Slide 1: First-Quarter 2023 Results
First-Quarter 2023 Results May 3, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes “forward-looking statements,” which are statements that are not historical facts, including statements that relate to our future financial performance and targets, including revenue, EPS and operating income; our business operations; demand for o
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: Strong Results, Improving Visibility, Confidently Raising FY 2023 Guidance
Q1 2023 UPDATE Strong Results, Improving Visibility, Confidently Raising FY 2023 Guidance • Strong Q1 performance • Organic revenues* up 9%; adj. operating margins* up 140 basis points, adj. EPS* up 26% • Strong bookings w/ book-to-bill of 117%; backlog up $400M sequentially to a record $7.3B, impro
Slide 5: Bookings Momentum Continues with Book-to-Bill of 117%; Backlog Up
Q1 2 0 2 3 OR G ANI C B OOK ING S AND R EVEN UES Bookings Momentum Continues with Enterprise Book-to-Bill of 117% on 9% Revenue Growth; Backlog Up $400M Sequentially to $7.3B Q1 Organic* Y-O-Y Change Bookings Revenue Enterprise -1% + 9% Americas book-to-bill > 115%, backlog up sequentially and > 3X
Slide 6: Strong Revenue Growth, Margin Expansion and EPS Growth
Q 1 2 0 2 3 E N T E R P R I S E R E S U LT S Strong Revenue Growth, Margin Expansion and EPS Growth Net Revenue Adj. EBITDA Margin* Adj. Operating Margin* Adj. Continuing EPS* +9% +100 +140 +26% Organic* bps bps 14.8% 13.8% 12.9% $1.41 $3,666 11.5% $3,356 $1.12 Q1 '22 Q1 '23 Q1 '22 Q1 '23 Q1 '22 Q1
Slide 7: Strong Broad-Based Organic Revenue Growth and Margin Expansion
Q 1 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 $2,861 15.9% 14.0% • Strong broad-based margin expansion +8% +50 bps +90 bps • Strong positive price realization, volum
Slide 8: Strong Underlying Demand for Sustainability-Focused Systems and Services
M A R K E T U P D AT E Strong Underlying Demand for Sustainability-Focused Systems and Services Support Healthy End Markets in FY’23/’24 and Beyond Commercial HVAC • Strong demand for innovative solutions driving all-time high backlog; Data center / education / healthcare / high tech industrial - al
Slide 9: Raising FY'23 Revenue & EPS Guidance to Reflect Strong Execution
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 Strong Execution Prior FY Guidance Updated FY Guidance* Organic +6% to +8% +7% to +8% (+7% to +9% reported, incl. M&A)** (+9% to +10% reported, incl. M&A)** Revenues Expect Q2 +HSD $8.20 to $8.50 $8.30 to $8.50 Adj. E
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 Invest for Maintain Healthy, Return Capital to 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: Deployed ~$720M in Balanced Capital Allocation YTD May 2023
BAL A N C ED CA PI TAL D E P L O YME N T Deployed ~$720M in Balanced Capital Allocation YTD May 2023; ~$2.5B Expected FY 2023 Balanced Capital Deployment Capital Deployment • Q1 dividends of $170M; increased dividend 12% Actual Target FY to $3.00 per share annualized, up 42% since the launch of Tran
Slide 13: Topics of Interest
a 4 Topics of Interest TECHNOLCG ES
Slide 14: Global Transport Market Outlook Unchanged; Expect Continued Outperformance
TOPICS OF INTEREST Global Transport Market Outlook Unchanged; Expect Continued Outperformance in FY’23 N.A., EMEA Markets Expected to be Flat to 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
Slide 15: ACT Projects North America Refrigerated Trailer Outlook to Remain Robust
TOPICS OF INTEREST ACT Projects North America Refrigerated Trailer Outlook to Remain Robust 2023 through 2028 ACT North America Trailer Market Outlook Comments North America 2024 ACT Forecast 50 Increased to 42k from 40k units • ACT 2024 North America Trailer forecast increased to 42k units from 40k
Slide 16: 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 17: Appendix
Appendix
Slide 18: FY'23 Detailed Guidance for Modeling Purposes
2023 GUIDANCE FY’23 Detailed Guidance for Modeling Purposes Metric FY Guidance Commentary Organic Revenue* +7% to +8% • 25%+ organic leverage • M&A moves from +1% to +2% to include M&A completed and committed as of May (appx. $500M in bolt on technology-focused M&A (see p.12)) M&A +2% • M&A carries
Slide 19: Trane Technologies Core Sustainability Strategy: Challenge Possible
SUSTAINABILITY CO MMITMENTS 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 gender parity in leadership, operations
Slide 20: 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 21: Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement
S U S TA I N A B I L I T Y L E A D E R Widely Recognized for Sustainability, Citizenship, Diversity, Inclusion & Engagement Highly Regarded ESG Performance People and Citizenship 12 Consecutive Years 11 years Performed in the 97th 72% percentile listed on most admired percentile in the Capital in th
Slide 22: Q1 Organic Revenues up 9% Y-O-Y; Bookings Down 1 Percent
Q1 Organic Revenues up 9% Y-O-Y; Bookings Down 1 Percent Organic* Revenue 2020 2021 2022 2023 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Americas -2% -13% +2% +1% -3% +9% +19% +4% +14% +11% +13% +13% +19% +14% +15% +8% EMEA -3% -15% -6% -6% -8% +12% +28% +8% +5% +13% +6% +11% +18% +23% +15% +15
Slide 23: Q1 Non-GAAP Measures Definitions
Q1 Non-GAAP Measures Definitions Adjusted operating income in 2023 is defined as GAAP operating income adjusted for restructuring costs, transformation costs, non-cash adjustments for contingent consideration and merger and acquisition related costs. Adjusted operating income in 2022 is defined as G
Slide 24: Q1 Non-GAAP Measures Definitions
Q1 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 adjustments for contingent consideration, and merger and acquisition related cost