Slide 1: Third-Quarter 2021 Results
Third-Quarter 2021 Results November 3, 2021
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, statements relating to the continued impact of the COVID-19 global pandemic, capital deployment including the amount and
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: Solid Execution in Challenging Environment – 2021 Guidance Unchanged
Q 3 2 0 2 1 U P D AT E Solid Execution in Challenging Environment – 2021 Guidance Unchanged; Bookings / Backlog Support Strong Positioning for 2022 • FY 2021 revenue, EPS, FCF guidance unchanged • Continuing to target top-quartile adj. EPS growth in FY 2021 • Underlying demand remains robust w/ Q3 b
Slide 5: Record Backlogs, Secular Megatrends & Continued Economic Recovery Support Strong 2022 Outlook
INITIAL 2022 OUTLOOK Record Backlogs, Secular Megatrends & Continued Economic Recovery Support Strong 2022 Outlook Record Backlogs, Strong Price Realization and Cost Savings Entering 2022 • Backlog up 70%+ in Americas, EMEA, ~20% up in Asia Pacific • Continued strong price realization driven by inno
Slide 6: Robust Bookings w/ Broad-Based Growth in All Segments / Businesses
Q3 2021 ORGANIC BOOKINGS AND REVENUES Robust Bookings w/ Broad-Based Growth in All Segments / Businesses; ~$150M in Revenues Impacted by Tight Supply Chain Q3 Organic* Y-O-Y Change Bookings Revenue Americas • CHVAC bookings up 30+% vs down LSD comp PY; Revs up MSD Enterprise + 20% + 4% led by HSD sv
Slide 7: Strong Price Execution Drives Organic Revenue Growth, Offsetting Persistent Inflation
ENTERPRISE Strong Price Execution Drives Organic Revenue Growth, Offsetting Persistent Inflation Net Revenue Adj. EBITDA %* Adj. Operating Margin* Adj. Continuing EPS* +4% -70 -60 +5% Organic bps bps +6% $3,720 18.7% 16.7% $1.80 18.0% 16.1% $1.72 $3,496 Q3 '20 Q3 '21 Q3 '20 Q3 '21 Q3 '20 Q3 '21 Q3 '
Slide 8: Strong Pricing Execution Drives Organic Revenue Growth in Challenging Environment
Q 3 2 0 2 1 S E G M E N T R E S U LT S Strong Pricing Execution Drives Organic Revenue Growth in Challenging Environment Revenue Adj. EBITDA% Adj. OI% Highlights $M Org. Growth vs PY vs PY • Strong price, productivity and cost controls offset inflation and Americas supply chain inefficiencies while
Slide 9: Improving End Markets, Strong Underlying Growth; Tight Supply Chain Strengthening 2022 / 23 Tailwinds
Q 3 2 0 2 1 S E G M E N T R E S U LT S Improving End Markets, Strong Underlying Growth; Tight Supply Chain Strengthening 2022 / 23 Tailwinds Commercial HVAC • Strong backlog exiting Q3 supporting Q4 outlook, strengthening visibility into 2022 and confidence in underlying end-market conditions • End
Slide 10: Leveraging Value Creation Framework to Outgrow Improving Markets
2 0 2 1 G U I D A N C E U P D AT E Leveraging Value Creation Framework to Outgrow Improving Markets to Deliver Top-Quartile EPS Growth Unchanged FY Guidance Commentary • FY21 outlook unchanged Organic + ~11% • Q4 revs supported by record Revenues (Up ~12.5% w/ M&A) backlog (Up ~13.5% w/ M&A & FX) •
Slide 11: On Track to Deliver ~$300M Total Transformation Savings by 2023
T R A N S F O R M AT I O N S AV I N G S On Track to Deliver ~$300M Total Transformation Savings by 2023; Fueling Innovation / Investments Across Portfolio • On track to deliver ~$90M incremental savings in Transformation Savings 2021 after delivering stranded / fixed cost take-out of ~$100M in 2020;
Slide 12: 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 13: Expect to Deploy At Least $2.5B in Balanced Capital Allocation in FY 2021
2 0 2 1 B A L A N C E D C A P I TA L D E P L O Y M E N T Expect to Deploy At Least $2.5B in Balanced Capital Allocation in FY 2021; ~$1.8B Deployed YTD Balanced Capital Deployment FY 2021 Outlook YTD* 2021 FY 2021 • Balanced capital deployment of ~$1.8B YTD; well-positioned to deploy a minimum Divid
Slide 14: Topics of Interest
a 4 Topics of Interest TECHNOLOGIES
Slide 15: EMEA Transport Markets Strengthening, North America Transport Markets Remain Strong in 2021
TOPICS OF INTEREST EMEA Transport Markets Strengthening, North America Transport Markets Remain Strong in 2021 N.A. and EMEA 2021 Strong Market Outlook N.A. and EMEA Market Results / Forecast EMEA Stronger / N.A. Timing Shifting to 2022 & 2023 • Trailer/Truck/APU: ~2/3rds of Total Transport Revenue
Slide 16: Transport Growth Outlook: ACT / IHS Projecting Continued Growth into 2022 / 23
TOPICS OF INTEREST Transport Growth Outlook: ACT / IHS Projecting Continued Growth into 2022 / 23 North America Trailer Market Outlook N.A. / EMEA Strong Market Outlook into 2022 / 23 • Underlying transport refrigeration demand remains strong 50 • 2021 N.A. OEM build capacity constrained for trailer
Slide 17: 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 innovation
Slide 18: Appendix
Appendix Appendix
Slide 19: Detailed Guidance for Modeling Purposes
2 0 2 1 G U I D A N C E U P D AT E Detailed Guidance for Modeling Purposes FY 2021 Revenue Adj. EPS Commentary • ~30+% FY organic leverage; modest shift in timing of revs between Organic + ~11% ~$5.95 Q3 and Q4 / 2022; ~$150M revs shifted from Q3; ~$50M to ~$75M to ship Q4, balance in 2022 Acquisiti
Slide 20: Trane Technologies Core Sustainability Strategy: Challenge Possible
2 0 3 0 S U S TA I N A B I L I T Y C O M M I T M E N T S 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 i
Slide 21: Highly Regarded ESG Performance
S U S TA I N A B I L I T Y L E A D E R Highly Regarded ESG Performance 10 Years Listed on North America Index #26 On Corporate Knights Top 100 Global Most Sustainable Corporations 61% Higher score than industrial machinery average Gold Medal Winner 35th annual award for International Achievement in
Slide 22: Purpose Alignment Drives Uplifting Culture
S U S TA I N A B I L I T Y L E A D E R Purpose Alignment Drives Uplifting Culture 1st in our industry to sign on to Paradigm for Parity – A Call to Action for Gender Equality Founding Member Coalition to hire 1 million Black Americans Best Employer Awards Forbes • Forbes America’s Best Employers for
Slide 23: Q3 Organic Bookings Up 20% Y-O-Y; Organic Revenues Up 4%
Q3 Organic Bookings Up 20% Y-O-Y; Organic Revenues Up 4% Organic* 2019 2020 2021 Bookings Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Americas -2% -4% +2% -7% -3% +11% -5% +8% +2% +4% +36% +29% +20% EMEA -9% +0% -2% -1% -3% -2% -20% +6% +9% -3% +18% +53% +25% Asia Pacific +0% -6% +3% -5% -2% -17% -2% -5%
Slide 24: Q3 Non-GAAP Measures Definitions
Q3 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 Adjusted operating income in 2021 is define
Slide 25: Q3 Non-GAAP Measures Definitions
Q3 Non-GAAP Measures Definitions Free cash flow in 2021 and 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. Working capital measures a firm’s operating liquidity positio