Slide 1: Second-Quarter 2020 Results
Second-Quarter 2020 Results July 29, 2020
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 our future performance, the COVID-19 global pandemic, capital deployment including the amount and timing of our dividends, our share repurchase
Slide 3: Executing a Consistent Strategy Delivering Profitable Growth Over the Long-Term
Executing a Consistent Strategy Delivering Profitable Growth Over the Long-Term 1. 2. 3. 4. Sustained Operational Dynamic Capital Uplifting Growth Excellence Allocation Culture Innovation at the nexus Lean methodology Reinvestment, dividends, Commitment to of sustainability and delivering margin sha
Slide 4: Strong execution in challenging pandemic environment
Strong execution in challenging pandemic environment; Remain focused on positioning business to thrive as business conditions improve • All facilities operating under new protocols and meeting market / customer demand − 1Q20 aggressive response and heavy upfront investment in world-class employee sa
Slide 5: COVID-19 Pandemic Heavily Impacted Bookings and Revenues
COVID-19 Pandemic Heavily Impacted Bookings and Revenues Q2 Organic* Y-O-Y Change Bookings Revenue Americas Enterprise -7% - 13% • CHVAC bookings down MSD; Revs down MSD supported by strong backlog; Despite COVID-19 pandemic-related building usage reductions, svc revs declined at a slower rate than
Slide 6: Q2 Operating Results Negatively Impacted by COVID-19 Pandemic
ENTERPRISE Q2 Operating Results Negatively Impacted by COVID-19 Pandemic Net Revenue Adj. EBITDA %* Adj. Operating Margin* Adj. Continuing EPS* -13% -80 -100 -26% Organic bps bps $3,618 $1.72 18.1% 16.0% 17.3% 15.0% $3,139 $1.27 Q2 '19 Q2 '20 Q2 '19 Q2 '20 Q2 '19 Q2 '20 Q2 '19 Q2 '20 • Global equip
Slide 7: Segment Results: Americas, EMEA, Asia Pacific
SEGMENT RESULTS Strong Price / Cost and Productivity Partially Offset Lower Volume from Pandemic Impacts to Deliver Enterprise Deleverage Better than GM% Target Levels Revenue Adj. EBITDA% Adj OI% Highlights $M Org. Growth vs PY vs PY Americas • Solid price / cost and productivity partially offset C
Slide 8: Expect Continued Market Outperformance
MARKET UPDATE Expect Continued Market Outperformance; Demand Outlook Remains Limited by Pandemic-Related Economic / End Market Uncertainty • CHVAC equipment applied revenues resilient from strong backlog; End market indicators (ABI, Dodge) remain soft; visibility limited by pandemic-related market u
Slide 9: Playing Aggressive Offense During Downturn with Innovative Products and Services
Playing Aggressive Offense During Downturn with Innovative Products and Services Indoor air quality assessments build 4 pipe chiller simultaneously heats confidence for building occupants and cools buildings with zero direct greenhouse gas emissions Comprehensive, layered approach balances IAQ and e
Slide 10: Further Accelerating Reductions of Fixed Costs
Further Accelerating Reductions of Fixed Costs Stranded Cost Reductions Stranded Cost Savings ($M) 160 • Accelerated stranded cost reduction actions to 140 eliminate entire ~$100M target in 2020 120 $100M Savings Target 40 − Up from 1Q guide of ~$90M & from initial guide of 100 ~$40M 80 30 140 • 202
Slide 11: Balance Sheet and Liquidity
Balance Sheet and Liquidity: Operating from Position of Strength STRONG FINANCIAL POSITION / BALANCE SHEET / LIQUIDITY ADDITIONAL DETAILS • Consistent, strong free cash flow generation = / > 100% of Adj. net earnings over time (5 yr avg of 107%, 2019 118%)** Cash On Hand Credit Facilities − FCF expe
Slide 12: Balancing Capital Allocation Priorities through COVID-19 Crisis
Balancing Capital Allocation Priorities through COVID-19 Crisis • Have consistently maintained balanced approach to capital deployment − Focus on deployment of excess cash through reinvestment in the business, dividends, share repurchases and acquisitions • Continue to reinvest in the business − Acc
Slide 13: 2020 Revenues on Pace to Perform Better
2020 Revenues on Pace to Perform Better than the Down 15% and Down 25% Scenarios Outlined on 1Q20 Earnings Call 2020 Revenues - Current View (based on current pace of economies reopening) • Down 25% scenario unlikely w/out major add’l COVID-19 disruption Reference: Scenarios from Q1 Earnings Call •
Slide 14: Confident in Long-Term Outlook for Trane Technologies
Confident in Long-Term Outlook for Trane Technologies to Deliver Profitable Growth Strategy • Strategy tied to attractive end markets supported by global mega trends Brands • Franchise brands with leadership market positions in all regions Innovation • Sustained business investments delivering innov
Slide 15: Appendix
Appendix Appendix
Slide 16: 2020 Transport Market Forecasts Significantly Impacted by COVID-19
2020 Transport Market Forecasts Significantly Impacted by COVID-19 Pandemic; Greater Depth / Duration of Correction Cycle Prior to Return to Growth in 2021 2020 Transport North America Outlook Pandemic significantly impacting market demand Trailer APU* Truck in N.A. and EMEA -3% -19% • Expect to out
Slide 17: Q2 Organic Bookings Down 7% Year-Over-Year
Q2 Organic Bookings Down 7% Year-Over-Year; Organic Revenues Down 13% Organic* 2018 2019 2020 Bookings Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Americas +10% +18% +17% +27% +18% -2% -4% +2% -7% -3% +11% -5% EMEA +16% +10% -1% -5% +5% -9% +0% -2% -1% -3% -2% -20% Asia Pacific +10% +18% +0% +8% +9% +0% -6%
Slide 18: Appendix: Restructuring and Transformation Costs
Appendix: Restructuring and Transformation Costs GAAP to Non-GAAP Adjustments Restructuring and Transformation Costs • Restructuring costs of ~$37M included in Table 2 of the Q2 2020 earnings release includes ~$34M of restructuring costs related to transformation activities as well as ~$3M of restru
Slide 19: Q2 Non-GAAP Measures Definitions
Q2 Non-GAAP Measures Definitions Organic bookings is defined as reported orders 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 revenues and book
Slide 20: Q2 Non-GAAP Measures Definitions
Q2 Non-GAAP Measures Definitions Free cash flow in 2020 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs. Free cash flow in 2019 is defined as net cash provided by (used in) co