Slide 1: Fourth-Quarter and Full Year 2022 Results
Fourth-Quarter and Full Year 2022 Results February 2, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes “forward-looking statements” which are statements that are not historical facts, including statements that relate to our future financial performance and targets, including revenue, EPS and operating income; our business operations; demand for ou
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: Top Quartile Q4 & 2022; Robust Backlog Supports Strong 2023 Outlook
Q4 2022 UPDATE Top Quartile Q4 & 2022; Robust Backlog Supports Strong 2023 Outlook Underpinned by Growing Demand for Sustainable Solutions • Strong execution in Q4 and close to 2022 • 2022 organic revenues* up 15%; adj. EPS* up 21%; organic bookings* up 5% (2-yr stack up 32%) • Q4 organic revenues u
Slide 5: Strong Execution in 2022; Exceeded Financial Commitments & Delivered 20+% Adj. EPS Growth
2022 YEAR IN REVIEW Strong Execution in 2022; Exceeded Financial Commitments & Delivered 20+% Adj. EPS Growth Despite Challenging Macroenvironment 2022 Initial Guidance** 2022 Actual Results* Organic Revenue* +HSD +15% + Organic Operating Leverage* ~20% 18% Adj. EPS* $6.95 to $7.15 $7.36 + ≥ Adj. Ne
Slide 6: Relentless Investments in Innovation, Customer Focus and Best-in-Class Business Operating System
C U LT U R E O F P E R F O R M A N C E E X C E L L E N C E Relentless Investments in Innovation, Customer Focus and Best-in-Class Business Operating System Driving Top-Quartile Financial Performance 17% ~7% +250 $13 CAGR bps 15% Revenue* $10 Adjusted 13% ($B) EBITDA $7 Margin †† 11% $4 9% 2017 2018
Slide 7: Robust Bookings and Backlog Entering 2023; Strong Revenue Growth and Demand
Q4 2 0 2 2 O R GA NIC B OOKI NG S A ND R EVEN UES Robust Bookings and Backlog Entering 2023; Strong Revenue Growth and Demand Q4 Organic* Y-O-Y Change Bookings Revenue Enterprise flat + 16% Americas • CHVAC bookings up low-teens, 2-yr stack up nearly 40%; Revs up mid-teens Americas flat + 14% with e
Slide 8: Strong Revenue Growth, Margin Expansion and EPS Growth
Q 4 2 0 2 2 E N T E R P R I S E R E S U LT S Strong Revenue Growth, Margin Expansion and EPS Growth Net Revenue Adj. EBITDA Margin* Adj. Operating Margin* Adj. Continuing EPS* +16% +100 +120 +34% Organic* bps bps $1.82 $4,074 +14% $1.36 $3,569 15.7% 13.7% 14.7% 12.5% Q4 '21 Q4 '22 Q4 '21 Q4 '22 Q4 '
Slide 9: Q4 Segment Results: Strong Broad-Based Organic Revenue Growth and Margin Expansion
Q 4 2 0 2 2 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 $3,140 16.6% 14.6% • Strong broad-based margin expansion +14% +70 bps +100 bps • Robust volume growth, positive price r
Slide 10: Strong Bookings & Backlog, Leading Innovation, Strong Market Positioning
M A R K E T U P D AT E Strong Bookings & Backlog, Leading Innovation, Strong Market Positioning Provides Solid Foundation and Visibility for 2023 Commercial HVAC • Expect continued strong growth in 2023 • Strong demand for innovative solutions driving all-time high backlog; Data center / education /
Slide 11: Leveraging Value Creation Flywheel to Drive Strong Revenue, EPS Growth and FCF in 2023
2023 GUIDANCE Leveraging Value Creation Flywheel to Drive Strong Revenue, EPS Growth and FCF in 2023 • Continued high levels of demand; share gain Organic +6% to +8% • Record backlog ~$7B • Revenues* (+7% to +9% reported) Reported includes ~+1 point M&A • Strong organic leverage, margin expansion Ad
Slide 12: 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 • Delivered ~$50M incremental savings in 2022 Transformation Savings • Targeting delivery of incremental savings
Slide 13: Strong FCF Drives Continued Balanced Capital Deployment Strategy
Strong FCF Drives Continued Balanced Capital Deployment Strategy 1 2 3 Invest for Maintain Healthy, Return Capital to 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 14: Strong, Balanced Capital Allocation in 2022; Targeting Additional Deployment of ~$2.5B in 2023
BAL A N C ED CA PI TAL D E PL O YMEN T Strong, Balanced Capital Allocation in 2022; Targeting Additional Deployment of ~$2.5B in 2023 Balanced Capital Deployment Capital Deployment • Q4 Share repurchases of $300M (FY Actual FY Target FY $1.2B); ~$3.2B remaining authorization 2022 2023 • Q4 dividends
Slide 15: Topics of Interest
a 4 Topics of Interest TECHNOLCG ES
Slide 16: Thermo King Significantly Outperformed End Markets in 2022
TOPICS OF INTEREST Thermo King Significantly Outperformed End Markets in 2022; Expect Continued Outperformance in 2023 N.A., EMEA Markets Expected to be Flat to N.A. and EMEA Market Results / Forecast Modestly Lower in 2023 • Trailer/Truck/APU: ~2/3rds of Total Transport Revenue Actual 2022 Transpor
Slide 17: North America Refrigerated Trailer Outlook – ACT Forecasts
TOPICS OF INTEREST North America Refrigerated Trailer Outlook – ACT Forecasts Dips to 40K Units in 2024, Rebounds in 2025, Growth in 2026 and 2027 North America Trailer Market Outlook Comments 50 • Underlying refrigerated trailer demand remains high, 45K units / year 40 • Strong demand forecast thro
Slide 18: 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 19: Appendix
Appendix
Slide 20: FY 2023 Detailed Guidance for Modeling Purposes
2023 GUIDANCE FY 2023 Detailed Guidance for Modeling Purposes Metric FY Guidance Commentary Organic Revenue* +6% to +8% • 25%+ organic leverage • M&A carries 3% leverage - nominal contribution given year 1 integration M&A +1% costs. Impact to total company leverage is minus ~(2) points Reported Reve
Slide 21: Trane Technologies Core Sustainability Strategy: Challenge Possible
2030 SUSTAINABILITY CO MMITMENTS Trane Technologies Core Sustainability Strategy: Challenge Possible Global Megatrends Our 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 22: Presented by His Majesty King Charles III
Presented by His Majesty King Charles III, in his former role as HRH the Prince of Wales 22
Slide 23: Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement
S U S TA I N A B I L I T Y L E A D E R Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement Highly Regarded ESG Performance People and Citizenship 12 Consecutive Years 62% higher 11 years Performed in the 97th score than industry listed on most admired percentile in t
Slide 24: Q4 Organic Bookings Flat Y-O-Y; Organic Revenues Up 16%
Q4 Organic Bookings Flat Y-O-Y; Organic Revenues Up 16% Organic* Bookings 2020 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Americas +11% -5% +8% +2% +4% +36% +29% +20% +31% +29% +6% +10% +11% flat +7% EMEA -2% -20% +6% +9% -3% +18% +53% +25% +13% +27% flat -12% -10% +2% -5% Asia Pacific -
Slide 25: Q4 Non-GAAP Measures Definitions
Q4 Non-GAAP Measures Definitions Adjusted operating income in 2022 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, merger and acquisition related costs, non-cash adjustments for contingent consideration, a settlement charge for a compensation related payme
Slide 26: Q4 Non-GAAP Measures Definitions
Q4 Non-GAAP Measures Definitions Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues. Adjusted effective tax rate for 2022 is defined as the ratio of income tax expense adjusted for the net tax effect of adjustments for restructuring costs, transformation costs,