Trane Technologies Plc · NYSE:TT
Trane Technologies — Bank of America Transportation, Airlines and Industrials Conference 2024
34 slides from Trane Technologies's conference presentation, May 15, 2024
Slide 1: Investor Presentation May 2024
Investor Presentation May 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 $16B Sales Transport Refrigeration EMEA Revenue Streams Residential HVAC 68% 32% Equipme
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 Lead a Movement 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 Fortune World’s Most the North America Index 71% percentile Admired Companies 3rd consecutive year on in the indus
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 in Innovation and Growth, People and Culture and Best-in-Class BOS
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: First-Quarter 2024 Results
First-Quarter 2024 Results April 30, 2024
Slide 17: Continued Strong Execution / Financial Performance. Raising 2024 Guidance.
Q1 2024 U P D A T E Continued Strong Execution / Financial Performance. Raising 2024 Guidance. Well Positioned for Growth in 2024 with Standout Bookings & Backlog • Continued strong execution across diversified and resilient global portfolio • Organic revenues* up 14%; adj. operating margins* up 230
Slide 18: Broad-Based Strength in Bookings & Revs with ~120% Book-to-Bill in all Regions
Q 1 2 0 2 4 O R GAN I C B O OK I N G S AN D R E V E N U E S Broad-Based Strength in Bookings & Revs with ~120% Book-to-Bill in all Regions on 14% Rev Growth. Backlog of $7.7B Increases Visibility for 2024 & Beyond Q1 Organic* Y-O-Y Change Bookings Revenue Enterprise + 17% + 14% Americas • CHVAC stro
Slide 19: Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth
Q 1 2 0 2 4 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* +14% +200 +230 Organic* bps bps +38% $4,216 $1.94 16.8% 15.2% $3,666 14.8% 12.9% $1.41 Q1 '23 Q1 '24
Slide 20: Q1 Segment Results: Americas, EMEA, Asia Pacific
Q 1 2 0 2 4 S E G M E 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 • Strong broad-based operating margin expansion $3,335 18.1% 16.4% +15% +220 bps +240 bps • Strong volume growth, positive pri
Slide 21: Market Outlook Largely Unchanged
M A R K E T U P D AT E Market Outlook Largely Unchanged w/ Q1 Americas CHVAC and Resi Stronger than Anticipated; No Change to Outlook for Other Segments / BUs Commercial HVAC – Q1 stronger as reflected in outlook • Strong, broad-based growth driving robust backlog; bookings growth in majority of ver
Slide 22: Raising FY'24 Revs & EPS Guide on Strong Q1 Performance
2 0 2 4 G U I D A N C E U P D AT E Raising FY’24 Revs & EPS Guide on Strong Q1 Performance, Robust CHVAC Outlook, Heavy Business Reinvestment Prior FY Guidance Updated FY Guidance* Organic +6% to +7% +8% to +9% +7% to +8% reported, incl. M&A +8% to +9% reported Revenues incl. 1pt M&A & minus 1pt FX
Slide 23: 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 24: Strong, Balanced Capital Deployment; Expect to Deploy ~$2.5B in 2024
B A L A N C E D C A P I TA L D E P L O Y M E N T Strong, Balanced Capital Allocation; Expect to Deploy ~$2.5B in 2024 Balanced Capital Deployment Actual Target FY • Q1 dividends of $190M; increased dividend 12% in February 2024 to $3.36 per share annualized, YTD Apr 2024 2024 up 58% since the launch
Slide 25: Topics of Interest
4 Topics of Interest TECHNOLCG ES
Slide 26: No Change to 2024 Weighted Avg Market Forecasts
TOPICS OF I NT EREST No Change to 2024 Weighted Avg Market Forecasts. Continue to Expect TK to Outperform in Each Region N.A. and EMEA Market Results / Forecast Weighted Avg Mkt Forecast / TK Revenue Actual 2023 Transport 2024 Transport N.A. • Americas 2024 Transport weighted average market N.A. Mar
Slide 27: ACT Projects North America Refrigerated Trailer Market to Dip in 2024 then Remain Robust
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Market to Dip in 2024 then Remain Robust 2025 through 2029 (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 28: Appendix
Appendix
Slide 29: FY'24 Detailed Guidance for Modeling Purposes
2024 GUIDANCE FY’24 Detailed Guidance for Modeling Purposes Metric FY Guidance 2024 Commentary Organic OrganicRevenue* Revenue +8% +8% to to +9%+9% • 25%+ organic leverage for FY’24 • ~1pt M&A = -5 pts of leverage. Year one contribution of negative $30M OI, primarily related to M&A ~+1% technology a
Slide 30: Core Sustainability Strategy: Challenge Possible
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 31: 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 32: Q1 Organic Revenues up 14% Y-O-Y; Bookings Up 17%
Q1 Organic Revenues up 14% Y-O-Y; Bookings Up 17% Organic* Revenue 2021 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Americas +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% +7% +9% +15% EMEA +12% +28% +8% +5% +13% +6% +11% +18% +23% +15% +15% +8% +3% +8% +8% +4% Asia
Slide 33: Q1 Non-GAAP Measures Definitions
Q1 Non-GAAP Measures Definitions Adjusted operating income in 2024 is defined as GAAP operating income adjusted for restructuring costs and legacy legal liability. Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, a non-cash
Slide 34: Q1 Non-GAAP Measures Definitions
Q1 Non-GAAP Measures Definitions Adjusted effective tax rate for 2024 is defined as the ratio of income tax expense adjusted for the net tax effect of adjustments for restructuring costs and legacy legal liability divided by adjusted net earnings. Adjusted effective tax rate for 2023 is defined as t
Trane Technologies — Bank of America Transportation, Airlines and Industrials Conference 2024 on 6ix