Trane Technologies Plc · NYSE:TT
Trane Technologies — Ingersoll Rand — Q1 2016 Earnings Presentation
23 slides from Trane Technologies's earnings presentation, Apr 26, 2016
Slide 1: First-Quarter 2016 Results
First-Quarter 2016 Results April 26, 2016
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 sh
Slide 3: Strategic Foundation Continues to Underpin Top-Quartile Performance
Strategic Foundation Continues to Underpin Top-Quartile Performance Sustainable, Profitable Growth and Shareholder Value Growth Operational Dynamic Winning Excellence Excellence Capital Culture Allocation Strong, recognized brands Well positioned in both Leading market shares geographic and end mark
Slide 4: End Market Environment by Geography: Climate Segment
End Market Environment by Geography Climate Segment Share Gain and Significant Margin Expansion Climate End Market Conditions Positive in Most Regions Europe North America Middle East Latin America Asia Pacific 4
Slide 5: End Market Environment by Geography: Industrial Segment
End Market Environment by Geography Industrial Segment Strong Cost Controls, Growth in Services Industrial End Market Conditions Continue to Decline in All Regions North America Europe Latin America Asia Pacific 5
Slide 6: Improved Operating Performance in Q1 Despite Continued Volatility and Mixed Markets
Improved Operating Performance in Q1 Despite Continued Volatility and Mixed Markets Revenue and Operating Margin • Adjusted EPS from continuing ops of $0.50, up 32%, exceeded prior guidance +0.2% • Revenue up 0.2%, +2% organic $2,888M $2,894M Strong organic growth in both residential +2% and N. Am
Slide 7: Q1 2016 Guidance-to-Actual EPS Bridge
Q1 2016 Guidance-to-Actual EPS Bridge Adjusted EPS Guidance Continuing Operations $0.33 to 0.38 Midpoint 0.36 Price/ Material deflation 0.06 Productivity/Other inflation 0.02 Cost savings and controls 0.03 Currency, share count and other income 0.03 Adjusted Continuing EPS $0.50 Q1 Restructuring (0.
Slide 8: Q1 2016 Organic Orders Up 4%
Q1 2016 Organic Orders Up 4% • Climate bookings up 4%, +6% organic – Commercial HVAC organic Y-O-Y bookings up high-single digits; Reported Organic • up high-single digits in N. America; % Change • up low-teens in Asia; Q1 2015 3% 5% • up high-single digits Europe • down low-single in Middle East –
Slide 9: Q1 Segment Organic Revenue by Region
Q1 Segment Organic Revenue by Region North America Europe Climate Climate Industrial Industrial Revenue Reported Organic Middle East change Y-O-Y Climate +3% +4% Climate Industrial (7%) (5%) Industrial Total 0.2% 2.1% Latin America Asia Climate Climate Industrial Industrial 9
Slide 10: Q1 2016 Operating Margin up 1.6 Percentage Points
Q1 2016 Operating Margin up 1.6 Percentage Points Highlights • Strong operating leverage • Positive volume/mix offset negative currency impact • Ongoing productivity gains partially offset by other inflation 1.6 0.1 (0.2) 7.5% 5.9% 0.1 Acquisition step up* 0.4 Investment/other (0.4) Restructuring (0
Slide 11: Climate Segment: Improved Margins with 4% Organic Growth
Climate Segment: Improved Margins with 4% Organic Growth Revenue and Operating Margin • Commercial HVAC organic revenues up mid-single digits +3% $2,214M – Organic revenues up low-teens in N. America $2,159M – Up mid-single digits in Europe and L. America, flat in Asia and down in the Middle East +4
Slide 12: Industrial Segment: Cost Containment Actions Partially Offset Soft End Markets and Currency
Industrial Segment: Cost Containment Actions Partially Offset Soft End Markets and Currency Revenue and Operating Margin • Compression-related Products – Organic revenues down low-single digits; completes down mid-single digits due to sharp $729M (7%) declines in large compressors $681M – Parts and
Slide 13: Strong Balance Sheet and Cash Flow Exiting Q1
Strong Balance Sheet and Cash Flow Exiting Q1 $Mil Q1 15 Q2 15 Q3 15 YE 15 Q1 16 Cash 734 780 652 737 613 Debt 4,521 4,372 4,550 4,218 4,473 Net Debt 3,787 3,592 3,898 3,481 3,860 $Mil Q1 2015 Q1 2016 Inventory Turns 5.2X 5.1X Receivables (DSO) 69.2 67.9 Payables (DPO) 59.3 60.0 Working Capital % Re
Slide 14: Dynamic Capital Allocation Focused on Delivering High Returns
Dynamic Capital Allocation Focused on Delivering High Returns Strategic Business Maintain Balance Sheet Dividend Payout Investment at BBB Metrics Consistent with Peers Ongoing No meaningful debt Increased to $1.28 in 2016, +10% maturities until 2018 24% annual CAGR 2011 to 2016 Acquisitions
Slide 15: 2016 Forecast for Mixed End-Market Performance
2016 Forecast for Mixed End-Market Performance End Markets Organic Revenue Updated Americas EMEA Asia Prior Guidance Guidance Up mid-single Commercial HVAC Up low-single digits digits Up high-single Residential HVAC Up mid-single digits digits Transport ~Flat Small increase Compression- Down low-sin
Slide 16: 2016 Revenue and Operating Margin Guidance by Segment
2016 Revenue and Operating Margin Guidance by Segment Prior Guidance Updated Guidance Climate ‒ Revenue Reported 1% to 3% 2% to 4% ‒ Revenue Organic 3% to 5% 4% to 6% Adjusted Operating Margin 13.25% to 13.75% 14.0% to 14.5% Industrial ‒ Revenue Reported -4% to -2% -6% to -4% ‒ Revenue Organic -1% t
Slide 17: Guidance 2016: Full-year Adjusted EPS Increased to $3.95 to $4.10
Guidance 2016: Full-year Adjusted EPS Increased to $3.95 to $4.10 Full Year Q2 Y-O-Y reported revenue change Flat to 2% 2% to 4% • Organic 2% to 4% 4% to 6% • Currency -2% -2% EPS continuing – reported $5.39 to $5.54 $2.75 to $2.80 Gain on Hussmann sale $1.49 $1.49 Restructuring – add back $(0.05) $
Slide 18: Appendix
LEY Ingersoll Rand. Appendix
Slide 19: Q1 Organic Revenue Up 2% Year-Over-Year
Q1 Organic Revenue Up 2% Year-Over-Year Reported 2014 2015 2016 FY Q1 Q2 Q3 Q4 FY Q1 Climate 5% 6% 2% 4% 2% 3% 3% Industrial 3% 7% (1%) (2%) 5% 2% (7%) Total 4% 6% 2% 3% 3% 3% Flat Organic 2013 2014 2015 2016 FY Q1 Q2 Q3 Q4 FY Q1 Climate 6% 9% 5% 8% 5% 7% 4% Industrial 3% 4% (4%) (2%) (2%) (1%) (5%)
Slide 20: Q1 Reported Revenue Up 0.2% and Organic Up 2%
Q1 Reported Revenue Up 0.2% and Organic Up 2% Segment Revenue Change Reported 3% Organic* Climate 4% -7% Industrial -5% *Organic revenue excludes acquisitions and currency Geographic Revenue Change 2% Americas U.S. Organic +3% 4% Europe, Middle -5% East, Africa -3% Reported Organic* -4% Asia ~Flat *
Slide 21: Q1 2016 Y-O-Y Revenue Change
Q1 2016 Y-O-Y Revenue Change Reported Organic Climate - Commercial HVAC + Low-single + Mid-single - Transport Neg. Low-single Down Slightly - Residential HVAC + Mid-single + Mid-single Total Climate 3% 4% Industrial - Compression-related Products Neg. Mid-single Neg. Low-single - Industrial Products
Slide 22: Q2 2016 Revenue Guidance ~$3.7B; Adjusted EPS $1.27 to $1.32
Q2 2016 Revenue Guidance ~$3.7B; Adjusted EPS $1.27 to $1.32 2015 Adjusted EPS Continuing Operations $1.20 Operations 0.17 to 0.22 Lower share count 0.03 Currency (0.03) Investments (0.04) Tax rate/other (0.06) Adjusted EPS Continuing $1.27 to $1.32 2016 forecast restructuring costs (0.01) Hussmann
Slide 23: am) Ingersoll Rand.
am) Ingersoll Rand.