Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — 2017 Electrical Products Group Conference
31 slides from Trane Technologies's conference presentation, May 23, 2017
Slide 1: 2017 EPG Conference
2017 EPG Conference May 23, 2017
Slide 2: Safe Harbor
Safe Harbor These presentations include “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 s
Slide 3: Mike Lamach (CEO) and Sue Carter (CFO)
Mike Lamach (CEO) and Sue Carter (CFO) 3
Slide 4: Agenda
Agenda Strong and improving diversified business Sustainable performance 4
Slide 5: Why Invest in Ingersoll Rand?
Why Invest in Ingersoll Rand? Multi-year top-tier • Business Operating System enables 2017-2020 performance record strong execution of company’s strategy Targets Revenue CAGR • Our people think big and bold to ~ 4 - 4.5% Inspired excellence create impactful products and services and innovation that
Slide 6: Executing a Consistent Strategy that Delivers Profitable Growth and Powerful Cash Flow
Executing a Consistent Strategy that Delivers Profitable Growth and Powerful Cash Flow 1. 2. 3. 4. Sustained Operational Dynamic Capital Winning Growth Excellence Allocation Culture Differentiated products Margin improvement Reinvestment, dividends, Commitment to and services deliver and powerful ca
Slide 7: Operationally Integrated Company Maximized for Future Growth
Operationally Integrated Company Maximized for Future Growth Past Present Organic Growth Steady Leading Performance Profitable Top-Tier Innovation Measured Transformational Operational Excellence Beginning Core Competency Culture Siloed Collaborative Sustainability Obligation Growth Driver 7
Slide 8: Widely Recognized for Global Citizenship, Sustainability and Employee Engagement
Widely Recognized for Global Citizenship, Sustainability and Employee Engagement Citizenship Sustainability Employee Engagement Manufacturing Industry Top Quartile Corporate Responsibility magazine 2016 Dow Jones Sustainability Manufacturing 100 Best Corporate Citizens World and North America Indust
Slide 9: Have Met or Exceeded Targets Set in November 2013
Have Met or Exceeded Targets Set in November 2013 Target Actual Target Met External Commitments • Organic revenue growth (CAGR) 4% - 5% 4% • Adj. EPS growth (CAGR) 15% - 20% 15.7% • Free cash flow % of net income 100% 103% Internal Goals • Dividend >= earnings growth (CAGR) > 15% 17% 3 year avg = 18
Slide 10: Leading Brands and Business Operating System Driving Top-Tier Revenue and Earnings Growth
Leading Brands and Business Operating System Driving Top-Tier Revenue and Earnings Growth In Billions Organic Revenue Adjusted EPS $15 $6.00 $14 3% $5.00 16% CAGR CAGR $4.00 $13 $3.00 $12 $2.00 $11 $1.00 $10 $0.00 2013 2014 2015 2016 2013 2014 2015 2016 Cash Flow ROIC Adjusted Operating Margin 30% 1
Slide 11: Business Model Delivers Powerful Free Cash Flow
Business Model Delivers Powerful Free Cash Flow Free Cash Flow ($ millions) $1,345** $1,100 to $1,151* $1,200 $985** $810 $862 Post Security Spin 2013 2014 2015 2016 2017F Cash flow stable and recurring: $4.3B 2013 - 2016 * Reported – includes Allegion security business and excludes restructuring an
Slide 12: Capital Deployment 2013-2016: Focused on Maximizing Shareholder Value
Capital Deployment 2013-2016: Focused on Maximizing Shareholder Value $6.3 Billion Capital Share Mergers & Dividends Expenditures Buyback Acquisitions • ~$900M in Capex • $1.2B in dividends paid • $3.1B • Spent $981 million – 17% CAGR • 53 million shares on 10 acquisitions • Long history of repurcha
Slide 13: Strategy and Execution Deliver Differentiated Shareholder Returns
Strategy and Execution Deliver Differentiated Shareholder Returns Total Shareholder Returns Outperformed S&P 500 Index, S&P Industrials and Peer Average 600% 500% ~500% 400% Ingersoll Rand 300% ~280% Peer Average 200% ~190% S&P 500 ~160% 100% S&P Industrials 0% (100%) 2009 2010 2011 2012 2013 2014 2
Slide 14: Agenda
Agenda Strong and improving diversified business Sustainable performance 14
Slide 15: Continuing to Execute Consistent and Proven Strategy
Continuing to Execute Consistent and Proven Strategy 1. 2. 3. 4. Deliver Laser Focus Allocate Strong Build and Cash Flow to Sustained on Operational Maximize Leverage our Growth Excellence Shareholder Value Winning Culture Strong, globally Leading Well positioned in both recognized brands market sha
Slide 16: Global Mega Trends Play to Our Strengths
Global Mega Trends Play to Our Strengths Global Mega Trends Our Strengths • Climate change • Reduce energy demand and greenhouse gas emissions • Urbanization • Improve efficiency in: • Natural resource scarcity – Buildings • Digital connectedness and – Industrial processes technologies – Transportat
Slide 17: Business Operating System Delivers Results
Business Operating System Delivers Results 1 Drive innovation and productivity 2 Proven & unique system to accelerate profitable growth 3 Committed to sustainability and energy efficiency 4 Focus on employee engagement 17
Slide 18: Significant Ongoing Business Investments Support Top-Tier Growth and Profitability
Significant Ongoing Business Investments Support Top-Tier Growth and Profitability Business Investments Key Examples ● New low-global warming potential ~15% refrigerants ● Digital / controls / wireless technology ● Channel expansion ● Parts and services capabilities / offerings ● Sales and services
Slide 19: Continuing 146-Year Trend of Transforming Everyday Life through Innovation
Continuing 146-Year Trend of Transforming Everyday Life through Innovation More than 200 Products Introduced in Last 3 Years Product portfolio refreshed since 2012 85% Ingersoll Rand Trane Series E™ Club Car Thermo King Next Generation CenTraVac Onward SLXi Key emerging markets R-Series innovation s
Slide 20: Continuing Top-Tier Performance Expected 2017 to 2020
Continuing Top-Tier Performance Expected 2017 to 2020 Organic Revenue Growth Adjusted Operating Income Growth ~10% ~4% - 4.5% CAGR CAGR ~3% ~6% 2017 Guidance 2017-2020 2017 Guidance 2017-2020 Adjusted Operating Margin % Adjusted EPS Growth ~11% - 13% ~14.5% - 15% CAGR 12.4% - 12.8% 5% - 9% 2017 Guid
Slide 21: Climate Segment: Continued Growth and Margin Expansion
Climate Segment: Continued Growth and Margin Expansion Revenue Growth* Margin Expansion* Key Margin Drivers ~4.5% 2017 Adj. 2020 CAGR ~14.9% ~16.5% • New product development ~$12.4B margin improvement ~$10.9B • Productivity through + ~160 bps operational excellence • Accretive Energy Services and Co
Slide 22: Industrial Segment: Solid Growth and Margin Expansion
Industrial Segment: Solid Growth and Margin Expansion Revenue Growth* Margin Expansion* Drivers 2020 Revenue drivers ~4% 2017 Adj. • Compressor Technologies & Services: CAGR services, oil-free compressors and $3.3B ~11.6% ~15% energy efficient equipment • Industrial Products: intelligent and $2.9B c
Slide 23: Strong Free Cash Flow of ~$4 Billion 2018 to 2020 Drives Dynamic Capital Allocation
Strong Free Cash Flow of ~$4 Billion 2018 to 2020 Drives Dynamic Capital Allocation Strong Cash Flow Business Investment D&A CAPEX Free Cash Flow 1% - 2% of Δ W/C Revenues FCF >= Maintain W/C Net Income 2018–2020 at 3-4% of Earnings Revenues 2018-2020 • Competitive dividend; 4% to 4.5% Revenue CAGR
Slide 24: Dynamic Approach to Capital Allocation to Deliver Top-Tier Shareholder Returns
Dynamic Approach to Capital Allocation to Deliver Top-Tier Shareholder Returns • Strengthen the core business and extend product & market leadership 1 • Invest in new technology and innovation Invest for Growth • Ensure no meaningful gaps exist in product portfolio • Acquire products, channels and b
Slide 25: M&A Framework – Clear Criteria
M&A Framework – Clear Criteria Business Criteria Financial Criteria Strong position – no major gaps to fill IRR > WACC Strengthening our core or extend leadership in product, channel or technology ROIC: Accretive < 3 years Must be clear strategic fit for Ingersoll Rand EPS accretive < 3 years and cl
Slide 26: Why Invest In Ingersoll Rand?
Why Invest In Ingersoll Rand? Strategy ● Strategy tied to attractive end markets supported by global mega trends Brands ● Franchise brands and businesses with leadership market positions ● Sustained business investments delivering innovation and growth, Innovation operating excellence and improving
Slide 27: Q&A
Q&A am) Ingersoll Rand Inspiring Progress™
Slide 28: Appendix
Appendix am) Ingersoll Rand Inspiring Progress™
Slide 29: Ingersoll Rand Targets 2017 to 2020
Ingersoll Rand Targets 2017 to 2020 2017-2020 Targets Revenue Growth 4%-4.5% CAGR Operating Income Growth ~10% CAGR Operating Margins ~14.5%-15% in 2020 EPS Growth 11% to 13% CAGR Based on ~22% tax rate Business Unit Operating Margins - Climate ~16.5% in 2020 - Industrial ~15% in 2020 Cash Generatio
Slide 30: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Organic revenue is defined as GAAP net revenues adjusted for the impact of currency and acquisitions. Organic bookings is defined as reported orders closed/completed in the current period adjusted for the impact of currency and acquisitions. • Currency impacts on net re
Slide 31: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Working Capital measures a firm’s operating liquidity position and its overall effectiveness in managing the enterprises’ current accounts. ● Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabili
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