Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — Q3 2019 Earnings Presentation
21 slides from Trane Technologies's earnings presentation, Oct 29, 2019
Slide 1: Third-Quarter 2019 Results
Third-Quarter 2019 Results October 29, 2019
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 the mix of and demand for our products; performance of the markets in which we operate; our share repurchase program including the amount of sha
Slide 3: Executing a Compelling Value Creation Model
Executing a C Nexus of sustainability Margin improvement Reinvestment, dividends, Commitment to and energy efficiency + and powerful cash flow + share repurchase and + integrity, ingenuity and global megatrends acquisitions engagement Sustainable growth | Strong operating system Powerful cash flow a
Slide 4: 2019 Q3 Update: Effectively Managing an Evolving Landscape
2019 Q3 Update: Effectively Managing an Evolving Landscape ● Consistent execution of business strategy delivering another strong quarter in Q3 ● On track to deliver top-tier 2019 financial results, ~14% adj. EPS growth, >= 100% FCF conversion ● Climate segment growth accelerated in Q3 despite tough
Slide 5: Strong Organic Revenue Growth led by Climate; Strong Bookings in Climate (ex. Transport)
Strong Organic Revenue Growth led by Climate; Strong Bookings in Climate (ex. Transport) Q3 Organic* Y-O-Y Change Bookings Revenue Climate Commercial HVAC + + • Strong, broad based rev growth – - North America + + CHVAC N.A. / Europe / Res HVAC - Latin America + + • Asia revs down MSD on China tough
Slide 6: Solid Growth in Mixed End Markets
Solid Growth in Mixed End Markets • Strong execution and exceptional bookings & rev growth in global CHVAC businesses; N.A. & Europe particularly robust; Asia revs down MSD on tough YOY China comps (low teens) Commercial HVAC • Backlog, pipeline, orders support 2019 growth expectations • 2019 global
Slide 7: Strong Q3 Financial Performance
Strong Q3 Financial Performance • Strong operating results – Adjusted continuing EPS of $1.99, up 14% year over year driven by strong performance in Climate – Maintaining adj. cont. EPS guidance of ~$6.40 on strong Climate expectations; weaker Industrials • Strong Q3 organic revenue growth – Broad-b
Slide 8: Q3 2019 Strong Revenue Growth and Margin Expansion Yield Cont’d EPS Growth
ENTERPRISE Q3 2019 Strong Revenue Growth and Margin Expansion Yield Cont’d EPS Growth Net Revenue Adj. Operating Margin* Adj. Continuing EPS* +6% +70 +14% Organic bps $4,344 $1.99 15.8% $1.75 $4,031 15.1% +8% Q3 '18 Q3 '19 Q3 '18 Q3 '19 Q3 '18 Q3 '19 Highlights • Strong organic revenue growth led by
Slide 9: Continued Strong Climate Performance Driving Adj. Cont. EPS +14%
ENTERPRISE Continued Strong Climate Performance Driving Adj. Cont. EPS +14% +$0.24 ($0.01) $0.04 $1.99 $0.16 $0.05 $1.75 $0.04 Corp Cost $0.00 Oth Exp ($0.05) Interest $0.00 Tax rate Q3 2018 Climate Industrial Other Share Count Q3 2019 Adjusted Adjusted Continuing EPS* Continuing EPS* Highlights • C
Slide 10: Strong Price and Productivity Driving 70 bps Margin Expansion
ENTERPRISE Strong Price and Productivity Driving 70 bps Margin Expansion +70 bps 0.8 (0.3) 15.8% 15.1% (0.2) 0.4 Q3 2018 Vol / Mix / FX / Acq Price / Material Productivity / Other Investment / Other Q3 2019 Adjusted Operating Inflation Inflation Adjusted Operating Margin* Margin* Highlights • Price
Slide 11: Q3 Continued Strong Revenue Growth and Margin Improvement (Climate)
CLIMATE SEGMENT Q3 Continued Strong Revenue Growth and Margin Improvement Net Revenue Adj. Operating Margin* Adj. EBITDA %* +8% +30 +30 Organic bps bps $3,471 17.3% 17.0% 19.0% 18.7% $3,239 +7% Q3 '18 Q3 '19 Q3 '18 Q3 '19 Q3 '18 Q3 '19 Highlights • Strong organic rev growth continues led by CHVAC NA
Slide 12: Stable Revenues & Margin Expansion despite Short-Cycle Industrial Backdrop
INDUSTRIAL SEGMENT Stable Revenues & Margin Expansion despite Short-Cycle Industrial Backdrop Net Revenue Adj. Operating Margin* Adj. EBITDA %* 0% +40 +110 Organic bps bps $873 15.0% $792 14.6% 17.9% 16.8% +10% Q3 '18 Q3 '19 Q3 '18 Q3 '19 Q3 '18 Q3 '19 Highlights • Solid Small Electric Vehicles grow
Slide 13: Maintain Healthy, Efficient Balance Sheet; Return Capital to Shareholders
2 Maintain Healthy, Efficient Balance Sheet 3 Return Capital to Shareholders Strengthen the core business and extend product & market leadership Invest in new technology and innovation Strategic acquisitions - pipeline remains active Completed $1.5B in acquisitions YTD Drive FCF conversion of greate
Slide 14: Topics of Interest
am Ingersoll Rand Inspiring Progress™ Topics of Interest
Slide 15: Topics of Interest
Topics of Interest • Industrial Segment Transaction Update − Separation and Integration Planning • Separation activities underway and on track—process, system, legal entity, supply chain, etc. • Temporary transition service agreements being created to support Day 1 operations for certain services/pr
Slide 16: Full Year Guidance Update—Adj EPS of ~$6.40 Unchanged
Full Year Guidance Update—Adj EPS of ~$6.40 Unchanged Prior Guidance** October Update** Climate Industrial Enterprise Climate Industrial Enterprise Reported Revenue 4.0% to 5.0% 10.5% to 11.5% 5.5% to 6.5% 5.8% to 6.3% 5.5% to 6.0% No change Organic* Revenue 5.0% to 6.0% 4.5% to 5.5% 5.0% to 6.0% 7.
Slide 17: Summary: Expect Top-Tier Rev, EPS Growth & Strong FCF in 2019
Summary: Expect Top-Tier Rev, EPS Growth & Strong FCF in 2019 Strategy ● Strategy tied to attractive end markets supported by global mega trends Brands ● Franchise brands and businesses with leadership market positions Innovation ● Sustained business investments delivering innovation and growth, ope
Slide 18: Appendix
am Ingersoll Rand Inspiring Progress™ Appendix abbideh bbl Biviredl|)
Slide 19: Q3 Organic Revenue Up 6% Year-Over-Year; Organic Bookings Up 1%
Q3 Organic Revenue Up 6% Year-Over-Year Organic Bookings Up 1% Against Tough Comparison (up HSD ex-TK) Organic* 2017 2018 2019 Bookings Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Climate 6% 3% 5% 7% 5% 11% 17% 12% 20% 15% -3% -4% 2% Industrial 9% 5% 5% 12% 8% 5% 8% 7% 6% 6% 1% 8% 0% Total 7% 4% 5% 8% 6%
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 boo
Slide 21: Q3 Non-GAAP Measures Definitions
Q3 Non-GAAP Measures Definitions Free cash flow in 2019 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for PFS acquisition-related transaction costs, Industrial Segment separation-related costs and restructuring. Free cash