Slide 1: Second-Quarter 2023 Results
Second-Quarter 2023 Results August 2, 2023
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: Strong Q2 & 1H Results. Raising FY 2023 Guidance
Q2 2023 UPDATE Strong Q2 & 1H Results. Raising FY 2023 Guidance on Strong Execution, Healthy Markets & Exceptional Backlog Visibility • Strong Q2 performance across diversified and resilient global portfolio • Organic revenues* up 11%; adj. operating margins* up 110 basis points; adj EPS* up 24% • C
Slide 5: Q2 Organic Bookings and Revenues
Q2 2 0 2 3 O R G A NI C B O OK I NG S A ND R EV EN UES Strong Broad-Based Revenue Growth; Robust Absolute Bookings Levels in Healthy End Markets. Backlog of $7B is 2.5X Historical Norms Q2 Organic* Y-O-Y Change Bookings Revenue Americas – bookings down 8%, ex-resi down LSD; revs up 9% Enterprise -5%
Slide 6: Robust Revenue Growth, Margin Expansion and EPS Growth
Q 2 2 0 2 3 E N T E R P R I S E R E S U LT S Robust Revenue Growth, Margin Expansion and EPS Growth Net Revenue Adj. EBITDA Margin* Adj. Operating Margin* Adj. Continuing EPS* +11% +100 +110 +24% Organic* bps bps $2.68 $4,705 19.7% $4,190 18.7% $2.16 18.0% 16.9% Q2 '22 Q2 '23 Q2 '22 Q2 '23 Q2 '22 Q2
Slide 7: Strong Broad-Based Organic Revenue Growth and Margin Expansion
Q 2 2 0 2 3 S E G ME N T R E S U LT S Strong Broad-Based Organic Revenue Growth and Margin Expansion Adj. Revenue Adj. OI*% EBITDA*% Highlights $M Org.* Growth vs PY vs PY Americas $3,693 21.4% 19.8% • Strong broad based margin expansion +9% +70 bps +100 bps • Strong volume growth and backlog margin
Slide 8: Outlook for Healthy 2023 Growth and Continued Strong Underlying Demand
M A R K E T U P D AT E Outlook for Healthy 2023 Growth and Continued Strong Underlying Demand for Sustainable Solutions Commercial HVAC • Strong demand for innovative solutions driving robust backlog; Data center / education / healthcare / high-tech industrial - all remain strong • Leading systems &
Slide 9: Raising FY'23 Revenue & EPS Guidance
2 0 2 3 G U I D A N C E U P D AT E Raising FY’23 Revenue & EPS Guidance to Reflect Favorable Outlook and Continued Strong Execution Prior FY Guidance Updated FY Guidance* Organic +7% to +8% ~+8% (+9% to +10% reported, incl. M&A)** (~+10% reported, incl. M&A) Revenues Expect Q3 ~+7% $8.30 to $8.50 $8
Slide 10: On Track For ~$300M Total Transformation Savings by Year-End
T R A N S F O R M AT I O N S AV I N G S On Track For ~$300M Total Transformation Savings by Year-End; Business Operating System to Drive Strong Productivity / Cost Savings Over Long Term • Targeting delivery of incremental savings of ~$60M in 2023 Transformation Savings • ~$300M transformation savin
Slide 11: 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 12: Deployed ~$1.2B in Balanced Capital Allocation YTD Jun 2023
BAL AN C ED CA PI TAL D EPL O YME N T Deployed ~$1.2B in Balanced Capital Allocation YTD Jun 2023; ~$2.5B Expected FY 2023 Balanced Capital Deployment Capital Deployment • Q2 dividends of $171M (YTD $341M); increased dividend 12% to $3.00 per share annualized in Actual YTD Target FY March 2023 2023
Slide 13: Topics of Interest
a 4 Topics of Interest TECHNOLCG ES
Slide 14: Transport Market Outlook Modestly Lower Per ACT in North America
TOPICS OF INTEREST Transport Market Outlook Modestly Lower Per ACT in North America; Unchanged in EMEA. Expect Outperformance in Both Regions in 2023 N.A., EMEA Markets Expected to be N.A. and EMEA Market Results / Forecast Modestly Lower in 2023 • Trailer/Truck/APU: ~2/3rds of Total Transport Reven
Slide 15: ACT Projects North America Refrigerated Trailer Market to Remain Robust
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Market to Remain Robust, Above 40k units 2023 through 2028 ACT North America Trailer Market Outlook Comments • ACT 2023 North America Trailer forecast decreased 50 to 42.5k from 45k units on OEM capacity constraints 40 (down 4% from
Slide 16: Positioned to Outperform Over the Long-Term
IN SUMMARY 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 innov
Slide 17: Appendix
Appendix
Slide 18: FY'23 Detailed Guidance for Modeling Purposes
2023 GUIDANCE FY’23 Detailed Guidance for Modeling Purposes Metric FY Guidance Commentary Organic Revenue* ~8% • 30%+ organic leverage (increased from 25%+ prior) • M&A carries ~3% leverage - nominal contribution given year 1 integration costs. M&A +2% FY impact to enterprise reported leverage is ~4
Slide 19: 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 gender parity in leadership, operations,
Slide 20: 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 21: 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 12 Consecutive Years 11 years Performed in the 97th 72% percentile listed on most admired percentile in the Capital in the industrial indu
Slide 22: Q2 Organic Revenues up 11% Y-O-Y; Bookings Down 5%
Q2 Organic Revenues up 11% Y-O-Y; Bookings Down 5% Organic* Revenue 2020 2021 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Americas -2% -13% +2% +1% -3% +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% EMEA -3% -15% -6% -6% -8% +12% +28% +8% +5% +13% +6% +11% +18% +23% +15% +1
Slide 23: Q2 Non-GAAP Measures Definitions
Q2 Non-GAAP Measures Definitions Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, non-cash adjustment for contingent consideration and merger and acquisition related costs. Adjusted operating income in 2022 is defined as GA
Slide 24: Q2 Non-GAAP Measures Definitions
Q2 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 for restructuring costs, transformation costs, non-cash adjustment for contingent consideration, and merger and acquisition related costs