Slide 1: Fourth-Quarter and Full Year 2023 Results
Fourth-Quarter and Full Year 2023 Results February 1, 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 PR IOR IT I ES 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 Upl
Slide 4: Strong Execution in 2023; Exceeded Financial Commitments
2023 YEA R IN RE VIEW Strong Execution in 2023; Exceeded Financial Commitments on Top- Line, Bottom-Line and FCF Conversion 2023 Initial Guidance** 2023 Actual Results* Organic Revenue* +6% to +8% +9% + Organic Operating Leverage* 25%+ +36% + Adj. EPS* $8.20 to $8.50 $9.04 + Free Cash Flow* ≥ Adj. N
Slide 5: Relentless Investments in Innovation and Growth, People and Culture and BOS
C UL T U R E OF P E RF O R M A N C E 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
Slide 6: Purpose Driven Strategy Drives Continued Strong Financial Performance
Purpose Driven Strategy, Best In Class BOS, Uplifting Culture Drive Continued Strong Financial Performance. Positioned for Growth in 2024 with Standout Bookings & Backlog • Bookings / backlog remain strong, led by longer cycle, commercial HVAC businesses globally • Q4 CHVAC organic bookings* up mid-
Slide 7: Exceptional Bookings, Robust Revenue Growth; $6.9B Backlog
Q 4 2 02 3 O R G A N I C B O OK I N G S A N D R E V E N U E S Exceptional Bookings, Robust Revenue Growth. $6.9B Backlog at Historic Highs Providing Strong Positioning for Continued Growth Entering 2024 Q4 Organic* Y-O-Y Change Bookings Revenue Enterprise + 12% + 6% Americas • Strong CHVAC bookings,
Slide 8: Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth
Q4 2 0 2 3 E NTE R P RI S E RE S UL TS Performance Scoreboard: Robust Revenue Growth, Margin Expansion and EPS Growth Net Revenue Adj. EBITDA Margin* Adj. Operating Margin* Adj. Continuing EPS* +6% +150 +190 Organic* bps bps +19% $4,424 $2.17 $4,074 17.2% 15.7% 15.6% $1.82 13.7% Q4 '22 Q4 '23 Q4 '22
Slide 9: Q4 Segment Results: Americas, EMEA, Asia Pacific
Q 4 2 0 2 3 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 $3,390 18.1% 16.6% +7% +150 bps +200 bps • Strong broad based margin expansion • •Strong marginvolume Strong expansion growth,
Slide 10: Market Update: CHVAC Strength, Residential Normalizing, Transport Headwinds
M A R K E T U P D AT E Continued Strength in CHVAC Globally, Residential Business Normalizing Near- Term, Transport Refrigeration with Modest 2024 Headwinds Commercial HVAC • Strong demand for innovative solutions driving robust backlog; data center / education / healthcare / high-tech industrial- a
Slide 11: Leveraging Value Creation Flywheel: 2024 Guidance
202 4 GU IDAN CE Leveraging Value Creation Flywheel to Drive Strong Revenue, EPS Growth and FCF in 2024 2024 Guidance Organic +6% to +7% (+7% to +8% reported, incl. M&A) Revenues Q1’24 expect ~+7% organic growth $10.00 to $10.30 Adj. EPS (+11% to +14%) Q1’24 expect ~$1.60 to $1.65 Operating Organic
Slide 12: Delivered ~$300M Total Transformation Savings from 2020 to 2023
T R A N S F O R M AT IO N S AV I N G S Delivered ~$300M Total Transformation Savings from 2020 to 2023; Business Operating System Driving Strong Productivity / Cost Savings • Delivered incremental savings of ~$60M in 2023 as expected Transformation Savings • ~$300M transformation savings adds fuel t
Slide 13: 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 14: $2.4B Capital Deployed in 2023 Including Targeted M&A
B A L A N C E D C A P I TAL D E P L O YM E N T $2.4B Capital Deployed in 2023 Including Targeted M&A Across Key Markets and Verticals. Expect to Deploy ~$2.5B in 2024 Balanced Capital Deployment • Increased dividend 12% in 2023 Actual Target FY • Share repurchases of $750M (inc. activity from Jan 20
Slide 15: Topics of Interest
a 4 Topics of Interest TECHNCLCG ES
Slide 16: TK Multi-Year Outperformance ~+30% Globally
TOPICS OF INTEREST TK Multi-Year Outperformance ~+30% Globally; Expect Continued Outperformance in 2024 N.A. and EMEA Market Results / Forecast Weighted Avg Mkt Forecast / TK Revenue 2023 Transport N.A. 2024 Transport N.A. • Americas 2024 Transport weighted average market Market Outlook* Market Outl
Slide 17: ACT Projects North America Refrigerated Trailer Market to Dip in 2024
TO PICS O F 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 2024 North America Trailer forecast at 37k units 50 40 • Underlying refrigerated trailer demand re
Slide 18: Positioned to Outperform Over the Long-Term
IN SUM MARY 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 inno
Slide 19: Appendix
Appendix
Slide 20: FY'24 Detailed Guidance for Modeling Purposes
20 24 GU ID ANC E FY’24 Detailed Guidance for Modeling Purposes Metric FY Guidance 2024 Commentary Organic Revenue* +6% to +7% • 25%+ organic leverage for FY’24 • ~1pt M&A = year one contribution of negative $30M OI, primarily related to technology acq, M&A ~+1% Nuvolo, with accelerated intangibles
Slide 21: 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 workforcediversity that operations, 10%
Slide 22: 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 23: 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 13 Consecutive Years on World’s Most the North America Index 73% percentile Admired Companies 3 consecutive years on the in the industrial
Slide 24: Q4 Organic Revenues up 6% Y-O-Y; Bookings Up 12%
Q4 Organic Revenues up 6% Y-O-Y; Bookings Up 12% Organic* Revenue 2020 2021 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Americas -2% -13% +2% +1% -3% +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% +9% +11% +7% +9% EMEA -3% -15% -6% -6% -8% +12% +28% +8% +5% +13% +6% +1
Slide 25: Q4 Year-to-Date Non-GAAP Measures Definitions
Q4 Year-to-Date Non-GAAP Measures Definitions Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, merger and acquisition related costs, non-cash adjustment for contingent consideration and an insurance settlement on a property
Slide 26: Q4 Year-to-Date Non-GAAP Measures Definitions
Q4 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 restructuring costs, transformation costs, merger and acquisition related costs, a non-cash adjustment for contingent consid