Trane Technologies Plc · NYSE:TT
Trane Technologies — Morgan Stanley Laguna Conference 2024
34 slides from Trane Technologies's conference presentation, Sep 12, 2024
Slide 1: Investor Presentation September 2024
Investor Presentation September 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 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 Recognized in the 13 Consecutive Years on inaugural edition Fortune World’s Most the North America Index Ranks companies who promote Admir
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: Second-Quarter 2024 Results
Second-Quarter 2024 Results July 31, 2024
Slide 17: Q2 Extends Strong Track Record of Performance. Raising 2024 Guidance.
Q2 2024 U P DAT E Q2 Extends Strong Track Record of Performance. Raising 2024 Guidance. Exceptional Bookings & Backlog Provide Increasing Visibility into 2024 & 2025 • Continued strong execution across the portfolio • Organic bookings* and organic revenues* up 19% and 13%, respectively. Adj. operati
Slide 18: Broad-Based Strength in Bookings & Revs. Backlog of $7.5B
Q2 2 0 2 4 O R GAN I C B OOK I N G S AN D R E V EN UE S Broad-Based Strength in Bookings & Revs. Backlog of $7.5B, up 8% from 2023 Year-End Q2 Organic* Y-O-Y Change Bookings Revenue Enterprise + 19% + 13% Americas + 23% + 16% Americas Commercial HVAC + + • CHVAC strong across the board: bookings up
Slide 19: Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth
Q 2 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* +13% +140 +140 Organic* bps bps +23% $3.30 $5,307 $4,705 $2.68 21.1% 19.4% 19.7% 18.0% Q2 '23 Q2 '24
Slide 20: Segment Results: Strong Revenue Growth and Broad-Based Margin Expansion
Q 2 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 $4,291 22.8% 21.1% +16% +140 bps +130 bps • Strong broad-based operating margin expansion • Strong volume growth in Americas a
Slide 21: Market Outlook: Q2 Americas CHVAC and Resi Stronger
M A R K E T U P D AT E Market Outlook: Q2 Americas CHVAC and Resi Stronger. ACT Projects Lower 2024 Transport Market. Other BUs Largely Unchanged Commercial HVAC – Q2 exceptional growth; expect continued strong growth in 2H against tougher comps – 1H & 2H 2024 3yr stack revs expected to be +45-50% •
Slide 22: Raising FY'24 Revs & EPS Guide on Strong 1H 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 1H Performance, Positive Outlook, High Levels of Business Reinvestment Prior FY Guidance Updated FY Guidance* Organic +8% to +9% ~+10% +8% to +9% reported ~+10% reported Revenues incl. +1pt M&A & minus 1pt FX incl. ~+1pt M&A
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 leadership of a
Slide 24: Strong, Balanced Capital Allocation; 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 • Q2 dividends of $190M (YTD $379M); increased dividend 12% in February 2024 to $3.36 per share YTDJuly2024 2024 annualized, up 58% since
Slide 25: Topics of Interest
4 Topics of Interest TECHNOLCG ES
Slide 26: ACT Lowered 2024 N.A. Transport Market Outlook
TOPICS OF INTEREST ACT Lowered 2024 N.A. Transport Market Outlook. EMEA Market Outlook Unchanged. 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 weig
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 lowered to 50 35k units from 37k units, primarily in 2H 40 30 •
Slide 28: Appendix
Appendix
Slide 29: FY'24 Detailed Guidance for Modeling Purposes
2 0 2 4 G U I DAN C E FY’24 Detailed Guidance for Modeling Purposes Metric FY Guidance 2024 Commentary Organic OrganicRevenue* Revenue +8% to +9% ~+10% • 25%+ organic leverage for FY’24 • ~1pt M&A = -5 pts of leverage. Year one contribution of negative $30M OI, primarily related M&A ~+1% to technolo
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 2010 Through Sustainability Founded Center for Energy Efficiency & Sustainability (CEES) Launched internal Diversity & Inclusion Council 2011 Launched the first Sustainability 2015 2014 2012-2013 Addendum to our Annual Report First annual submission to D
Slide 32: Q2 YoY Organic Revenue up 13%; Bookings up 19%
Q2 YoY Organic Revenuesup 13%; Bookings up 19% Organic* Revenue 2021 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Americas +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% +7% +9% +15% +16% EMEA +12% +28% +8% +5% +13% +6% +11% +18% +23% +15% +15% +8% +3% +8% +8% +4%
Slide 33: Q2 Non-GAAP Measures Definitions
Q2 Non-GAAP Measures Definitions Adjusted operating income in 2024 is defined as GAAP operating income adjusted for restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition related costs, and legacy legal liability. Adjusted operating income in 2023 is defined
Slide 34: Q2 Non-GAAP Measures Definitions
Q2 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, a non-cash adjustment for contingent consideration, merger and acquisition related costs, and legacy legal liabi
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