King®, and our portfolio of environmentally responsible products and services, we bring efficient and sustainable climate solutions to buildings, homes and transportation. For more information, visit tranetechnologies.com.

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5/5/21

(See Accompanying Tables)

• Table 1: Condensed Consolidated Income Statement
• Tables 2 - 5: Reconciliation of GAAP to Non-GAAP
• Table 6: Condensed Consolidated Balance Sheets
• Table 7: Condensed Consolidated Statement of Cash Flows
• Table 8: Balance Sheet Metrics and Free Cash Flow

Contacts:
Media:	Investors:
Jennifer Regina	Zac Nagle
630-390-8011, [e-mail]	704-990-3913, [e-mail]

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