Trane Technologies Plc · NYSE:TT
Trane Technologies — Citi Global Industrial Tech and Mobility Conference 2024
37 slides from Trane Technologies's conference presentation, Feb 20, 2024
Slide 1: Investor Presentation
Investor Presentation February 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This news release includes “forward-looking" statements within the meaning of securities laws, which are statements that are not historical facts, including statements that relate to our future financial performance and targets, including revenue, EPS, operating income, op
Slide 3: Focused Strategy Delivers Differentiated Shareholder Returns
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 Uplifti
Slide 4: Pure-Play Climate Control Business with Leading Brands and Market Positions
T R A N E T E C H N O L O G I E S T O D AY Pure-Play Climate Control Business with Leading Brands and Market Positions; High Aftermarket Mix Regional Segments Franchise Brands Commercial HVAC Americas Total APAC $17.7B Sales Transport Refrigeration EMEA Revenue Streams Residential HVAC 68% 32% Equip
Slide 5: Global Megatrends Continue to Intensify – Demanding Bold Action
S U S TA I N A B I L I T Y L E A D E R Global Megatrends Continue to Intensify – Demanding Bold Action Heating and Cooling Food Loss GHG Emissions Buildings Global emissions from heating / Global emissions Combined share of cooling buildings* come from food loss / waste* global emissions 15% + 10% =
Slide 6: Uniquely Positioned with Innovative Solutions to Reduce GHG Emissions
S U S TA I N A B I L I T Y L E A D E R Uniquely Positioned with Innovative Solutions to Lead a Movement to Reduce GHG Emissions Business Key Actions We Delivery on the Bending as Usual are Taking Gigaton Challenge the Curve % Global Carbon Emissions (CO2e) % Global Carbon Emissions (CO2e) from Heati
Slide 7: Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction
S U S TA I N A B I L I T Y L E A D E R Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction SOCIAL BENEFITS FINANCIAL BENEFITS Defines Our Culture Focuses Business Priorities Generates uplifting culture that builds More targeted investments engagement and empowers people Drives innovativ
Slide 8: Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement
SUSTAINABILITY LEADER Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement Highly Regarded ESG Performance People and Citizenship 13 Consecutive Years on World’s Most the North America Index 73% percentile Admired Companies 3 consecutive years on the in the industrial
Slide 9: Trane Technologies: Reimagined to Unlock Our Full Potential
Trane Technologies: Reimagined to Unlock Our Full Potential 1 Sustainability innovation fuels our growth 2 Exceptional performance maximizes our margins 3 Structural transformation unlocks our potential Customer-focused innovation Relentlessly focused on leaning Redesigned to maximize our 100% tied
Slide 10: Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise
TRANE TECHNOLOGIES REIMAGINED Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise Essence of a Credibility of a Startup Market Leader Purpose-driven alignment + Long track record of execution Fit for purpose organizational design Trusted industry & technical expertise Strategic c
Slide 11: Why Pure Play Matters? – Purpose Drives Performance
TRANE TECHNOLOGIES REIMAGINED 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 100% focus on sustainability drives dif
Slide 12: Megatrends are Powerful Drivers of Growth
I N N O VAT I O N Megatrends are Powerful Drivers of Growth and Accelerate Need for Innovative Trane Technologies’ Solutions Continuing Megatrends Accelerating Megatrends Climate Urbanization Resource Demographics Indoor Digital Change Scarcity Environmental Connectedness Quality Driving Sustainabil
Slide 13: Proven Business Operating System Delivers Results
Proven Business Operating System Delivers Results Business Operating System Results 1 2 • World class sales, service capabilities / offerings Aligns resources Empowers • Sustained market outgrowth for customer people to solve value problems • Margin expansion • Continuous improvement and sustainable
Slide 14: Relentless Investments Delivering Consistent Strong Financial Performance
CULTURE OF PERFORMANCE EXCELLENCE Relentless Investments in Innovation and Growth, People and Culture and Best-in-Class BOS Delivering Consistent Strong Financial Performance $18 18% ~12% +260 CAGR bps $15 16% Revenue* Adjusted $12 14% ($B) EBITDA $9 Margin* † 12% $6 10% 2020 2021 2022 2023 2020 202
Slide 15: Positioned to Outperform. Consistently.
IN SUMMARY Positioned to Outperform. Consistently. Secular The markets we serve will continue to outgrow GDP, fueled Tailwinds by long-term sustainability megatrends Sustainability We are positioned to outgrow the market and expand Focused Innovation margins with market-leading sustainable innovatio
Slide 16: Fourth-Quarter 2023 Results
Fourth-Quarter 2023 Results February 1, 2024
Slide 17: Focused Strategy Delivers Differentiated Shareholder Returns
C LEAR PR 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 an
Slide 18: Purpose Driven Strategy Drives Continued Strong Financial Performance
Purpose Driven Strategy, Best In Class BOS, Uplifting Culture Drive Continued Strong Financial Performance. Positioned for Growth in 2024 with Standout Bookings & Backlog • Bookings / backlog remain strong, led by longer cycle, commercial HVAC businesses globally • Q4 CHVAC organic bookings* up mid-
Slide 19: Exceptional Bookings, Robust Revenue Growth
Q4 2 0 2 3 O R G A NI C B O OK I NG S A ND R EV EN UES Exceptional Bookings, Robust Revenue Growth. $6.9B Backlog at Historic Highs Providing Strong Positioning for Continued Growth Entering 2024 Q4 Organic* Y-O-Y Change Bookings Revenue Enterprise + 12% + 6% Americas • Strong CHVAC bookings, up mid
Slide 20: Performance Scoreboard
Q 4 2 0 2 3 E N T E R P R I S E R E S U LT S Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth Net Revenue Adj. EBITDA Margin* Adj. Operating Margin* Adj. Continuing EPS* +6% +150 +190 Organic* bps bps +19% $4,424 $2.17 $4,074 17.2% 15.7% 15.6% $1.82 13.7% Q4 '22 Q4 '23
Slide 21: Q4 Segment Results: Strong Revenue Growth and Broad-Based Margin Expansion
Q 4 2 0 2 3 S E G ME N T R E S U LT S Strong Revenue Growth and Broad-Based Margin Expansion Adj. Revenue Adj. OI*% EBITDA*% Highlights $M Org.* Growth vs PY vs PY Americas $3,390 18.1% 16.6% +7% +150 bps +200 bps • Strong broad based margin expansion • •Strong Strong marginvolume expansiongrowth, p
Slide 22: Continued Strength in CHVAC Globally
M A R K E T U P D AT E Continued Strength in CHVAC Globally, Residential Business Normalizing Near- Term, Transport Refrigeration with Modest 2024 Headwinds Commercial HVAC • Strong demand for innovative solutions driving robust backlog; data center / education / healthcare / high-tech industrial- a
Slide 23: Leveraging Value Creation Flywheel: 2024 Guidance
2024 GUIDANCE Leveraging Value Creation Flywheel to Drive Strong Revenue, EPS Growth and FCF in 2024 2024 Guidance Organic +6% to +7% (+7% to +8% reported, incl. M&A) Revenues Q1’24 expect ~+7% organic growth $10.00 to $10.30 Adj. EPS (+11% to +14%) Q1’24 expect ~$1.60 to $1.65 Operating Organic 25%
Slide 24: Delivered ~$300M Total Transformation Savings
T R A N S F O R M AT I O N S AV I N G S Delivered ~$300M Total Transformation Savings from 2020 to 2023; Business Operating System Driving Strong Productivity / Cost Savings • Delivered incremental savings of ~$60M in 2023 as expected Transformation Savings • ~$300M transformation savings adds fuel
Slide 25: Strong FCF Drives Continued Balanced Capital Deployment Strategy
Strong FCF Drives Continued Balanced Capital Deployment Strategy 1 2 3 Maintain Healthy, Return Capital to Invest for Growth Efficient Balance Sheet Shareholders • Strengthen the core business • Expect to deliver FCF* ≥ 100% • Expect to consistently deploy and extend product & market of adjusted net
Slide 26: $2.4B Capital Deployed in 2023
BAL AN C ED CA PI TAL D EPL O YME N T $2.4B Capital Deployed in 2023 Including Targeted M&A Across Key Markets and Verticals. Expect to Deploy ~$2.5B in 2024 Balanced Capital Deployment • Increased dividend 12% in 2023 Actual Target FY • Share repurchases of $750M (inc. activity from Jan 2023 2024 2
Slide 27: Topics of Interest
4 Topics of Interest TECHNOLCG ES
Slide 28: TK Multi-Year Outperformance
TOPICS OF INTEREST TK Multi-Year Outperformance ~+30% Globally; Expect Continued Outperformance in 2024 N.A. and EMEA Market Results / Forecast Weighted Avg Mkt Forecast / TK Revenue 2023 Transport N.A. 2024 Transport N.A. • Americas 2024 Transport weighted average market Market Outlook* Market Outl
Slide 29: ACT Projects North America Refrigerated Trailer Market to Dip in 2024
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Market to Dip in 2024 then Remain Robust 2025 through 2028 (above 40k units) ACT North America Trailer Market Outlook Comments • ACT 2024 North America Trailer forecast at 37k units 50 40 • Underlying refrigerated trailer demand rema
Slide 30: Positioned to Outperform Over the Long-Term
I N S U M MAR Y Positioned to Outperform Over the Long-Term Secular The markets we serve will continue to outgrow GDP, fueled Tailwinds by long-term sustainability megatrends Sustainability We are positioned to outgrow the market and expand Focused Innovation margins with market-leading sustainable
Slide 31: Appendix
Appendix
Slide 32: FY'24 Detailed Guidance for Modeling Purposes
2024 GUIDANCE FY’24 Detailed Guidance for Modeling Purposes Metric FY Guidance 2024 Commentary Organic Revenue* +6% to +7% • 25%+ organic leverage for FY’24 • ~1pt M&A = year one contribution of negative $30M OI, primarily related to technology acq, M&A ~+1% Nuvolo, with accelerated intangibles amor
Slide 33: Trane Technologies Core Sustainability Strategy
SUSTAINABILITY COMMITMENTS Trane Technologies Core Sustainability Strategy: Challenge Possible Global Megatrends Our 2030 Commitments The Gigaton Challenge Leading by Example Opportunity for All Achieving carbon neutral Reducing one gigaton of carbon Creating workforce diversity that operations, 10%
Slide 34: Driving Performance Through Sustainability
SUSTAINABILITY LEADERSHIP Driving Performance Before 2010 2010 Through Sustainability Focus on environmental and safety compliance Center for Energy Efficiency & Sustainability (CEES) is founded and begins operating 2011 Launched the first Launched internal Diversity & Inclusion Council ‘Sustainabil
Slide 35: Q4 Organic Revenues up 6% Y-O-Y; Bookings Up 12%
Q4 Organic Revenues up 6% Y-O-Y; Bookings Up 12% Organic* Revenue 2020 2021 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Americas -2% -13% +2% +1% -3% +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% +7% +9% EMEA -3% -15% -6% -6% -8% +12% +28% +8% +5% +13% +6% +1
Slide 36: Q4 Year-to-Date Non-GAAP Measures Definitions
Q4 Year-to-Date Non-GAAP Measures Definitions Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, merger and acquisition related costs, non-cash adjustment for contingent consideration and an insurance settlement on a property
Slide 37: Q4 Year-to-Date Non-GAAP Measures Definitions
Q4 Year-to-Date Non-GAAP Measures Definitions Adjusted effective tax rate for 2023 is defined as the ratio of income tax expense adjusted for the net tax effect of adjustments restructuring costs, transformation costs, merger and acquisition related costs, a non-cash adjustment for contingent consid
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