Trane Technologies Plc · NYSE:TT
Trane Technologies — UBS Global Industrials and Transportation Conference 2024
35 slides from Trane Technologies's conference presentation, December 2024
Slide 1: Investor Presentation December 2024
Investor Presentation December 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; High Aftermarket Mix
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 Lead a Movement 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 and Accelerate Need for Innovative Solutions
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 • World class sales, service 1 2 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: Third-Quarter 2024 Results
Third-Quarter 2024 Results October 30, 2024
Slide 17: Q3 Extends Strong Track Record of Performance. Raising 2024 Guidance.
Q3 2024 UPD AT E Q3 Extends Strong Track Record of Performance. Raising 2024 Guidance. Exceptional Bookings & Backlog Provide Strong Visibility into 2025 • Strong execution across diversified, resilient portfolio • High performance flywheel - leading revenue and adj. EPS* growth in Q3, while maintai
Slide 18: Continued Strong Execution and Demand with Double Digit Revenue Growth and Bookings of $5.2B
Q3 2 0 2 4 O R G ANI C B OOK I NG S A N D R EV EN UES Continued Strong Execution and Demand with Double Digit Revenue Growth and Bookings of $5.2B, up 5% Q3 Organic* Y-O-Y Change Bookings Revenue Enterprise + 5% + 11% Americas + 8% + 15% Americas • Broad-based CHVAC demand: CHVAC bookings up LSD w/
Slide 19: Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth
Q 3 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* +11% +120 Organic* +90 +21% bps bps $5,441 20.7% $4,883 19.5% $3.37 18.9% 18.0% $2.79 Q3 '23 Q3 '24
Slide 20: Q3 Segment Results: Strong Revenue Growth and Broad-Based Margin Expansion
Q 3 2 0 2 4 S E G ME 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 $4,475 22.2% 20.6% • Strong volume growth in Americas/EMEA partly +15% +140 bps +130 bps offset by softness in China • Strong m
Slide 21: Market Outlook: CHVAC and Resi Stronger. China Macro Weaker.
M A R K E T U P D AT E Market Outlook: CHVAC and Resi Stronger. China Macro Weaker. Other BUs Largely Unchanged Commercial HVAC – Q3 stronger than expected – mainly timing of customer delivery dates, stronger services growth • Strong revenue growth - broad-based with particular strength in data cent
Slide 22: Raising FY’24 Revs & EPS Guide on Strong Demand, High Levels of Business Reinvestment
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 Demand, High Levels of Business Reinvestment Prior FY Guidance Updated FY Guidance* Organic ~+10% ~+11% ~+10% reported ~+11% reported Revenues incl. ~+1pt M&A & minus ~1pt FX less than 1pt M&A & FX impact Q4’24 expect ~+7% o
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
BAL AN C ED CA PI TAL D EPL O YME N T Strong, Balanced Capital Allocation; Expect to Deploy ~$2.5B in 2024 Balanced Capital Deployment Actual & Target FY • Dividends paid Q3 YTD $569M; and Q4 dividend Committed declared with payment on Dec 31st ~$190M 2024 • Increased dividend 12% in February 2024 t
Slide 25: Topics of Interest
a 4 Topics of Interest TECHNOLCG ES
Slide 26: Global Transport Market Outlook for FY’2024
TOPICS OF INTEREST Global Transport Market Outlook for FY’2024. Continue to Expect TK to Outperform in Each Region – No Change vs Q2 N.A. and EMEA Market Results / Forecast Weighted Avg Mkt Forecast / TK Revenue Actual 2023 Transport 2024 Transport N.A. • Americas 2024 Transport weighted average mar
Slide 27: ACT Projects North America Refrigerated Trailer Market to Improve to +LSD Growth in 2025
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Market to Improve to + LSD Growth in 2025 vs + Mid-Teens Prior; Robust Growth Expected 2026 - 2029 (above 40k units) ACT North America Trailer Market Outlook Comments • ACT 2025 North America Trailer forecast lowered to 50 36.8k unit
Slide 28: Positioned Well for Another Strong Year in 2025
2025 DYNAMICS Positioned Well for Another Strong Year in 2025 • Continued strong execution / innovation; pivot to highest-growth verticals delivering strong bookings / revenues Strong CHVAC • Well positioned to capture significant opportunities w/ best in class direct sales & service teams & stakeho
Slide 29: Appendix
Appendix
Slide 30: FY’24 Detailed Guidance for Modeling Purposes
2024 GUIDANCE FY’24 Detailed Guidance for Modeling Purposes Metric FY Guidance 2024 Commentary Organic OrganicRevenue* Revenue* +8% to +9% ~+11% • ~30% 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 technology acq
Slide 31: Trane Technologies Core Sustainability Strategy: Challenge Possible
SUSTAINABILITY COMMITMENTS Trane Technologies Core Sustainability Strategy: Challenge Possible Global Megatrends Our 2030 Commitments Leading by Example The Gigaton Challenge Achieving carbon neutral Opportunity for All Reducing one gigaton of carbon operations, 10% absolute energy Creating workforc
Slide 32: Driving performance through sustainability
A LEGACY OF ACTION Driving performance through sustainability Note: Information as of October 30, 2024 --- NOT AN UPDATE OR REAFFIRMATION 20
Slide 33: Q3 YoY Organic Revenues up 11%; Bookings up 5%
Q3 YoY Organic Revenues up 11%; Bookings up 5% Organic* Revenue 2021 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Americas +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% +7% +9% +15% +16% +15% EMEA +12% +28% +8% +5% +13% +6% +11% +18% +23% +15% +15% +8% +3% +8%
Slide 34: Q3 Non-GAAP Measures Definitions
Q3 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 35: Q3 Non-GAAP Measures Definitions
Q3 Non-GAAP Measures Definitions Adjusted effective tax rate for 2024 is defined as the ratio of income tax expense adjusted for a U.S. discrete tax benefit and the net tax effect of adjustments for restructuring costs, a non-cash adjustment for contingent consideration, merger and acquisition relat
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