Slide 1: Investor Briefing
Investor Briefing December 14, 2020 1
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 our future performance, the COVID-19 global pandemic, capital deployment (including the amount and timing of our dividends, our share repurchase
Slide 3: Investor Briefing Agenda
Investor Briefing Agenda 10:00-10:10 Introduction Zac Nagle, VP Investor Relations Trane Technologies 10:10-10:40 reimagined Mike Lamach, Chairman and Chief Executive Officer Chris Kuehn, SVP and Chief Financial Officer Driving growth and margin 10:40-11:00 expansion through innovation Dave Re
Slide 4: Trane Technologies: Reimagined to Unlock Our Full Potential
Trane Technologies: Reimagined to Unlock Our Full Potential 4
Slide 5: Trane Technologies Reimagined: Key Messages for the Day
K E Y M E S S A G E S F O R T H E D AY The New Trane Technologies: Reimagined to Unlock Our Full Potential 1 Sustainability innovation fuels our growth 2 Exceptional performance maximizes our margins 3 Structural transformation unlocks our potential Customer-focused innovation Relentlessly focused o
Slide 6: Agenda
Agenda Trane Technologies reimagined Strengths we are leveraging Clear priorities to maximize our potential 6
Slide 7: Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise
TRANE TECHNOLOGIES REIMAGINED Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise Essence of a Credibility of a Startup Market Leader Purpose-driven alignment + Long track record of execution Fit for purpose organizational design Trusted industry & technical expertise Strategic c
Slide 8: Why Pure Play Matters? – Purpose Drives Performance
TRANE TECHNOLOGIES REIMAGINED Why Pure Play Matters? – Purpose Drives Performance 1 World class climate innovator relentlessly reinvesting to bend the curve on climate change 2 Lean-based, customer-focused model 3 Increased speed and agility in the marketplace 100% focus on sustainability drives dif
Slide 9: Diversified Global Climate Leader with Increasing Aftermarket Business
T R A N E T E C H N O L O G I E S T O D AY Diversified Global Climate Leader with Increasing Aftermarket Business Americas EMEA Asia Pacific Transport Transport Transport Refrigeration Refrigeration Refrigeration Total Total Total $10.1B $1.8B $1.3B Sales Sales Sales Residential Commercial HVAC Comm
Slide 10: Agenda
Agenda Trane Technologies reimagined Strengths we are leveraging Clear priorities to maximize our potential 10
Slide 11: What Differentiates Trane Technologies – Sustainability Leader
What Differentiates Trane Technologies – Sustainability Leader Leveraging Culture of Performance Excellence Culture of Sustainability 1 Leader 2 Performance Excellence 11
Slide 12: Global Megatrends Continue to Intensify – Demanding Bold Action
S U S TA I N A B I L I T Y L E A D E R Global Megatrends Continue to Intensify – Demanding Bold Action Heating and Cooling Food Loss GHG Emissions Buildings Global emissions from heating / Global emissions Combined share of cooling buildings* come from food loss / waste* global emissions 15% + 10% =
Slide 13: Innovative Solutions to Lead a Movement to Reduce GHG Emissions
S U S TA I N A B I L I T Y L E A D E R Uniquely Positioned with Innovative Solutions to Lead a Movement to Reduce GHG Emissions Business Key Actions We Delivery on the Bending as Usual are Taking Gigaton Challenge the Curve % Global Carbon Emissions (CO2e) % Global Carbon Emissions (CO2e) from Heati
Slide 14: Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction
S U S TA I N A B I L I T Y L E A D E R Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction SOCIAL BENEFITS FINANCIAL BENEFITS Defines Our Culture Focuses Business Priorities Generates uplifting culture that builds More targeted investments engagement and empowers people Drives innovativ
Slide 15: Highly Regarded ESG Performance
S U S TA I N A B I L I T Y L E A D E R Highly Regarded ESG Performance 10 Years Listed on North America Index #66 On Corporate Knights Top 200 public companies ranked by clean revenue 61% Higher score than industrial machinery average Gold Medal Winner 35th annual award for International Achievement
Slide 16: Purpose Alignment Drives Uplifting Culture
S U S TA I N A B I L I T Y L E A D E R Purpose Alignment Drives Uplifting Culture 1st in our industry to sign on to Paradigm for Parity – A Call to Action for Gender Equality Founding Member OneTen coalition to hire 1 million Black Americans 2nd Consecutive Year Forbes Best Employers for Diversity J
Slide 17: What Differentiates Trane Technologies – Culture of Performance Excellence
What Differentiates Trane Technologies – Sustainability Leader Leveraging Culture of Performance Excellence Culture of Sustainability 1 Leader 2 Performance Excellence 17
Slide 18: Significantly Exceeded Revenue, EPS, Free Cash Flow and Cash Flow ROIC Targets
C U LT U R E O F P E R F O R M A N C E E X C E L L E N C E Significantly Exceeded Revenue, EPS, Free Cash Flow and Cash Flow ROIC Targets Set at 2017 Investor Day Performance Through 2019 Target Actual Target Met Climate organic revenue growth (CAGR)* ~4.5% 8% Adj. EPS growth (CAGR)** 11% - 13% 19
Slide 19: Driving Sustained Growth and Operating Margin Improvement 2017-2019
C U LT U R E O F P E R F O R M A N C E E X C E L L E N C E Driving Sustained Growth and Operating Margin Improvement 2017-2019 ~8% ~19% CAGR CAGR $6.00 Revenue* Adjusted ($B) EPS** $4.00 $2.00 2017 2018 2019 Avg. = +90 bps 106% FCF % of Adjusted Adj. Net EBITDA Earnings** Margin* * 2017, 2018 and 20
Slide 20: Long Track Record of Disciplined and Balanced Capital Deployment
C U LT U R E O F P E R F O R M A N C E E X C E L L E N C E Long Track Record of Disciplined and Balanced Capital Deployment (2016 to 2019) Dividends CAPEX • Capex lite business model • ~16% CAGR dividend per share • ~1.7% of revenue • Long history of growing dividend ~23% ~13% $7.7B* ~26% ~38% Share
Slide 21: Agenda
Agenda Trane Technologies reimagined Strengths we are leveraging Clear priorities to maximize our potential 21
Slide 22: 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 23: Business Transformation Delivers $300M in Cost Savings
CLEAR PRIORITIES Business Transformation Delivers $300M in Cost Savings to Fund Continued Market Outgrowth With 25% Sustainable Leverage Sustainable Operating High Performance Flywheel Leverage Improvement 1 Increased reinvestment in 25% + innovation 4 2 16% Sustainable Above market leverage (25% gr
Slide 24: Driving Growth and Margin Expansion Through Innovation and Performance Excellence
Driving Growth and Margin Expansion Through Innovation and Performance Excellence 24
Slide 25: Agenda
Agenda Track record of margin improvement Priorities to drive growth and margin expansion Long-term valuation creation framework 25
Slide 26: Continuing Long Record of Driving Margin Expansion
Continuing Long Record of Driving Margin Expansion Strong Record Last 3 Years Key Drivers (Adj. EBITDA Margin %)* • Margin improvement despite challenging cost +90 15.2% impacts from material inflation and tariffs bps • Uplifting, people-focused culture • Lean approach focused on continuous 14.6% im
Slide 27: Proven Business Operating System Delivers Results
Proven Business Operating System Delivers Results Business Operating System Results 1 2 • World class sales, service capabilities / offerings Aligns resources Empowers • Sustained market outgrowth for customer people to solve value problems • Margin expansion • Continuous improvement and sustainable
Slide 28: Agenda
Agenda Track record of margin improvement Priorities to drive growth and margin expansion Long-term valuation creation framework 28
Slide 29: Three Focus Areas to Drive Growth and Margin Expansion
Three Focus Areas to Drive Growth and Margin Expansion 1. Accelerate Innovation 2. Deliver Superior 3. Transform Our Commercialization Operational Platform 29
Slide 30: Megatrends are Powerful Drivers of Growth
1 . I N N O VAT I O N Megatrends are Powerful Drivers of Growth and Accelerate Need for Innovative Trane Technologies’ Solutions Continuing Megatrends Accelerating Megatrends Climate Urbanization Resource Demographics Indoor Digital Change Scarcity Environmental Connectedness Quality Driving Sustain
Slide 31: Deep Sustainable Innovation Pipeline to Drive Growth
1 . I N N O VAT I O N Deep Sustainable Innovation Pipeline to Drive Growth with Compressed Cycle Time from Idea to Launch Idea Concept Experiment Pilot Launch Initiatives Include: • Heat pump technology • Application of next generation low • Digital enabled services • Electrification of transport gl
Slide 32: Three Focus Areas to Drive Growth and Margin Expansion
Three Focus Areas to Drive Growth and Margin Expansion 1. Accelerate Innovation 2. Deliver Superior 3. Transform Our Commercialization Operational Platform 32
Slide 33: Key Commercial Initiatives to Drive Growth and Expand Margins
2 . S U P E R I O R C O M M E R C I A L I Z AT I O N Key Commercial Initiatives to Drive Growth and Expand Margins Innovative Products Built Highly Trained, Differentiated TCO on Core Technologies Consultative Sales Force Benefits Customers • Materials & Chemistry • Innovators for our customers • De
Slide 34: Case Study: Advancer, Latest Innovation in European Trailer Refrigeration
2 . S U P E R I O R C O M M E R C I A L I Z AT I O N Case Study: Advancer, Latest Innovation in European Trailer Refrigeration Unique Advantages Include Customer Benefits Include Fully variable airflow for precise cargo temperature control Best in class electrical and fuel efficiency for lowest oper
Slide 35: Case Study: Combining Cooling and Heating
2 . S U P E R I O R C O M M E R C I A L I Z AT I O N Case Study: Combining Cooling and Heating can Change an Industry with an Exponential Increase in Efficiency and Reduction in GHG Emissions Trane Technologies Opportunity Customer Benefits Include Electric single unit to heat and cool buildings inc
Slide 36: Case Study: Indoor Air Quality Expertise Drives Value Capture Opportunity
2 . S U P E R I O R C O M M E R C I A L I Z AT I O N Case Study: Indoor Air Quality Expertise Drives Value Capture Opportunity Unique Advantages Include Customer Benefits Include ~100 years expertise managing and improving IAQ Comprehensive IAQ assessments for data driven recommendations Turn-key im
Slide 37: Three Focus Areas to Drive Growth and Margin Expansion
Three Focus Areas to Drive Growth and Margin Expansion 1. Accelerate Innovation 2. Deliver Superior 3. Transform Our Commercialization Operational Platform 37
Slide 38: The Structural Transformation of Trane Technologies: Four Focus Areas
3 . O P E R AT I O N A L T R A N S F O R M AT I O N The Structural Transformation of Trane Technologies: Four Focus Areas 1 2 3 4 Fit For Purpose Strategic Choice Repositioning Supply Chain Organizational Budgeting IT Excellence Model Transformed Platform • Lean-based, customer-focused organizationa
Slide 39: Fit-For-Purpose Organizational Model – More Focused, Less Complex
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – O R G A N I Z AT I O N 1 Fit-For-Purpose Organizational Model – More Focused, Less Complex Actions Outcomes Align Realigned for customer focus and regionally agility with G&A workforce to regions Redeployed functional Strengthen responsibilities
Slide 40: Strategic Choice Budgeting Delivers Structural Cost Reductions
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – S T R AT E G I C B U D G E T I N G 2 Strategic Choice Budgeting Delivers Structural Cost Reductions Aligned with Climate-Focused Strategy Clean Sheet Approach Outcomes Climate Focus • Clean sheet framework All spend aligns with climate-focused pr
Slide 41: Ahead of Plan to Reduce Fixed Costs
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – F I X E D C O S T S 1 2 Ahead of Plan to Reduce Fixed Costs from Fit for Purpose Organization and Strategic Choice Budgeting Original Updated Total Fixed Cost Reduction1 Cost Reduction Plan Cost Reduction Plan Total 2021 Savings One year early $1
Slide 42: Repositioning IT to Fuel Growth Supports Further Margin Expansion
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – R E P O S I T I O N I N G I T 3 Repositioning IT to Fuel Growth Supports Further Margin Expansion Repositioned Outcome • IT redeployed closer to customer with direct Reimagine role accountability to business and optimized spans of technology and
Slide 43: Supply Chain Excellence Initiatives Support Further Margin Expansion
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – S U P P LY C H A I N 4 Supply Chain Excellence Initiatives Support Further Margin Expansion Key Initiatives Best in Class Benchmark Digitization of Supply Chain Accelerating deployment of sourcing productivity levers Deploying advanced eProcureme
Slide 44: Repositioned IT and Supply Chain Excellence Deliver Additional $160M
3 . O P E R AT I O N A L T R A N S F O R M AT I O N – I T / S U P P LY C H A I N 3 4 Repositioned IT and Supply Chain Excellence Deliver Additional $160M Repositioned IT / Repositioned IT Supply Chain Excellence Supply Chain Savings Reimagine role of technology Best in Class Digitization of $160M Re
Slide 45: Agenda
Agenda Track record of margin improvement Priorities to drive growth and margin expansion Long-term valuation creation framework 45
Slide 46: Total Transformation Savings ~ $300M Annually by 2023
BRINGING IT ALL TOGETHER 1 2 3 4 Total Transformation Savings ~ $300M Annually by 2023 1 2 3 4 Fit For Purpose Strategic Choice Repositioning Supply Chain Organizational Model Budgeting IT Excellence Repositioned IT & Prior Fixed Cost Savings Supply Chain Savings $140M (Highlighted with 3rd Quarter
Slide 47: $300M Transformation Savings Supports Continued Market Outgrowth
B R I N G I N G I T A L L T O G E T H E R : L O N G - T E R M VA L U E C R E AT I O N F R A M E W O R K $300M Transformation Savings Supports Continued Market Outgrowth & Sustainable Leverage of 25% Sustainable Operating High Performance Flywheel Leverage Improvement 1 Increased reinvestment in 25%
Slide 48: 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 49: Trane Technologies Reimagined: Key Messages for the Day
K E Y M E S S A G E S F O R T H E D AY The New Trane Technologies: Reimagined to Unlock Our Full Potential 1 Sustainability innovation fuels our growth 2 Exceptional performance maximizes our margins 3 Structural transformation unlocks our potential Customer-focused innovation Relentlessly focused o
Slide 50: Appendix
TRANE TECHNOLOGIES
Slide 51: Feedback on Today’s Event
Feedback on Today’s Event Thank you for joining us on our 2020 Investor Briefing. We hope you found it informative. Your feedback is important to us, so we would appreciate it if you could fill out a quick survey - it should take only 2-3 minutes. The answers are all anonymous. This survey will be o
Slide 52: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Non-GAAP Measures associated with pre-RMT transaction Ingersoll Rand enterprise results Organic revenue is defined as GAAP net revenues adjusted for the impact of currency and acquisitions. Currency impacts on net revenues are measured by applying the prior year’s forei
Slide 53: Trane Technologies Core Sustainability Strategy: Challenge Possible
2 0 3 0 S U S TA I N A B I L I T Y C O M M I T M E N T S Trane Technologies Core Sustainability Strategy: Challenge Possible Global Megatrends Our Commitments The Gigaton Challenge Leading by Example Opportunity for All Achieving carbon neutral Reducing one gigaton of carbon Creating gender parity i
Slide 54: Speaker Biographies
Speaker Biographies TRANE TECHNOLOGIES
Slide 55: Mike Lamach
Mike Lamach Chairman and Chief Executive Officer Mike Lamach is Chairman and Chief Executive Officer of Trane Technologies plc, a global climate innovator focused on sustainable solutions for buildings, homes and transportation. Trane Technologies was launched in 2020 upon the completion of a strate
Slide 56: Chris Kuehn
Chris Kuehn Senior Vice President and Chief Financial Officer Chris Kuehn is senior vice president (SVP), chief financial officer (CFO) of Trane Technologies plc, responsible for all finance functions, including investor relations, financial planning and analysis, treasury, strategic business unit f
Slide 57: Dave Regnery
Dave Regnery President and Chief Operating Officer Dave Regnery is president and chief operating officer of Trane Technologies plc and a member of the enterprise leadership team. In this role, Dave oversees the company's strategic businesses, including leading climate brands Trane® and Thermo King®
Slide 58: Ray Pittard
Ray Pittard Transformation Office Leader Ray Pittard is the transformation office leader of Trane Technologies plc. In this role, Ray leads efforts to transform Trane Technologies into an efficient, more customer focused company that unlocks value for customers and shareholders. Ray joined the compa
Slide 59: Zac Nagle
Zac Nagle Vice President, Investor Relations Zac Nagle is vice president of investor relations at Trane Technologies. Mr. Nagle joined Ingersoll Rand in July 2016. Trane Technologies was launched in 2020 upon the completion of a strategic transaction that created two leading companies – Trane Techno