Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll-Rand — Q2 2018 Earnings Presentation
24 slides from Trane Technologies's earnings presentation, Jul 25, 2018
Slide 1: Second-Quarter 2018 Results
Second-Quarter 2018 Results July 25, 2018
Slide 2: Safe Harbor
Safe Harbor This presentation includes “forward-looking statements” which are statements that are not historical facts, including statements that relate to the mix of and demand for our products; performance of the markets in which we operate; our share repurchase program including the amount of sha
Slide 3: Executing a Consistent Strategy that Delivers Profitable Growth
Executing a Consistent Strategy that Delivers Profitable Growth 1. 2. 3. 4. Sustained Operational Dynamic Capital Winning Growth Excellence Allocation Culture Nexus of sustainability Margin improvement Reinvestment, dividends, Commitment to and energy efficiency and powerful cash flow share repurcha
Slide 4: 2018 Mid-Year Update – Strong Execution Continues
2018 Mid-Year Update – Strong Execution Continues Healthy End • End markets remain healthy – broad-based organic order and revenue growth Markets across product categories / segments / geographies Strong Industrial • Industrial segment continues strong performance – bookings growth / revenue Perform
Slide 5: Q2 2018 Strong Organic Bookings and Revenue Growth Sustained in Both Segments
Q2 2018 Strong Organic Bookings and Revenue Growth Sustained in Both Segments Organic* Y-O-Y Change Climate Bookings Revenues Commercial HVAC + + - N. America + + - L. America + + - EMEA + + - Asia + + Residential HVAC + + Transport + + Total + 17% + 9% Industrial Compression Tech + + Industrial Pro
Slide 6: Continued Strong Growth in Healthy End Markets
Continued Strong Growth in Healthy End Markets • Sustained growth in Global CHVAC markets - strong equipment bookings and revenues with outsized growth in China Commercial • N.A. CHVAC market growth solid – equip / services / contracting / controls. Growth led by Education / Industrial HVAC • EMEA C
Slide 7: Strong Financial Performance Powers Full Year Guidance Raise
Strong Financial Performance Powers Full Year Guidance Raise • Raising full year revenue growth, adjusted continuing EPS and free cash flow guidance • Strong Q2 organic revenue and bookings growth in both segments – Industrial organic revenues up 9% with strong growth across the segment in equipment
Slide 8: Q2 2018 Strong Revenue Growth, Margin Expansion and Capital Deployment Delivering 24% Adj. Cont. EPS Growth
Q2 2018 Strong Revenue Growth, Margin Expansion and Capital Deployment Delivering 24% Adj. Cont. EPS Growth Net Revenue Adj. Operating Margin* Adjusted EPS* +9% +50 +24% Organic bps $4,358 $1.85 $3,908 14.4% 14.9% $1.49 +11% Q2 '17 Q2 '18 Q2 '17 Q2 '18 Q2 '17 Q2 '18 Highlights • Strong organic reven
Slide 9: Strong Operating Performance in Both Segments Driving Adjusted Continuing EPS Higher by 24%
ENTERPRISE Strong Operating Performance in Both Segments Driving Adjusted Continuing EPS Higher by 24% +$0.36 $0.08 $0.04 $0.07 $1.85 $1.49 $0.17 $0.01 Interest $0.01 Tax rate $0.02 Other Q2 2017 Climate Industrial Other Share Count Q2 2018 Adjusted Adjusted Continuing EPS* Continuing EPS* Highlight
Slide 10: Strong Volume Growth and Positive Price vs Material Inflation Spread Driving 50 bps Margin Expansion
ENTERPRISE Strong Volume Growth and Positive Price vs Material Inflation Spread Driving 50 bps Margin Expansion +50 bps 14.4% 0.8 0.1 flat (0.4) 14.9% Q2 2017 Volume / Mix / FX Price/Material Inflation Productivity/Other Investment/Other Q2 2018 Adjusted Operating Inflation Adjusted Operating Margin
Slide 11: Q2 Continued Strong, Broad-Based Revenue Growth; Flat Adjusted Margins
CLIMATE SEGMENT Q2 Continued Strong, Broad-Based Revenue Growth; Flat Adjusted Margins Net Revenue Adj. Operating Margin* Adj. OI + D&A %** +9% Flat -20 Organic bps $3,494 18.8% 18.6% $3,144 16.8% 16.8% +11% Q2 '17 Q2 '18 Q2 '17 Q2 '18 Q2 '17 Q2 '18 Highlights • Strong revenue growth – products / bu
Slide 12: Q2 Strong Margin Expansion and Revenue Growth
INDUSTRIAL SEGMENT Q2 Strong Margin Expansion and Revenue Growth Net Revenue Adj. Operating Margin* Adj. OI + D&A %** +9% +170 +170 Organic bps bps $864 14.2% $765 12.5% 16.6% 14.9% +13% Q2 '17 Q2 '18 Q2 '17 Q2 '18 Q2 '17 Q2 '18 Highlights • Strong revenue growth in equipment and services led by Asi
Slide 13: Continued Execution of Balanced Dynamic Capital Allocation Strategy
Continued Execution of Balanced Dynamic Capital Allocation Strategy • Strengthen the core business and extend product & market leadership 1 Invest for Growth • Invest in new technology and innovation • Strategic acquisitions pipeline primarily focused on technology, product and channel 2 • Improving
Slide 14: Guidance
am) Ingersoll Rand Inspiring Progress™ Guidance
Slide 15: 2018 Enterprise Guidance
2018 Enterprise Guidance Prior FY Guidance Updated FY Guidance Climate ‒ Revenue Reported 5.0% to 5.5% 9.0% to 10.0% ‒ Revenue Organic 3.0% to 3.5% 7.0% to 8.0% Adjusted Operating Margin 14.6% to 15.1% 14.6% to 14.7% Industrial ‒ Revenue Reported 5.5% to 6.0% 9.0% to 10.0% ‒ Revenue Organic 3.5% to
Slide 16: 2018 Guidance: Full-year Continuing Adjusted EPS ~$5.50
2018 Guidance: Full-year Continuing Adjusted EPS ~$5.50 Targets Prior FY Guidance Updated FY Guidance Y-O-Y change in revenue • Reported 5.0% to 5.5% 9.0% to 10.0% • Organic 3.0% to 3.5% 7.0% to 8.0% EPS continuing $4.80 to $5.00 ~$5.25 Restructuring – (add back) ($0.20) ($0.20) Debt redemption / ot
Slide 17: Topics of Interest
am) Ingersoll Rand Inspiring Progress™ Topics of Interest teeta bid trol!
Slide 18: Tariffs and Inflation Mitigation
Topics of Interest • Tariffs and Inflation Mitigation − Effectively managing known section 232 and section 301 $50B list tariffs within guidance − Key areas of inflation • Most prominent in tier 1 metals, tier 2 metal content and freight − Actively assessing and managing tariff and inflation impacts
Slide 19: Summary: Expect Continued Strong Revenue, Earnings and Cash Growth in 2018
Summary: Expect Continued Strong Revenue, Earnings and Cash Growth in 2018; Adj. Cont. EPS Guidance Raised ~6% to ~$5.50 / share Strategy ● Strategy tied to attractive end markets supported by global mega trends Brands ● Franchise brands and businesses with leadership market positions Innovation ● S
Slide 20: Appendix
am) Ingersoll Rand Inspiring Progress™ Appendix
Slide 21: Q2 Organic Bookings Up 15%; Revenue Up 9% Year-Over-Year
Q2 Organic Bookings Up 15%; Revenue Up 9% Year-Over-Year Organic* 2016 2017 2018 Bookings Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Climate 6% 6% 4% 10% 6% 6% 3% 5% 7% 5% 11% 17% Industrial (5%) (5%) (1%) (1%) (3%) 9% 5% 5% 12% 8% 5% 8% Total 4% 3% 3% 7% 4% 7% 4% 5% 8% 6% 9% 15% Organic* 2016 2013 2017 20
Slide 22: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Organic bookings is defined as reported orders closed/completed 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 re
Slide 23: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Working capital measures a firm’s operating liquidity position and its overall effectiveness in managing the enterprises’ current accounts. • Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabili
Slide 24: Li Ingersoll Rand.
Li Ingersoll Rand. GB ingerson Rand.