Investor Presentation Feb. 2021...2021/02/02 · pandemic on our business, our suppliers and our customers, global economic conditions taking into account the global COVID -19 pandemic,

Investor PresentationFebruary 2021

Safe Harbor

2

This presentation includes “forward-looking statements” which are statements that are not historical facts, including statements that relate to our future performance, statements relating to the continued impact of the COVID-19 global pandemic, capital deployment including the amount and timing of our dividends, our share repurchase program including the amount of shares to be repurchased and the timing of such repurchases and our capital allocation strategy including projected acquisitions; our projected free cash flow and usage of such cash; our available liquidity; performance of the markets in which we operate; restructuring activity and cost savings associated with such activity; our projected financial performance and targets including assumptions regarding our effective tax rate.

These forward-looking statements are based on our current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from our current expectations. Such factors include, but are not limited to, the impact of the global COVID-19 pandemic on our business, our suppliers and our customers, global economic conditions taking into account the global COVID-19 pandemic, disruption and volatility in the financial markets due to the COVID-19 pandemic, improvement in market conditions (if any) with global vaccine administration, the outcome of any litigation, the outcome of the Chapter 11 proceedings for our deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC, demand for our products and services, and tax law changes and interpretations. Additional factors that could cause such differences can be found in our Form 10-K for the year ended December 31, 2020, as well as our subsequent reports on Form 10-Q and other SEC filings. We assume no obligation to update these forward-looking statements.

This presentation also includes non-GAAP financial information which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. The definitions of our non-GAAP financial information are included as an appendix in our presentation and reconciliations can be found in our earnings releases for the relevant periods located on our website at www.tranetechnologies.com. Unless otherwise indicated, all data beyond the fourth quarter of 2020 are estimates.

http://www.tranetechnologies.com/

1 2 3 4

C L E A R P R I O R I T I E S

Focused Strategy Delivers Differentiated Shareholder Returns

Grow Marginsand Cash Via

MaximizeValue As

ContinueWith

Strong operating system and performance culture

Uplifting culture – integrity, ingenuity, community & engagementPowerful cash flow

SustainableInnovation

WinThrough

ExecutionExcellence

FocusedClimate Co.

Dynamic Capital Allocation

Strong Foundation

3

T R A N E T E C H N O L O G I E S T O D A Y

Pure-Play Climate Control Business with Leading Brands and Market Positions; High Aftermarket Mix

All figures are FY 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations.4

Regional Segments

Americas APAC

67% 33%Equipment Aftermarket

Revenue Streams

EMEA

Total$12.5BSales

Commercial HVAC

Transport Refrigeration

Residential HVAC

Franchise Brands

S U S T A I N A B I L I T Y L E A D E R

Global Megatrends Continue to Intensify – Demanding Bold Action

5

Heating and Cooling Buildings

Global emissions from heating / cooling buildings*

Food Loss

Global emissions come from food loss / waste*

GHG Emissions

Combined share ofglobal emissions

* Source: Project Drawdown and BCG

=+15% 10% 25%


Uniquely Positioned with Innovative Solutions to Lead a Movement to Reduce GHG Emissions

Reduce customer carbonfootprint by

% Global Carbon Emissions (CO2e) from Heating and Cooling Buildings

and Food Loss

Businessas Usual

Delivery on the Gigaton Challenge

Key Actions We are Taking

1GIGATON of CO2e

(1 billion metric tons) by 2030

Today 2030

~25%

~35%

Accelerating clean technologies

Addressing system energy efficiency

Reducing food loss from cold chain

Transitioning out of high GWP refrigerants

Like minded companies to join movement

Bendingthe Curve

Today 2030

% Global Carbon Emissions (CO2e) from Heating and Cooling Buildings

and Food Loss

6


Our Sustainability Purpose Yields Benefits Beyond CO2e Reduction

7

Creates purpose driven performance

Generates uplifting culture that builds engagement and empowers people More targeted investments

Simplifies business model

More value to shareholders, customers and employees

Drives innovative solutions

Defines Our Culture Focuses Business Priorities

Increases speed and agility

SOCIAL BENEFITS FINANCIAL BENEFITS

Improves productivity and executionFosters employee retention and safety

Top Decile GloballyIdentified as “Industry Leader”

61%Higher score than industrial machinery average

#26On Corporate Knights Top 100 Global Most Sustainable Corporations

Gold Medal Winner35th annual award for International Achievement in Sustainable Development

9 YearsListed on most admired companies list

A-Climate Change disclosure submitted 10+ consecutive years

10 YearsListed on North America Index


Highly Regarded ESG Performance

8

1st in our industryto sign on to Paradigm for Parity – A Call to Action for Gender Equality

2nd Consecutive Year Forbes Best Employers for Diversity

Joined 150of America’s leading CEOs in a pledge to diversity and inclusion in the workplace

Top Quartileof all companies

Employee Engagement


Purpose Alignment Drives Uplifting Culture

Founding Membercoalition to hire 1 million Black AmericansOneTen

9

The New Trane Technologies: Reimagined to Unlock Our Full Potential

10

Trane Technologies Reimagined:Streamlined, Customer-Focused Climate Innovator

321Relentlessly focused on leaning out processes and driving excellent execution

Customer-focused innovation 100% tied to sustainability secular mega trends

Redesigned to maximize our value as a pure-play climate focused innovator

Sustainability innovation fuels our growth

Exceptional performance maximizes our margins

Structural transformationunlocks our potential

Essence of a

Startup

Purpose-driven alignment

Fit for purpose organizational design

Strategic choice budgeting

Built for speed

T R A N E T E C H N O L O G I E S R E I M A G I N E D

Uniquely Positioned as IPO-like Climate Innovator with Proven Expertise

11

+

Credibility of a Market Leader

Long track record of execution

Trusted industry & technical expertise

Deep customer relationships

Strong performance culture


Why Pure Play Matters? – Purpose Drives Performance

12

Lean-based, customer-focused model2

Increased speed and agility in the marketplace3

World class climate innovator relentlessly reinvesting to bend the curve on climate change1

Strong competitive position with full spectrum of product and service capabilities4Global reach provides scale to deliver next generation technologies through unequaled channel expertise5

100%focus on sustainability

drives differentiated results for shareholders

Sustainable OperatingLeverage Improvement


Business Transformation Delivers $300M in Cost Savings by 2023 to Fund Continued Market Outgrowth With 25% Sustainable Leverage

Increased reinvestment in

innovation

1

2Above market growth profile

Improved cost structure

Sustainable leverage (25% plus) & margin improvement

4

3

High Performance Flywheel

16%

2017-2019 Actual* Transformational Model

13

25% +

* Operating leverage calculated based on change in historical Climate segment adjusted operating income less adjusted unallocated corporate costs divided by change in Climate segment revenues, Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION

Digital Connectedness

14

I N N O V A T I O N

Megatrends are Powerful Drivers of Growth and Accelerate Need for Innovative Trane Technologies’ Solutions

Climate Change

Urbanization ResourceScarcity

Demographics IndoorEnvironmental

Quality

Driving SustainabilityAccelerating need for innovative climate sustainability solutions

Accelerating MegatrendsContinuing Megatrends

Trane Technologies Innovation AdvantageLeader in innovative climate solutions at nexus of

environmental sustainability and impact

Proven Business Operating System Delivers Results

15

• World class sales, service capabilities / offerings

• Sustained market outgrowth• Margin expansion• Continuous improvement and

sustainable performance

Results

Aligns resources for customer value

1 2Empowers people to solve problems

Embeds sustainability in our operations

Accelerates profitable growth

4 3

Business Operating System

Adjusted EBITDA Margin*

FCF % of Adj. Net

Earnings**

C U L T 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 2017-2020

* 2017, 2018, 2019 and 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations** 2017 and 2018 free cash flow conversion history based on pre-RMT transaction consolidated Ingersoll Rand financial statements† 2018, 2019 and 2020 historical information restated to reflect Ingersoll Rand Industrial segment in discontinued operations. 2017 calculated based on historical Climate segment adj. op. inc. less adj. unallocated corporate costs divided by Climate segment revenues16

Adj. Op. Inc.

Margin

Revenue*($B)

$3

$6

$9

$12

2017 2018 2019 2020

~4%CAGR

0%

40%

80%

120%

160%

2017 2018 2019 2020

Avg. =116%

10%

12%

14%

16%

18%

2017 2018 2019 2020

+110bps

5%

7%

9%

11%

13%

2017 2018 2019 2020

+110bps

†

C U L T 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 2020)

* Historical information based on pre-RMT transaction consolidated Ingersoll Rand financial statements through 2019; 2020 reflects Trane Technologies.17

CAPEX

M&A

~25%

~13%

~36%

~26%

$8.8B*

~12% CAGR dividend per share. Long history of growing dividend.

Capex lite business model~1.6% of revenue

~$2.2B on 25 acquisitionsas of January 2021

Share Repurchase~$3.2 billion on share repurchases

Dividends

18

The markets we serve will continue to outgrow GDP fueled by long-term sustainability megatrends

Secular Tailwinds

Sustainability Focused Innovation

Margin Expansion

Financial Strength

We are positioned to outgrow the market and expand margins with market-leading sustainable innovations

Our execution excellence and transformational work position us to maximize margins and cash generation

Our strong balance sheet, exceptional cash generation and balanced capital allocation strategy deliver significant value to shareholders

I N S U M M A R Y

Positioned to Outperform. Consistently.

18

Non-GAAP Measures Definitions

Adjusted operating income in 2020 is defined as GAAP operating income plus restructuring costs and transformation costs. Adjusted operating income in 2019, 2018 and 2017 is defined as GAAP operating income plus restructuring costs.

Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.

Adjusted earnings from continuing operations attributable to Trane Technologies plc (adjusted net earnings) in is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus / minus certain adjustments applicable to each respective year such as restructuring costs, transformation costs, gain on M&A transaction, legacy legal liability adjustment, gain from deconsolidation of certain entities under Chapter 11, debt redemption premium and related charges, net of tax impacts as well as separation-related tax costs, tax reform/tax legislation adjustments and other U.S. and Non-U.S. discrete non-cash tax adjustments.

Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net less the gain on M&A transaction. Adjusted EBITDA in 2019, 2018 and 2017 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net.

Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues.

Free cash flow is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments forrestructuring costs and transformation costs.

Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. 2020) less the prior period (e.g. 2019), divided by the change in net revenues for the current period less the prior period.

19

Fourth-Quarter 2020 ResultsFebruary 5, 2021

1 2 3 4Grow Marginsand Cash Via

MaximizeValue As

ContinueWith

Strong operating system and performance culture

Uplifting culture – integrity, ingenuity, community & engagementPowerful cash flow

SustainableInnovation

WinThrough

ExecutionExcellence

FocusedClimate Co.

Dynamic Capital Allocation

Strong Foundation

C L E A R P R I O R I T I E S

Focused Strategy Delivers Differentiated Shareholder Returns

21

• Resilient financial performance highlights strength of focused strategy, business operating system & high-performance culture− Broad-based outgrowth / share gain across challenging global end-markets− Strong Q4 bookings growth in all segments, Enterprise revenues ~flat, with strong margin expansion & EPS growth− FY 2020: +2% bookings growth, -5% rev decline, ~13% deleverage, +20 bps adj. EBITDA margins− Exceptional 2020 FCF of $1.7B, 158% conversion – strengthens balance sheet, adds capital allocation capabilities / optionality

• Aggressive offense through downturn to emerge even stronger post-pandemic− Maintained high levels of business reinvestment supporting greater innovation & market outgrowth / strong leverage− Further extended pure-play competitive advantages (IAQ, cold storage, leading sustainability solutions)

• RMT completed Q1; Business transformation savings accelerated; targeted savings 3X original $100M cost reduction target− Expected $300M total transformation savings by 2023 funds superior innovation & growth profile, sustainable strong leverage− Stranded / fixed cost take-out of $100M achieved in 2020; on track for $140M run-rate savings in 2021 and $160M add’l savings by 2023− Strong performance culture maintained through downturn and transformation; world class employee engagement up in 2020 survey

• 2021 guidance reflects improving market conditions with expectation of global vaccine administration− 2021 revenue growth of 6.5% to 8.5%, adj. EPS of $5.30 – $5.50− Organic revenue growth of 5-7% with ~30% leverage (better than ~25% long term target)

• Exceptional FCF, financial position, liquidity and balance sheet optionality support balanced capital allocation strategy• Deployed ~$1.2B in capital 2020; expect to deploy ~$2B+ in capital in 2021

• Purpose-driven sustainability strategy unchanged & focused on long-term secular tailwinds towards sustainability megatrends− Leadership in addressing these challenges delivers top-tier financial performance & differentiated shareholder returns

Strong Performance in Q4 and 2020 Against Challenging Covid-19 Backdrop

* Includes certain Non-GAAP financial measures. See the company’s Q4 2020 earnings release for additional details and reconciliations.

Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION22

* Includes certain Non-GAAP financial measures. See the company’s Q4 2020 earnings release for additional details and reconciliations.** Reflects COVID-19 pandemic downturn scenarios, May 5, 2020 (Q1), July 29, 2020 (Q2) and October 28, 2020 (Q3)

Net Revenue

Deleverage*

Free Cash Flow*

2020 Results

-5%

~13%

158% Adj. Net Earnings

2020 Guidance (Q3)**

-6%

Better Than Gross Margin %

≥ 125% Adj. Net Earnings

• Resilient revenue, end market outgrowth and strong margin performance• Modest deleverage of ~13%, well below GM% target• Exceptional free cash flow of ~$1.7B, or 158% of adj. net earnings • Successful RMT & transformation driving savings / fueling investment in 2020

2 0 2 0 Y E A R I N R E V I E W

Strong Performance and Improving Outlooks Throughout 2020 Despite COVID-19 Impacts

2020 Guidance (Q2)**

-10% to -15%

~Gross Margin %


2020 Scenarios (Q1)**

-15% to -25%

~Gross Margin %


23

Bookings Growth and ~Flat Revenues, Outpacing Weak End Markets

*Organic bookings and organic revenues exclude acquisitions and currency

Q4 Organic* Y-O-Y ChangeBookings Revenue

Enterprise + 3% - 1%

Americas + 2% + 1%

Commercial HVAC

Residential HVAC

Transport

EMEA + 9% - 6%

Commercial HVAC

Transport

Asia Pacific + 2% - 6%

Commercial HVAC

Transport

-

+

Americas • CHVAC bookings / revs down MSD on tough comps (Bookings

up ~25% across 2018/19; N.A. revs up high-teens 4Q19); Svcsperformance stronger than equipment; Svcs revs up LSD; Cont’d impacts from low building occupancy / school / other closings; IAQ demand remains healthy

• Res HVAC revs up 20+% on strong end market demand; Strong backlog headed into 1Q21

• Transport bookings up 40+%, revs up LSD, outpacing largely soft transport markets (truck / trailer markets significantly lower in Q4)

EMEA• CHVAC bookings up high teens w/ growth in both equipment and

services; CHVAC revs down MSD• Transport bookings positive / revs down HSD, outpacing weak

transport market declines (trailer market down mid-teens)

Asia Pacific • CHVAC bookings up LSD. Revs down HSD. Bookings and rev

growth in China more than offset by decreases in rest of Asia driven by continued pandemic challenges

• Transport bookings and revs up MSD

+-

+-

-

+

++

+

-

+

+

Note: Information as of February 5, 2021 --- NOT AN UPDATE OR REAFFIRMATION

24

Net Revenue

13.0%

14.4%

Q4 '19 Q4 '20

$3,184 $3,179

Q4 '19 Q4 '20

10.9%

12.4%

Q4 '19 Q4 '20

-1%Organic

*Includes certain Non-GAAP financial measures. See the company’s Q4 2020 earnings release for additional details and reconciliations.**2019 restated to reflect Ingersoll Rand Industrial segment in discontinued operations.

E N T E R P R I S E

Consistent Execution Drives Strong Performance Despite Ongoing COVID-19 Impacts

Adj. Continuing EPS*

$0.92 $1.03

Q4 '19 Q4 '20

+12%

• Primarily driven by strong operating performance, higher op income, op margin expansion

• FY20 adj eff tax rate (20.2%) consistent w/ FY20 outlook of ~19% to ~20%

• Strong margin expansion despite modest revenue decline • Strong price / cost and productivity in every region more than offset COVID-19

related volume declines• Maintained high level of business reinvestment in safety, innovation, technology

• Resilient rev performance despite ongoing COVID-19 impacts; Res HVAC revs particularly strong

• CHVAC Americas and Asia Pacific svcs outperformed equip

• Transport Americas revs returned to growth in challenged markets

Adj. EBITDA %*

+140bps

Adj. Operating Margin*

+150bps

flat

25

Q 4 S E G M E N T R E S U L T S

Strong Execution, Cost Controls, Productivity, Positive Price / Cost Delivers Margin Expansion in Every Region

$MRevenue

Org. GrowthAdj. EBITDA%

vs PYAdj OI%vs PY Highlights

Amer

icas $2,386

+1%16.2%

+130 bps14.0%

+120 bps

• Market outgrowth, cost controls, productivity, price / cost drive margin expansion while maintaining high levels of business reinvestment

EMEA $465

-6%16.2%

+110 bps14.6%

+200 bps

• Strong execution / cost controls / productivity more than offset COVID-19 pandemic-related volume declines to deliver margin expansion

Asia

Pac

ific

$328-6%

18.2%+200 bps

17.7%+280 bps

• Strong execution / cost controls / productivity more than offset COVID-19 pandemic-related volume declines to deliver margin expansion

* Includes certain Non-GAAP financial measures. See the company’s Q4 2020 earnings release for additional details and reconciliations.26

M A R K E T U P D A T E

Expect Improving Market Conditions With Global Vaccine Administration in 2021


• Economic recovery varies by country, impacted by ongoing pandemic challenges• CHVAC cont’d underlying demand for sustainability focused products and services, however both equipment

and services markets remain challenging given COVID-19; expect improving markets with improved vaccine distribution / timing

• Transport mkts expected to emerge from downcycle in 2021 w/ ~8% weighted avg mkt growth expected

EMEA

Commercial HVAC • Svcs resilient, growing LSD in 4Q20 despite cont’d low building occupancy; 4Q20 revs down MSD (tough

comps vs 4Q19); IAQ remains long-term tailwind • End market indicators (ABI, Dodge, etc) remain soft, visibility limited by pandemic-related uncertainty• Expect improvement in 2H21 with improved vaccine distribution / timingResidential HVAC• Strong demand drove record bookings / revs in Q4; strong backlog entering Q1 • Expect more normalized growth in 2021; 2H21 tough comps given record 2020 bookings / revsTransport • Market expected to come out of deep downcycle with strong weighted avg mkt growth of ~26% in 2021 • Market growth begins to ramp in Q1; weighted avg mkt estimated growth of MSD to HSD (N.A. Trailer +10%)

Americas

• China market growth driven by cont’d strength in Data Center, Electronics, Pharma and Health Care• Rest of Asia slower to recover driven by continued pandemic challengesAsia Pacific


2 0 2 1 G U I D A N C E

Leveraging Value Creation Framework To Outgrow Markets With Strong Operating Leverage

Organic Revenues

+ 5% to + 7%*

Free Cash Flow = / > Adj. Net Earnings

• Guidance reflects current view of market conditions, improved pace of vaccine production, administration

• ~1.5% M&A growth(Up 6.5% to 8.5% w/ M&A)

Adj. EPS $5.30 to $5.50*($5.25 to $5.45 Organic)

• M&A modestly accretive in year 1 (~$0.05)

Operating Leverage Organic ~30% • Impact of transformation savings and higher

transport mix

*2021 FX unknown. FX revs leverage at translational OI% (~13% in 2020); ~1pt of FX rev growth = ~$0.05 EPS**See pg. 17 for additional details

w/ M&A


Q 1 2 0 2 1 G U I D A N C E

Strong Q1 Growth and Operating Leverage

Organic Revenues

~5%*

Other Items(for modeling purposes)

~$70M Corporate Costs~$60M Interest Expense~15% Adj. Eff. Tax Rate

~243M Share Count

• Strong organic growth• ~1.5% M&A growth• ~1.0% FX growth(Up ~7.5% w/ M&A & FX)

Operating Leverage

Organic ~30% to ~35%

• Anticipate FX revenues to leverage at translational OI % (~7% in Q1 2020); ~1.0 pts of FX rev growth = ~$0.01 EPS• Current exchange rates suggest ~1.0 pts of FX in Q1, albeit too early call

• Strong enterprise leverage (includes corporate)

• Transformation savings plus higher Transport mix

• Corp costs weighted to Q1 due to spend timing; seasonally higher stock based comp

• Tax rate seasonally low in Q1, majority stock based compensation vests in Q1


T R A N S F O R M A T I O N S A V I N G S

Fixed Cost Reduction Programs Delivered $100M Savings in 2020; On Track for $140M Run Rate Savings in 2021 & Total Transformation Savings ~ $300M Annually by 2023

1. Expenses Related to Achieving Cost Reductions $100M - $150M through 2021; ~$4M spent in Q4; ~$95M year to date 2020

Fit For Purpose Organizational Model

1

Strategic Choice Budgeting

2

RepositioningIT

3

Supply Chain Excellence

4

Fixed Cost Savings Repositioned IT & Supply Chain Savings

$140M $160M2021 Run Rate 2021-2023

$300MTotal Annual Savings1

2023

Expect ~1/3 savings in 2021 Expect ~2/3 in 2022 / 2023



Strong FCF Drives Continued Balanced Capital Deployment Strategy

1Invest forGrowth

• Strengthen the core business and extend product & market leadership

• Invest in new technology and innovation

• Fully invest in strategic, value-accretive M & A

2Maintain Healthy,

Efficient Balance Sheet

• Expect to deliver FCF ≥ 100% of adjusted net earnings

• Strengthening balance sheet

• Strong BBB investment grade rating offers optionality as markets evolve

3Return Capital to

Shareholders

• Expect to consistently deploy 100% of excess cash over time

• Pay competitive dividend and grow dividend at or above rate of earnings growth over time

• Repurchase shares with excess cash when intrinsic value provides high returns

31

32

2020• $507M dividends• $183M M&A (primarily channel acquisitions)• $300M debt retirement• $250M share repurchases

2021• ~$564M dividends, (increased 11% in Feb, $2.36 annualized)• ~$1B between M&A and share repurchases

• ~$100M add’l share repurchases through Feb 5, $350M Q4/Jan• $1B share repurchases for modeling purposes; ~241M Diluted Shares

• $425M debt retirement at maturities• Q1 $300M • Q3 $125M

Balanced Capital Deployment (2020 & 2021)

Resumption of Balanced Capital Allocation in 2020; Strong Deployment in 2021 After Full Business Reinvestment

Capital Allocation

~$1.2B

2020 2021 Est.

~$2B+


Topics of Interest

34

• ~1.5% revenue: ~80% / ~20%, Americas / EMEA

• ~$0.05 EPS accretion in 2021

• Utilizing proven playbook to integrate into Trane Technologies’ business operating system

• Accelerates Trane Technologies’ growth, end-to-end customer relationships

• Acquisition of high-value services business

3 CHVAC Channel Acquisitions Completed Through January 2021

T O P I C S O F I N T E R E S T

Recent Acquisitions


FY 2021 Revenue Adj. EPS Commentary

Organic + 5% to + 7% $5.25 to $5.45 • ~30% organic leverage; transformation savings plus higher Transport mix

Acquisitions ~1.5% ~$0.05 • ~5% OI contribution in year 1; impact of integration costs

Combined* + 6.5% to + 8.5% $5.30 to $5.50

*Includes certain Non-GAAP financial measures. See the company’s Q4 2020 earnings release for additional details and reconciliations.**Supports initiatives to deliver ~$300M in annualized savings by 2023 (3X initial $100M stranded cost target)


Strong 2021 Organic Leverage; Positive Impact from EPS Accretive M&A in First Year of Integration

*Anticipate FY FX revenues to leverage at translational OI% (~13% in 2020); ~1pt of FX rev growth = ~$0.05 EPS

• ~$220M Corporate Costs• ~$240M Interest Expense• ~19% to ~20% Adj. Eff. Tax Rate• ~241M Diluted Shares• ~$75M in transformation and other

restructuring costs (excluded from adj. EPS)**

Other Items


35

2020 Transport N.A. Market Results

Trailer / Truck / APU wtd avg

2020 Transport EMEA Market Results

Trailer / Truck wtd avg

• Trailer/Truck/APU: ~2/3rds of Total Transport Revenue• N.A. growth estimates up ~34%; • EMEA growth estimates up ~9%

• Marine/Bus/Rail/Air/Aftermarket (“all other”): ~1/3rd of Total Transport Revenue• N.A. and EMEA wtd avg. growth estimates both up +5% to +10%

• Total Transport: Truck/Trailer/APU/Marine/Bus/Rail/Air• Americas** weighted avg. growth estimate +26%***• EMEA** weighted avg. growth estimate +8%***

• Diversified Americas / EMEA business outperformed end-markets in 2020; Expect continued outperformance 2021

• Global vaccine storage/distribution remains developing opportunity as countries/states firm up needs/availability

Source: ACT / IHS / Company Estimates

2021 Transport N.A. Market Outlook*

Trailer / Truck / APU wtd avg

+34%2021 Transport EMEA

Market OutlookTrailer / Truck wtd avg

+9%

N.A. and EMEA 2021 markets expected to emerge from prolonged downcycle / COVID-19 pandemic

-23%

-33%


North America / EMEA Transport Markets Poised for Growth in 2021

N.A. and EMEA Market Results / Forecast

*Includes 2021 N.A. Trailer build fcst up ~39% (44.9K)

** Americas and EMEA represent ~50% and ~40% of global Transport revenues, respectively*** Weighted avg calculation assumes midpoint of “all other” range (7.5%)


36

The markets we serve will continue to outgrow GDP fueled by long-term sustainability megatrends

Secular Tailwinds

Sustainability Focused Innovation

Margin Expansion

Financial Strength

We are positioned to outgrow the market and expand margins with market-leading sustainable innovations

Our execution excellence and transformational work position us to maximize margins and cash generation

Our strong balance sheet, exceptional cash generation and balanced capital allocation strategy deliver significant value to shareholders

I N S U M M A R Y

Positioned to Outperform. Consistently.

37

Appendix

Appendix

2 0 3 0 S U S T A 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

One company can change an industry and one industry can change the world

– MIKE LAMACH, CHAIRMAN AND CEO

Global Megatrends Our Commitments

Material Issues to Focus Our Efforts

Targets Align with Global Priorities

The Gigaton ChallengeReducing one gigaton of carbon

emissions (CO2e) from our customers’ footprint by 2030

Leading by ExampleAchieving carbon neutral

operations, 10% absolute energy reduction, zero waste to landfill

and net positive water

Opportunity for All Creating gender parity in leadership,

workforce diversity, investing in STEM education

OperationsEmissions intensityRenewable energy

Water usageHeating electrified

Products and Services

Energy efficiency Low-emission products

Technology & innovationEmerging market innovations

Product life cycle

Supply ChainResponsible

sourcingSupplier diversity

EmployeesDiversity and

inclusionEthics and integrity

SafetyDevelopmentEngagement

CommunitiesAccess to cooling

Food and wellnessEducationWorkforce

development

GovernanceBoard oversight

Financial performancePublic policy

CLIMATE CHANGE

URBANIZATION

RESOURCE SCARCITY

DEMOGRAPHICS

DIGITAL CONNECTEDNESS

INDOOR AIR QUALITY (IAQ)

Zero Hunger2 Quality

Education4 GenderEquality5 Clean Water

& Sanitation6 Affordable & Clean Energy7 Decent Work

& Economic Growth8 Industry,

Innovation & Infrastructure9 Sustainable

Cities & Communities11 Responsible

Consumption & Production12 Climate

Action13

39

Q4 Organic Bookings Up 3% Year-Over-Year; Organic Revenues Down 1%

Organic*Bookings 2018 2019 2020

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FYAmericas +10% +18% +17% +27% +18% -2% -4% +2% -7% -3% +11% -5% +8% +2% +4%

EMEA +16% +10% -1% -5% +5% -9% +0% -2% -1% -3% -2% -20% +6% +9% -3%

Asia Pacific +10% +18% +0% +8% +9% +0% -6% +3% -5% -2% -17% -2% -5% +2% -6%

Total +11% +17% +12% +20% +15% -3% -4% +2% -6% -3% +6% -7% +7% +3% +2%

2013Organic* Revenue 2018 2019 2020

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FYAmericas +7% +8% +11% +11% +9% +12% +7% +10% +9% +10% -2% -13% +2% +1% -3%

EMEA +12% +11% +9% +1% +8% +1% -3% +3% +1% +1% -3% -15% -6% -6% -8%

Asia Pacific +13% +12% +4% +8% +9% +2% +0% -4% -1% -1% -34% -5% -2% -6% -11%

Total +8% +9% +10% +9% +9% +10% +5% +8% +7% +7% -5% -13% +50bps -1% -5%

*Organic revenues and bookings exclude acquisitions and currency40

Restructuring and Transformation Costs GAAP to Non-GAAP Adjustments

Restructuring and Transformation Costs• Restructuring costs of ~$4M included in Table 2 of the Q4 2020 earnings release includes ~$2M of restructuring costs

related to transformation activities as well as ~$2M of restructuring costs supporting other cost reduction programs, not directly related to transformation.

• Total transformation costs of ~$4M on slide 30 include both the ~$2M of restructuring transformation costs mentioned above and ~$2M of non-restructuring transformation costs also disclosed in Table 2 of the earnings release.

Costs Restructuring Transformation Slide 30 Total

Transformation-related (restructuring and other) $2M $2M $4M

Restructuring related to other cost reduction programs $2M $2M

Table 2 Total (Q4 2020 earnings release) $4M $2M $6M

41

Q4 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 bookings are measured by applying the prior year’s foreign currency exchange rates to the current period’s net revenues and bookings reported in local currency. This measure allows for a direct comparison of operating results excluding the year-over-year impact of foreign currency translation.

Adjusted operating income in 2020 is defined as GAAP operating income plus restructuring costs and transformation costs. Adjusted operating income in 2019 is defined as GAAP operating income plus restructuring costs.

Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.

Adjusted earnings from continuing operations attributable to Trane Technologies plc (adjusted net earnings) in 2020 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs and transformation costs less the gain on M&A transaction, net of tax impacts plus separation-related tax costs. Adjusted net earnings in 2019 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs, net of tax impacts plus separation-related tax costs.

Adjusted continuing EPS in 2020 is defined as GAAP continuing EPS plus restructuring costs and transformation costs less the gain on M&A transaction, net of tax impacts plus separation-related tax costs. Adjusted continuing EPS in 2019 is defined as GAAP continuing EPS plus restructuring costs, net of tax impacts plus separation-related tax costs.

Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net less the gain on M&A transaction. Adjusted EBITDA in 2019 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net.

Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues.

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Q4 Non-GAAP Measures Definitions

Free cash flow in 2020 and 2019 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs.

Working capital measures a firm’s operating liquidity position and its overall effectiveness in managing the enterprise’s current accounts.

• Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabilities that exclude short-term debt, dividend payables and income tax payables.

• Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of December 31) by the annualized revenue for the period (e.g. reported revenues for the three months ended December 31 multiplied by 4 to annualize for a full year).

Adjusted effective tax rate for 2020 is defined as the ratio of income tax provision less the net tax effect of adjustments for restructuring costs, transformation costs and the gain on M&A transaction less separation-related tax costs divided by earnings from continuing operations before income taxes plus restructuring costs and transformation costs less the gain on gain on M&A transaction. Adjusted effective tax rate for 2019 is defined as the ratio of income tax provision plus the tax effect of restructuring costs plus separation-related tax costs divided by earnings from continuing operations before income taxes plus restructuring costs. This measure allows for a direct comparison of the effective tax rate between periods.

Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q4 2020) less the prior period (e.g. Q4 2019), divided by the change in net revenues for the current period less the prior period.

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Documents

Investor Presentation Feb. 2021...2021/02/02 · pandemic on our business, our suppliers and our customers, global economic conditions taking into account the global COVID -19 pandemic,