Slide 1: Third-Quarter 2020 Results
Third-Quarter 2020 Results October 28, 2020
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, the COVID-19 global pandemic, capital deployment including the amount and timing of our dividends, our share repurchase
Slide 3: Executing a Consistent Strategy Delivering Profitable Growth Over the Long-Term
Executing a Consistent Strategy Delivering Profitable Growth Over the Long-Term 1. 2. 3. 4. Sustained Operational Dynamic Capital Uplifting Growth Excellence Allocation Culture Innovation at the nexus Lean methodology Reinvestment, dividends, Commitment to of sustainability and delivering margin sha
Slide 4: Strong Execution Despite Challenging Pandemic Environment
Strong Execution Despite Challenging Pandemic Environment; Remain Focused On Positioning Business To Thrive As Business Conditions Improve • Strong performance despite ongoing global pandemic-related challenges − Successful execution of business strategy delivering top quartile revenue and EPS growt
Slide 5: Q3 Organic Bookings Up 7%, Revenues Positive Despite Ongoing COVID-19 Impacts
Q3 Organic Bookings Up 7%, Revenues Positive Despite Ongoing COVID-19 Impacts Q3 Organic* Y-O-Y Change Bookings Revenue Americas • CHVAC bookings down LSD; Revs flat supported by strong Enterprise + 7% +50 bps backlog (revs up ~1% ex-Latin America); Service revs up LSD despite COVID-19 pandemic cont
Slide 6: Strong Execution Drives Resilient Performance Despite Ongoing COVID-19 Impacts
ENTERPRISE Strong Execution Drives Resilient Performance Despite Ongoing COVID-19 Impacts Net Revenue Adj. EBITDA %* Adj. Operating Margin* Adj. Continuing EPS* 50 bps +80 +80 +6% Organic bps bps 18.7% 16.7% $3,496 $1.72 $3,471 17.9% 15.9% $1.62 Q3 '19 Q3 '20 Q3 '19 Q3 '20 Q3 '19 Q3 '20 Q3 '19 Q3 '2
Slide 7: Americas Segment Results
SEGM ENT RESULTS Strong Productivity, Volume, Positive Price / Cost Delivers Operating Leverage Better Than GM% Revenue Adj. EBITDA% Adj OI% Highlights $M Org. Growth vs PY vs PY • Strong Res HVAC volume, productivity, price / cost, partially offset Americas $2,746 20.2% 18.2% by negative Transport
Slide 8: 2020 Revenue and Leverage Outlooks Further Improved After Strong Third Quarter
2020 Revenue and Leverage Outlooks Further Improved After Strong Third Quarter 2020 Revenues - Current View Add’l 2020 Modeling Assumptions (based on current pace of economies reopening) • Q1 and Q2 2020 scenarios unlikely w/out major additional COVID-19 disruption • Quarterly interest expense: ~$62
Slide 9: 2H Outlook Significantly Improved From Q2 Expectations
M AR K ET U PD ATE 2H Outlook Significantly Improved From Q2 Expectations • CHVAC services resilient, growing LSD despite reduced building occupancy due to the COVID-19 pandemic; Pipeline / bookings growing for indoor air quality assessments and services; End market indicators (ABI, Dodge) remain so
Slide 10: Fixed Cost Reduction Programs On Track to Deliver $100M Savings in 2020
Fixed Cost Reduction Programs On Track to Deliver $100M Savings in 2020; $140M Run Rate savings in 2021 Expense Associated with Eliminating Stranded Cost Reductions On Track For 2020, 2021 Stranded Costs • 100% of ~$100M target cost reduction expected in 2020 • Expense to achieve stranded cost reduc
Slide 11: Strong Free Cash Flow and Balance Sheet Supports Continued Balanced Capital Allocation Strategy
Strong Free Cash Flow and Balance Sheet Supports Continued Balanced Capital Allocation Strategy • Strengthen the core business and extend product & market leadership 1 Invest for Growth • Invest in high ROI technology and innovation • Strategic, value-accretive acquisitions - pipeline remains active
Slide 12: Topics of Interest
a 4 Topics of Interest TECHNOLOGIES
Slide 13: Topics of Interest: Indoor Air Quality
Topics of Interest: Indoor Air Quality Indoor Air Quality Update • Comprehensive, systemic, fully customizable approach balances IAQ and energy intensity • Strong & growing pipeline for IAQ services & system improvements leveraging deep application expertise • Innovation and investment focused to ex
Slide 14: Topics of Interest: Transport Market Outlook
Topics of Interest: Transport Market Outlook – Markets Remain Significantly Impacted by COVID-19 Pandemic Prior to Forecasted Growth in 2021 2020 Transport North 2021 Transport North America Market America Market N.A. and EMEA market demand significantly impacted Outlook Outlook Trailer / APU / Truc
Slide 15: Topics of Interest: Investor Briefing December
Topics of Interest: Investor Briefing December 14 • Date: Morning of December 14, 2020 • Format: Virtual (details to follow soon) • Focus: Transformation of Trane Technologies Investor Briefing − Focus will be on self-help initiatives to support continued margin improvement and growth over the next
Slide 16: Confident in Long-Term Outlook for Trane Technologies to Deliver Profitable Growth
Confident in Long-Term Outlook for Trane Technologies to Deliver Profitable Growth Strategy • Strategy tied to attractive end markets supported by global mega trends Brands • Franchise brands with leadership market positions in all regions Innovation • Sustained business investments delivering innov
Slide 17: Appendix
Appendix Appendix
Slide 18: Q3 Organic Bookings Up 7% Year-Over-Year; Organic Revenues Positive
Q3 Organic Bookings Up 7% Year-Over-Year; Organic Revenues Positive Organic* 2018 2019 2020 Bookings Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Americas +10% +18% +17% +27% +18% -2% -4% +2% -7% -3% +11% -5% +8% EMEA +16% +10% -1% -5% +5% -9% +0% -2% -1% -3% -2% -20% +6% Asia Pacific +10% +18% +0% +8% +9
Slide 19: Appendix: Restructuring and Transformation Costs GAAP to Non-GAAP Adjustments
Appendix: Restructuring and Transformation Costs GAAP to Non-GAAP Adjustments Restructuring and Transformation Costs • Restructuring costs of ~$8M included in Table 2 of the Q3 2020 earnings release includes ~$5M of restructuring costs related to transformation activities as well as ~$3M of restruct
Slide 20: 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 • Currency impacts on net revenues and book
Slide 21: Q3 Non-GAAP Measures Definitions
Q3 Non-GAAP Measures Definitions Free cash flow in 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. Free cash flow in 2019 is defined as net cash provided by (used in) co