Slide 1: Third-Quarter 2023 Results
Third-Quarter 2023 Results November 1, 2023
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: Continued Strong Execution / Financial Performance. Raising 2023 Guidance
Continued Strong Execution / Financial Performance. Raising 2023 Guidance. Well Positioned for Growth in 2024 With Standout Bookings & Backlog • Continued strong execution across diversified and resilient global portfolio • Strong growth and leverage through the P&L - Organic revenues* up 9%; adj. o
Slide 5: Exceptional Bookings, Strong Revenue Growth. Backlog of $6.9B
Q3 2 0 2 3 O R G A NI C B O OK I NG S A ND R EV EN UES Exceptional Bookings, Strong Revenue Growth. Backlog of $6.9B is 2.5X Historical Norms. Positions Us Well for 2024 Q3 Organic* Y-O-Y Change Bookings Revenue Enterprise + 8% + 9% Americas • CHVAC bookings up mid-teens, 3-yr stack up ~65%. Revs up
Slide 6: Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth
Q 3 2 0 2 3 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* +9% +100 +130 +23% Organic* bps bps $2.79 $4,883 $4,372 19.5% $2.27 18.5% 18.0% 16.7% Q3 '22 Q3 '23
Slide 7: Strong, Broad-Based Organic Revenue Growth and Margin Expansion
Q 3 2 0 2 3 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 $3,888 20.8% 19.3% +11% +80 bps +120 bps • Strong broad based margin expansion • •Strong marginvolume Strong expansion
Slide 8: Outlook for Healthy 2023 Growth and Continued Strong Underlying Demand
M A R K E T U P D AT E Outlook for Healthy 2023 Growth and Continued Strong Underlying Demand for Sustainable Solutions Commercial HVAC • Strong demand for innovative solutions driving robust backlog; Data center / education / healthcare / high-tech industrial - all remain strong • Leading systems &
Slide 9: Raising FY'23 Revenue & EPS Guidance
2 0 2 3 G U I D A N C E U P D AT E Raising FY’23 Revenue & EPS Guidance to Reflect Favorable Outlook and Continued Strong Execution Prior FY Guidance Updated FY Guidance* Organic ~+8% +8% to +9% (~+10% reported, incl. M&A) (+10% to 11% reported, incl. M&A) Revenues $8.80 to $8.90 ~$9.00 Adj. EPS (+2
Slide 10: 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 • Targeting delivery of incremental savings of ~$60M in 2023 Transformation Savings • ~$300M transformation savin
Slide 11: 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 of adjusted net
Slide 12: Balanced Capital Allocation; Deployed ~$1.6B YTD Through Oct
BAL AN C ED CA PI TAL D EPL O YME N T Balanced Capital Allocation; Deployed ~$1.6B YTD Through Oct; ~$2.5B Expected FY 2023 Balanced Capital Deployment Capital Deployment • Q3 dividends of $172M (YTD $513M); increased Actual Target FY dividend 12% to $3.00 per share annualized in March 2023 YTD Oct
Slide 13: Topics of Interest
a 4 Topics of Interest TECHNOLCG ES
Slide 14: Strong Execution Across TK Markets Globally, Driving Outperformance
TOPICS OF INTEREST Strong Execution Across TK Markets Globally, Driving Outperformance in Each Segment N.A., EMEA Markets Expected to be N.A. and EMEA Market Results / Forecast Modestly Lower in 2023 • Trailer/Truck/APU: ~2/3rds of Total Transport Revenue Actual 2022 Transport 2023 Transport N.A. •
Slide 15: ACT Projects North America Refrigerated Trailer Market to Dip in 2024
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Market to Dip in 2024 then Remain Robust 2025 through 2028 (above 40k units) ACT North America Trailer Market Outlook Comments • ACT 2023 North America Trailer forecast adjusted to 50 42.3k from 42.5k 40 30 • ACT 2024 North America T
Slide 16: Positioned Well for Growth in 2024
2024 DYNAMICS Positioned Well for Growth in 2024 • Strong execution / innovation in high-growth verticals delivering strong bookings / revenues Strong CHVAC • Direct salesforce uniquely positioned to capture opps across healthy end markets, albeit some softer verticals Demand (~65% of revs) • Secula
Slide 17: Positioned to Outperform Over the Long-Term
IN SUMMARY Positioned to Outperform Over the Long-Term 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 innov
Slide 18: Appendix
Appendix
Slide 19: FY'23 Detailed Guidance for Modeling Purposes
2023 GUIDANCE FY’23 Detailed Guidance for Modeling Purposes Metric FY Guidance Commentary Organic Revenue* +8% to +9% • 30%+ organic leverage for FY’23 • M&A carries ~3% leverage - nominal contribution given year 1 integration costs. M&A +2% FY impact to enterprise reported leverage is ~4 points low
Slide 20: 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 21: Driving Performance Through Sustainability
SUSTAINABILITY LEADERSHIP Driving Performance Before 2010 2010 Through Sustainability Focus on environmental and safety compliance Center for Energy Efficiency & Sustainability (CEES) is founded and begins operating 2011 Launched the first Launched internal Diversity & Inclusion Council ‘Sustainabil
Slide 22: 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 12 Consecutive Years World’s Most Performed in the 97th 73% percentile Admired Companies percentile in the Capital in the industrial indus
Slide 23: Q3 Organic Revenues up 9% Y-O-Y; Bookings Up 8%
Q3 Organic Revenues up 9% Y-O-Y; Bookings Up 8% Organic* Revenue 2020 2021 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Americas -2% -13% +2% +1% -3% +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% EMEA -3% -15% -6% -6% -8% +12% +28% +8% +5% +13% +6% +11% +18% +23% +1
Slide 24: Q3 Year-to-Date Non-GAAP Measures Definitions
Q3 Year-to-Date Non-GAAP Measures Definitions Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, non-cash adjustment for contingent consideration and merger and acquisition related costs. Adjusted operating income in 2022 is
Slide 25: Q3 Year-to-Date Non-GAAP Measures Definitions
Q3 Year-to-Date Non-GAAP Measures Definitions Adjusted effective tax rate for 2023 is defined as the ratio of income tax expense adjusted for the net tax effect of adjustments for restructuring costs, transformation costs, non-cash adjustment for contingent consideration, and merger and acquisition