Trane Energy Services & Controls

Q2 2015 - Employee Meeting

Hosted by Jason Bingham, vice president, energy services and controls

Friday, April 24, 2015

Today’s Discussion

Our values and guiding principles

How we will continue to win (keystone behaviors)

Progress on our goals and key priorities

(“round robin” to hear from leaders)

Q1 Business Performance and Financials

Closing Comments

Questions

Jason Bingham

Our Values & Guiding Principles

How we win, is just as important as winning

Jason Bingham

Our Strategy and Keystone Behaviors

Trane is great at

Equipment Market Share

System’s team passion

for controls moves Trane

from 7% to

14-20% on “Day 1”

Controls service agreement

on every project we did last

year drives linkage from

current <5% to 50% Consult with customers on

small energy projects (S&D)

worth $100-200k/Customer on

“Day 2”

Controls from 75-25 to

50-50.

Energy contracting

profitably grows

double digits.

Systems Team: Act like a controls company

Sell controls as passionately as we do chillers

Have sales talent focused exclusively on controls

Build world class operations teams

Services Team: Start small and walk staircase

Start with anything your customer can approve

That is an energy project justified by savings

And validate those savings

Keystone Behavior for Everyone: Link to ALL controls jobs with service agreements for controls and intelligent service agreements

Progress on our goals and key priorities: Controls – D. Lemke

Intelligent Services Value Stream – M. Gates

Supply – D. Fellon

Offerings – L. Rygielski

Customer Segmentation Tool – S. James

Energy Contracting – G. Bourbonniere / E. Bauer

Controls Technical Training – G. Stibbens

Technical Resource & Federal Teams – J. Wilkens / N. Maldeis

Trane Building Advantage – M. Conrad

‣Record Bookings

‣Record March Bookings: $35.5M

‣Record four quarters in a row

‣Small Buildings Controls Solutions

‣ Tracer Concierge for small buildings

‣Air-Fi Wireless Technology

‣District Controls Sales Leader Meeting at

Customer 4 Life Conference

‣Controls GTP

‣ First class graduates in May

Controls Update

Dick Lemke

‣Controls Customer Visit Program

‣ 16 customer visits this year

‣Trane Building Advantage

Visual Management Board

‣Celebration

Controls Update

Dick Lemke

Intelligent Services Value Stream Transformation

VALUE STREAM SUB STREAM

Intelligent Services

Energy Services PGT As of Sept 2014

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Lean Transformation Scope

Geography - VA, OH/Det, CA - Los Angeles

At a milestone, PGTwill decide to add

Selling! Fulfilling!

Matt Gates

Rapid Improvement Event (RIE) Update

RIE # Title Date Location Team Leader

1 Standard Package of

Offerings

Mar 24-27 Los Angeles A. Wittwer

2 Fulfillment process,

Roles & Responsibilities

Apr 27 – May 1 Richmond B. Trevillian

8 Sales Roles &

Responsibilities

May 18-20 Los Angeles A. Wittwer

3 Sales process May 20-22 Los Angeles A. Wittwer

4 Internal Strategy

process for customers

Jun 1-5 Richmond K. Schomaker

5 Value Delivery for

customers

Jun 15-19 Columbus T. Bugg

6 Assessment process TBD Jul or Aug St Paul P. McMurphy

7 Data Gathering process Aug 24-28 Columbus K. Hubert

Matt Gates

RIE #1 – Outputs for offer packages

Matt Gates

Supply

‣Celebrated our One Year Anniversary of becoming a part of Trane on April 1, 2015:

- Integration has gone very well, allowing for little or no disruption for the associates, customers or

business -- Significant Focus on Business Growth & Employee Engagement

- Supply-Side Service Offerings integration with District Offices continues to be a major focus

- Working to incorporate our separate energy supply and demand management systems for greater

customer engagement

‣Supply is key to ES&C business growth strategy and aligns with desired end state

‣Supply offerings are a key differentiator in the marketplace

- Changes the conversation you are having with your clients to stand out and "Be Consulted!"

‣We are your Supply-Side Energy Services fulfillment team in Louisville, KY ready to help/serve

‣Clients are having the conversation on the volatility of energy supply costs - - make sure it includes you

Drew Fellon

Certified

Energy Proj.

Sales App

Released

Customer

Segmentation

Scoring

Tool in CRM

Financials

Package

Chilled

Water

Optimization

Field Trial

Trane Building

Advantage

Customer

Visit Program

Industrial

Market Pilot

Legal Need

to Know

Module

New

Proposal

Process

Sales

Insights

Program

Second

Chilled Water

Optimization

Field Trial

ON

TH

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OR

IZO

N

Laura Rygielski Preston

Certified Energy Projects (PACT Lite)

‣ One day training – Texas first out of the gate

‣“Performance Certificate” along with guidelines

‣Two step Process: Pre contract and Post contract (should be total 8 man-hours or less to

execute)

Contact:

Terry Massey

Tmassey@trane.co

m

615-945-2260

Laura Rygielski Preston

Customer Segmentation Scoring Tool

Background

Access the tool now in CRM!

- Look in the ‘Customer’ tab

The Customer Segmentation Scoring Tool is a key tool developed to help us identify opportunities with target customers, where we are likely to win customers for life

The research resulted in the identification of 8 key customer segments with 3 target segments to focus on

In 2013, Trane invested in research to learn about customer buying behaviors for energy services market in the U.S.

Sharon James

Customer Segmentation Scoring Tool- How does it work?

Insert key data points

about the customer into

the Scoring Tool

The Customer

Segmentation Scoring Tool

defines the segment which

the customer is in

1. Record 1. Record 2. Score 3. Pursue and Win

Click on the links in the

segment box for access to: - List of other customers in

this segment

- In-depth information about

target segments 2, 3, 7A

Sharon James

Energy Contracting

Every office in the CS game, Every office in the energy based turnkey

game, 7% bookings CAGR, a reliable and predictable business

Metrics

2015 Booking Plan = $370,000 (29% growth YOY) Contributing factor - Quality of pipeline, SORs, project development resources

2015 Bookings Forecasting accuracy rolling 3 months = 10% Contributing factor - monthly pipeline reviews with quality CRM input

1st quarter bookings were $83M vs a plan of $72M, expecting a huge 2nd quarter

Major Deliverables

Major Deliverables

• Maturity Matrices for Energy

Contracting

• Sales Funnel Management

• Strategic Opportunity reviews

• Peer Reviews

• Monthly Energy Contracting scorecard

• Small Projects Product Growth Team

• Bookings Countermeasure 9 blocker

Guy Bourbonniere

Energy Contracting

Every office in the CS game, Every office in the energy based turnkey

game, 7% bookings CAGR, a reliable and predictable business

Eric Bauer

Controls Technician Training Program

CTTP is a six-week, accelerated training program offering a comprehensive, practical, and

foundational approach geared to teach an overall system and the “systems within the system.”

Objectives:

Improve retention rates

Increase hiring productivity

Improve technician effectiveness

Deliver consistent training

Training Offerings:

CTTP-I January 2015 - completed

CTTP-I September 2015

Next Steps:

CTTP-I:

Deliver September 2015 cohort

Add additional cohorts in 2016

CTTP-II:

Construct course in 2015

Deliver 2 cohorts in 2016

Inspiring Knowledge Through Advanced Training

Metrics:

Level 4 survey (4pt avg.)

EnSA-ExSA (1pt avg. improvement)

100% enrollment

Reduce Ramp-up cost (1.9m YOY)

Greg Stibbens

Technical Resource & Federal Teams

Teaming (District Offices & ES&C)

Teaming sessions held at 13 offices (Remaining offices targeted by end of June)

Collaborated on 17 jobs/totaling $95M

M&V project transitions to align with new team structure in progress

Established EP report generation process – 47% of backlog cleared YTD, with remainder

on track by end of 2nd Qtr

Business Results

Federal team developing over $100M of ESPC projects

GSA schedule sales to-date - secured $5.1M

Guarantee project status - 223 projects, totaling $434M in liability

Customers for Life opportunities - 6 Identified by M&V engineers

Guarantee projects approved – 9 YTD $ 62M

Jody Wilkens

Technical Resource & Federal Teams

Programs and Initiatives

Developing Standardized M&V Reports – Team established, targeting 3rd Qtr completion

Utility Bill Collection Process – RIE in progress with FM (DataPoint)

Master M&V Project Tracking Tool refresh – on track, completion by end of June

Survey/Data Collection Tool – RIE in progress with Bractlet and Dallas (C Howe)

Behavior Modification/Education “ECM” & M&V support – Finalizing Master agreement with Class 5

Collaboration with “Small Projects Team” – Certified Energy Program – Late April rollout

Moving forward

Continue to work with offices to grow business

Need feedback from you on what is working/what can we do better

Jody Wilkins

Trane Building Advantage Update

‣ Congratulations to districts actively building the brand!

• California, Canada, Carolinas, Chicago, Iowa-Missouri, Mid-

America, NY/NJ, Southwest

‣ New tools available

• Business cards and stationary

• Exhibit properties

• Sales Resource App

‣ Fellon-McCord

Matt Conrad

Q1 Business Performance and Financials & What it takes to win in Q2

Jason Bingham

2012-Today

Energy Services & Controls – We won in Q1!

ES&C Revenue Growth

4.9% YOY Increase from Q1 2014

Bookings

YOY Increase from Q1 2014

Q1 2015 Business Performance

+23.9% +5.8%

Controls Energy

Contracting

Overview Messages:

‣HVAC Commercial SBU exceeded top-line

revenue expectations – led by growth in the

Middle East and strong services performance

‣ Energy Contracting revenue was below plan in

Q1, but backlog for Q2 is strong

‣ Controls revenue was up 16.8% vs PY

‣ Large turnkey orders from Virginia Trane and

Miami at the end of the quarter helped us

reach our Q1 targets

Jason Bingham

How we will win in Q2 and beyond

‣ 100% Commitment to Keystone Behaviors - Change management within

local offices and teams to embrace keystone behaviors for long-term success

‣ Learn Together – the real work is happening with so many of you today.

Reach out, share and steal shamelessly.

‣ Conscious of balance on growth and margin – make sure we are getting the

value and investing in the right places.

‣ We are in great position for success in Q2 and 2015!

‣ Thank you!

Jason Bingham

Questions?