News Release Details

View all news

Trane Technologies Reports Strong Third-Quarter 2020 Results In Challenging Economic Environment 

Oct 28, 2020

Highlights (third quarter 2020 versus third quarter 2019, unless otherwise noted):

  • Reported bookings of $3.5 billion, reported and organic bookings* up 7 percent
  • Reported revenues of $3.5 billion, reported revenues up 1 percent; organic revenues* up 50 bps
  • GAAP operating margin up 70 bps; adjusted operating margin* up 80 bps
  • GAAP continuing EPS of $1.67; adjusted continuing EPS* of $1.72, up 6 percent
  • Y-T-D cash from continuing operating activities and free cash flow* of $1.1 billion

*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations.

SWORDS, Ireland--(BUSINESS WIRE)-- Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $1.67 for the third quarter of 2020. Adjusted continuing EPS was $1.72, up 6 percent, which excludes $18.3 million related to planned restructuring and transformation costs.

Third-Quarter 2020 Results

Financial Comparisons - Third-Quarter Continuing Operations

$, millions except EPS

Q3 2020

Q3 2019**

Y-O-Y Change

Organic Y-O-Y
Change

Bookings

$3,490

$3,269

7%

7%

Net Revenues

$3,496

$3,471

1%

50 bps

GAAP Operating Income

$567

$537

6%

 

GAAP Operating Margin

16.2%

15.5%

70 bps

Adjusted Operating Income*

$585

$553

6%

Adjusted Operating Margin*

16.7%

15.9%

80 bps

Adjusted EBITDA*

$655

$620

6%

Adjusted EBITDA Margin*

18.7%

17.9%

80 bps

GAAP Continuing EPS

$1.67

$1.57

6%

Adjusted Continuing EPS

$1.72

$1.62

6%

Restructuring and Transformation Costs

($18.3)

($16.6)

($1.7)

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations.

“As we continue to navigate a challenging year, we remain true to our strategy: maintaining world-class safety for our employees, bringing advanced technology and innovation to our customers and accelerating our commitment to build a more sustainable world. These fundamental building blocks will deliver differentiated financial performance for us, now and into the future,” said Mike Lamach, chairman and chief executive officer.

“In the third quarter, we significantly outperformed challenging end markets and delivered both revenue growth and margin expansion, exceeding our prior outlook and enabling us to again raise our outlook for 2020. Strong execution by our teams around the world enabled us to continue our stranded cost reduction and transformation-related margin improvement programs while maintaining high levels of business reinvestment. Our focus is on emerging even stronger as a leading climate innovator as we come through the pandemic.”

Lamach continued, “We continue to see growing interest in the latest technologies for indoor air quality, energy management and precision temperature control for safe movement of food, medicines and vaccines. Looking forward, we remain in an exceptionally strong financial position, which enables us to continue to play offense by investing heavily in the safety of our people and in accretive investment opportunities through execution of our balanced capital deployment strategy. This will further strengthen Trane Technologies and our ability to compete, to win and to thrive both today and as business conditions improve and new market opportunities arise.”

Highlights from the Third Quarter of 2020 (all comparisons against the third quarter of 2019 unless otherwise noted)

  • Strong execution drove continuing EPS and operating income growth despite ongoing COVID-19 pandemic related impacts.
  • Enterprise reported and organic bookings up 7 percent driven by Americas and EMEA.
  • Enterprise reported revenues were up 1 percent; enterprise organic revenues were up 50 basis points.
  • GAAP operating margin was up 70 basis points, adjusted operating margin was up 80 basis points, and adjusted EBITDA margin was up 80 basis points, driven by strong performance across all three segments.

Third-Quarter Business Review (all comparisons against the third quarter of 2019 unless otherwise noted)

Americas Segment: innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating and cooling systems, building controls, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.

$, millions

Q3 2020

Q3 2019

Y-O-Y Change

Organic Y-O-Y
Change

Bookings

$2,718.1

$2,519.6

8%

8%

Net Revenues

$2,745.8

$2,707.5

1%

2%

GAAP Operating Income

$493.8

$467.9

6%

 

GAAP Operating Margin

18.0%

17.3%

70 bps

Adjusted Operating Income

$500.4

$483.3

4%

Adjusted Operating Margin

18.2%

17.9%

30 bps

Adjusted EBITDA

$555.0

$529.9

5%

Adjusted EBITDA Margin

20.2%

19.6%

60 bps

  • Americas continued to be impacted by the COVID-19 pandemic in the quarter.
  • Strong operating performance in Americas was primarily driven by Residential and Commercial HVAC.
  • Americas reported and organic bookings were both up 8 percent.
  • Reported and organic revenues were up 1 and 2 percent, respectively. Commercial HVAC organic revenues were flat. Residential HVAC organic revenues were up high-teens. Transport organic revenues were down more than 20 percent. Commercial HVAC service revenues continued to outperform equipment.
  • GAAP operating margin increased 70 basis points, adjusted operating margin increased 30 basis points and adjusted EBITDA margin increased 60 basis points. Strong productivity, execution and price more than offset lower Transport volumes and revenue mix shift.

Europe, Middle East and Africa (EMEA) Segment: innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating and cooling systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.

$, millions

Q3 2020

Q3 2019

Y-O-Y Change

Organic Y-O-Y
Change

Bookings

$445.0

$408.0

9%

6%

Net Revenues

$445.2

$456.3

(2)%

(6)%

GAAP Operating Income

$76.3

$73.6

4%

 

GAAP Operating Margin

17.1%

16.1%

100 bps

Adjusted Operating Income

$77.0

$74.4

3%

Adjusted Operating Margin

17.3%

16.3%

100 bps

Adjusted EBITDA

$87.6

$82.0

7%

Adjusted EBITDA Margin

19.7%

18.0%

170 bps

  • EMEA continued to be impacted by the COVID-19 pandemic in the quarter.
  • EMEA reported bookings were up 9 percent and organic bookings were up 6 percent.
  • Reported revenue was down 2 percent and organic revenue was down 6 percent. Commercial HVAC organic revenues decreased mid-single digits and Transport organic revenues were down high-single digits.
  • Despite lower building occupancy and residual impacts related to the COVID-19 pandemic, Commercial HVAC service revenues continued to outperform equipment, declining at a slower pace.
  • GAAP operating margin increased 100 basis points, adjusted operating margin increased 100 basis points and adjusted EBITDA margin improved 170 basis points. Strong execution, productivity and price more than offset COVID-19 pandemic-related volume declines to support operating margin expansion despite continued mix shift to Commercial from Transport.

Asia Pacific Segment: innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.

$, millions

Q3 2020

Q3 2019

Y-O-Y Change

Organic Y-O-Y
Change

Bookings

$327.1

$341.0

(4)%

(5)%

Net Revenues

$304.5

$307.1

(1)%

(2)%

GAAP Operating Income

$53.8

$42.0

28%

 

GAAP Operating Margin

17.7%

13.7%

400 bps

Adjusted Operating Income

$54.6

$42.4

29%

Adjusted Operating Margin

17.9%

13.8%

410 bps

Adjusted EBITDA

$58.5

$46.8

25%

Adjusted EBITDA Margin

19.2%

15.2%

400 bps

  • Asia Pacific continued to be impacted by the COVID-19 pandemic in the quarter.
  • Asia Pacific reported bookings were down 4 percent and organic bookings were down 5 percent.
  • Reported revenue was down 1 percent and organic revenue was down 2 percent. Growth in China continued during the quarter, offset by weakness in the rest of Asia.
  • GAAP operating margin improved 400 basis points, adjusted operating margin improved 410 basis points and adjusted EBITDA margin improved 400 basis points. Strong execution, productivity and price offset COVID-19 pandemic-related volume declines to expand margins in the quarter.

Balance Sheet and Cash Flow

$, millions

Q3 2020

Q3 2019**

Y-O-Y Change

Cash From Continuing Operating Activities Y-T-D

$1,133

$895

$238

Free Cash Flow Y-T-D*

$1,129

$776

$353

Working Capital/Revenue*

2.9%

5.1%

220 bps decrease

Cash Balance 30 September

$3,190

$806

$2,384

Debt Balance 30 September

$5,269

$5,572

($303)

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations.

  • As of September 30, 2020, the Company generated strong Y-T-D free cash flow of $1.1 billion, up $353 million, driven by a continued focus on working capital, cost management and lower capex spend.
  • The Company expects 2020 free cash flow to be equal to or greater than 125 percent of adjusted net earnings.*

Capital Deployment

  • The Company continues to reinvest in employee safety, innovation and technology projects and capital expenditures to support its core sustainability strategy.
  • Year-to-date, the Company has paid approximately $380 million in dividends. The Company declared a quarterly dividend of $0.53 per share payable on December 31, 2020, consistent with a $2.12 per share annualized rate in 2020.
  • The Company expects to execute its balanced capital allocation strategy including paying a competitive and growing dividend, strategic, value-accretive mergers and acquisitions and share repurchases, and expects to continue to deploy 100 percent of excess cash to shareholders over time.

This news release includes “forward-looking statements,” which are statements that are not historical facts, including statements that relate to our future performance during 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; 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, the outcome of any litigation, the outcome of 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, 2019, 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 news release 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 and reconciliation to GAAP are attached to this news release.

All amounts reported within the earnings release above related to net earnings (loss), earnings (loss) from continuing operations, earnings (loss) from discontinued operations, adjusted EBITDA and per share amounts are attributed to Trane Technologies' ordinary shareholders.

Trane Technologies (NYSE:TT) is a global climate innovator. Through our strategic brands Trane® and Thermo King®, and our portfolio of environmentally responsible products and services, we bring efficient and sustainable climate solutions to buildings, homes and transportation. For more information, visit tranetechnologies.com.

# # #

10/28/20

(See Accompanying Tables)

  • Table 1: Condensed Consolidated Income Statement
  • Tables 2 - 5: Reconciliation of GAAP to Non-GAAP
  • Table 6: Condensed Consolidated Balance Sheets
  • Table 7: Condensed Consolidated Statement of Cash Flows
  • Table 8: Balance Sheet Metrics and Free Cash Flow

*Q3 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 in the current period 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. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2, 3 and 4 of the news release.

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

Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q3 2020) less the prior period (e.g. Q3 2019), divided by the change in net revenues for the current period less the prior period.

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, net of tax impacts. 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. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.

Adjusted continuing EPS in 2020 is defined as GAAP continuing EPS plus restructuring costs and transformation costs, net of tax impacts. Adjusted continuing EPS in 2019 is defined as GAAP continuing EPS plus restructuring costs, net of tax impacts. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.

Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net. Adjusted EBITDA in 2019 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income / (expense), net. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 4 and 5 of the news release.

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

Free cash flow in 2020 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs. Free cash flow in 2019 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures plus cash payments for restructuring. Please refer to the free cash flow reconciliation on table 8 of the news release.

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 revenueis calculated by dividing the working capital balance (e.g. as of September 30) by the annualized revenue for the period (e.g. reported revenues for the three months ended September 30 multiplied by 4 to annualize for a full year).

Adjusted effective tax rate for 2020 is defined as the ratio of income tax expense less the net tax effect of adjustments for restructuring costs and transformation costs divided by earnings from continuing operations before income taxes plus restructuring costs and transformation costs. Adjusted effective tax rate for 2019 is defined as the ratio of income tax provision plus the tax effect of restructuring 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.

The Company reports its financial results in accordance with generally accepted accounting principles in the United States (GAAP). The following schedules provide non-GAAP financial information and a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP.

The non-GAAP financial measures should be considered supplemental to, not a substitute for or superior to, financial measures calculated in accordance with GAAP. They have limitations in that they do not reflect all of the costs associated with the operations of our businesses as determined in accordance with GAAP. In addition, these measures may not be comparable to non-GAAP financial measures reported by other companies.

We believe the non-GAAP financial information provides important supplemental information to both management and investors regarding financial and business trends used in assessing our financial condition and results of operations.

Non-GAAP financial measures assist investors with analyzing our business results as well as with predicting future performance. In addition, these non-GAAP financial measures are also reviewed by management in order to evaluate the financial performance of each segment. Presentation of these non-GAAP financial measures helps investors and management to assess the operating performance of the Company.

As a result, one should not consider these measures in isolation or as a substitute for our results reported under GAAP. We compensate for these limitations by analyzing results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to non-GAAP results.

Table 1

TRANE TECHNOLOGIES PLC

Condensed Consolidated Income Statement

(In millions, except per share amounts)

UNAUDITED

 

 

For the quarter

 

For the nine months

ended September 30,

 

ended September 30,

2020

 

2019**

 

2020

 

2019**

Net revenues

$

3,495.5

 

 

$

3,470.9

 

 

$

9,275.6

 

 

$

9,892.2

 

Cost of goods sold

(2,360.8)

 

 

(2,366.6)

 

 

(6,420.1)

 

 

(6,818.6)

 

Selling and administrative expenses

(567.8)

 

 

(567.8)

 

 

(1,710.7)

 

 

(1,733.7)

 

Operating income

566.9

 

 

536.5

 

 

1,144.8

 

 

1,339.9

 

Interest expense

(62.4)

 

 

(63.9)

 

 

(186.8)

 

 

(179.4)

 

Other income/(expense), net

(4.5)

 

 

(5.8)

 

 

7.6

 

 

(21.7)

 

Earnings before income taxes

500.0

 

 

466.8

 

 

965.6

 

 

1,138.8

 

Benefit (provision) for income taxes

(89.9)

 

 

(80.5)

 

 

(224.4)

 

 

(192.6)

 

Earnings from continuing operations

410.1

 

 

386.3

 

 

741.2

 

 

946.2

 

Discontinued operations, net of tax

(5.5)

 

 

77.1

 

 

(120.4)

 

 

181.2

 

Net earnings (loss)

404.6

 

 

463.4

 

 

620.8

 

 

1,127.4

 

Less: Net earnings from continuing operations attributable to noncontrolling interests

(4.0)

 

 

(3.7)

 

 

(9.7)

 

 

(10.3)

 

Less: Net earnings from discontinued operations attributable to noncontrolling interests

 

 

(0.9)

 

 

(0.9)

 

 

(2.3)

 

Net earnings (loss) attributable to Trane Technologies plc

$

400.6

 

 

$

458.8

 

 

$

610.2

 

 

$

1,114.8

 

 

 

 

 

 

 

 

 

Amounts attributable to Trane Technologies plc ordinary shareholders:

 

 

 

 

 

 

 

Continuing operations

$

406.1

 

 

$

382.6

 

 

$

731.5

 

 

$

935.9

 

Discontinued operations

(5.5)

 

 

76.2

 

 

(121.3)

 

 

178.9

 

Net earnings (loss)

$

400.6

 

 

$

458.8

 

 

$

610.2

 

 

$

1,114.8

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:

 

 

 

 

 

 

 

Continuing operations

$

1.67

 

 

$

1.57

 

 

$

3.01

 

 

$

3.82

 

Discontinued operations

(0.03)

 

 

0.31

 

 

(0.50)

 

 

0.73

 

Net earnings (loss)

$

1.64

 

 

$

1.88

 

 

$

2.51

 

 

$

4.55

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

Diluted

243.7

 

 

244.6

 

 

242.7

 

 

244.8

 

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

Table 2

TRANE TECHNOLOGIES PLC

Reconciliation of GAAP to non-GAAP

(In millions, except per share amounts)

UNAUDITED

 

 

 

For the quarter ended September 30, 2020

 

For the nine months ended September 30, 2020

 

 

As

 

 

 

As

 

As

 

 

 

As

 

 

Reported

 

Adjustments

 

Adjusted

 

Reported

 

Adjustments

 

Adjusted

 

Net revenues

$

3,495.5

 

 

$

 

 

$

3,495.5

 

 

$

9,275.6

 

 

$

 

 

$

9,275.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

566.9

 

 

18.3

 

(a,b)

585.2

 

 

1,144.8

 

 

101.9

 

(a,b)

1,246.7

 

 

Operating margin

16.2

%

 

 

 

16.7

%

 

12.3

%

 

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

500.0

 

 

18.3

 

(a,b)

518.3

 

 

965.6

 

 

83.6

 

(a,b,c,d)

1,049.2

 

 

Benefit (provision) for income taxes

(89.9)

 

 

(4.5)

 

(e)

(94.4)

 

 

(224.4)

 

 

17.7

 

(e,f)

(206.7)

 

 

Tax rate

18.0

%

 

 

 

18.2

%

 

23.2

%

 

 

 

19.7

%

 

Earnings from continuing operations attributable to Trane Technologies plc

$

406.1

 

 

$

13.8

 

(g)

$

419.9

 

 

$

731.5

 

 

$

101.3

 

(g)

$

832.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

1.67

 

 

$

0.05

 

 

$

1.72

 

 

$

3.01

 

 

$

0.42

 

 

$

3.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

243.7

 

 

 

 

243.7

 

 

242.7

 

 

 

 

242.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Detail of Adjustments:

 

 

 

 

 

 

 

 

 

 

 

(a)

Restructuring costs (COGS & SG&A)

 

 

$

8.2

 

 

 

 

 

 

$

71.3

 

 

 

(b)

Transformation costs (SG&A)

 

 

10.1

 

 

 

 

 

 

30.6

 

 

 

(c)

Legacy legal liability adjustment

 

 

 

 

 

 

 

 

(17.4)

 

 

 

(d)

Gain from deconsolidation of certain entities under Chapter 11

 

 

 

 

 

 

 

 

(0.9)

 

 

 

(e)

Tax impact of adjustments (a,b,c,d)

 

 

(4.5)

 

 

 

 

 

 

(22.6)

 

 

 

(f)

Separation-related tax adjustments

 

 

 

 

 

 

 

 

40.3

 

 

 

(g)

Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc

 

 

$

13.8

 

 

 

 

 

 

$

101.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax impact of adjustments on cost of goods sold

 

 

3.3

 

 

 

 

 

 

21.9

 

 

 

 

Pre-tax impact of adjustments on selling & administrative expenses

 

 

15.0

 

 

 

 

 

 

80.0

 

 

 

 

Pre-tax impact of adjustments on operating income

 

 

$

18.3

 

 

 

 

 

 

$

101.9

 

 

 

Table 3

TRANE TECHNOLOGIES PLC

Reconciliation of GAAP to non-GAAP

(In millions, except per share amounts)

UNAUDITED

 

 

 

For the quarter ended September 30, 2019**

 

For the nine months ended September 30, 2019**

 

 

As

 

 

 

As

 

As

 

 

 

As

 

 

Reported

 

Adjustments

 

Adjusted

 

Reported

 

Adjustments

 

Adjusted

 

Net revenues

$

3,470.9

 

 

$

 

 

$

3,470.9

 

 

$

9,892.2

 

 

$

 

 

$

9,892.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

536.5

 

 

16.6

 

(a)

553.1

 

 

1,339.9

 

 

36.0

 

(a)

1,375.9

 

 

Operating margin

15.5

%

 

 

 

15.9

%

 

13.5

%

 

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

466.8

 

 

16.6

 

(a)

483.4

 

 

1,138.8

 

 

36.0

 

(a)

1,174.8

 

 

Provision for income taxes

(80.5)

 

 

(3.0)

 

(b)

(83.5)

 

 

(192.6)

 

 

(6.4)

 

(b)

(199.0)

 

 

Tax rate

17.2

%

 

 

 

17.3

%

 

16.9

%

 

 

 

16.9

%

 

Earnings from continuing operations attributable to Trane Technologies plc

$

382.6

 

 

$

13.6

 

(c)

$

396.2

 

 

$

935.9

 

 

$

29.6

 

(c)

$

965.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

1.57

 

 

$

0.05

 

 

$

1.62

 

 

$

3.82

 

 

$

0.12

 

 

$

3.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

244.6

 

 

 

 

244.6

 

 

244.8

 

 

 

 

244.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Detail of Adjustments:

 

 

 

 

 

 

 

 

 

 

 

(a)

Restructuring costs (COGS & SG&A)

 

 

$

16.6

 

 

 

 

 

 

$

36.0

 

 

 

(b)

Tax impact of adjustments

 

 

(3.0)

 

 

 

 

 

 

(6.4)

 

 

 

(c)

Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc

 

 

$

13.6

 

 

 

 

 

 

$

29.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax impact of adjustments on cost of goods sold

 

 

14.0

 

 

 

 

 

 

27.6

 

 

 

 

Pre-tax impact of adjustments on selling & administrative expenses

 

 

2.6

 

 

 

 

 

 

8.4

 

 

 

 

Pre-tax impact of adjustments on operating income

 

 

$

16.6

 

 

 

 

 

 

$

36.0

 

 

 

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

Table 4

TRANE TECHNOLOGIES PLC

Reconciliation of GAAP to non-GAAP

(In millions)

UNAUDITED

 

 

 

For the quarter ended September 30, 2020

 

For the quarter ended September 30, 2019**

 

 

As Reported

 

Margin

 

As Reported

 

Margin

Americas

Net revenues

$

2,745.8

 

 

 

 

$

2,707.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

$

493.8

 

 

18.0

%

 

$

467.9

 

 

17.3

%

 

Restructuring

6.6

 

 

0.2

%

 

15.4

 

 

0.6

%

 

Adjusted operating income *

500.4

 

 

18.2

%

 

483.3

 

 

17.9

%

 

Depreciation and amortization

56.6

 

 

2.1

%

 

53.9

 

 

2.0

%

 

Other income/(expense), net

(2.0)

 

 

(0.1)

%

 

(7.3)

 

 

(0.3)

%

 

Adjusted EBITDA *

$

555.0

 

 

20.2

%

 

$

529.9

 

 

19.6

%

 

 

 

 

 

 

 

 

 

Europe, Middle East & Africa

Net revenues

$

445.2

 

 

 

 

$

456.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

$

76.3

 

 

17.1

%

 

$

73.6

 

 

16.1

%

 

Restructuring

0.7

 

 

0.2

%

 

0.8

 

 

0.2

%

 

Adjusted operating income

77.0

 

 

17.3

%

 

74.4

 

 

16.3

%

 

Depreciation and amortization

7.8

 

 

1.8

%

 

7.7

 

 

1.7

%

 

Other income/(expense), net

2.8

 

 

0.6

%

 

(0.1)

 

 

%

 

Adjusted EBITDA

$

87.6

 

 

19.7

%

 

$

82.0

 

 

18.0

%

 

 

 

 

 

 

 

 

 

Asia Pacific

Net revenues

$

304.5

 

 

 

 

$

307.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

$

53.8

 

 

17.7

%

 

$

42.0

 

 

13.7

%

 

Restructuring

0.8

 

 

0.2

%

 

0.4

 

 

0.1

%

 

Adjusted operating income

54.6

 

 

17.9

%

 

42.4

 

 

13.8

%

 

Depreciation and amortization

4.0

 

 

1.3

%

 

3.4

 

 

1.1

%

 

Other income/(expense), net

(0.1)

 

 

%

 

1.0

 

 

0.3

%

 

Adjusted EBITDA

$

58.5

 

 

19.2

%

 

$

46.8

 

 

15.2

%

 

 

 

 

 

 

 

 

 

Corporate

Unallocated corporate expense

$

(57.0)

 

 

 

 

$

(47.0)

 

 

 

 

Restructuring/Other (a)

10.2

 

 

 

 

 

 

 

 

Adjusted corporate expense

(46.8)

 

 

 

 

(47.0)

 

 

 

 

Depreciation and amortization

6.1

 

 

 

 

7.7

 

 

 

 

Other income/(expense), net

(5.2)

 

 

 

 

0.6

 

 

 

 

Adjusted EBITDA

$

(45.9)

 

 

 

 

$

(38.7)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

Net revenues

$

3,495.5

 

 

 

 

$

3,470.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

566.9

 

 

16.2

%

 

$

536.5

 

 

15.5

%

 

Restructuring/Other (a)

18.3

 

 

0.5

%

 

16.6

 

 

0.4

%

 

Adjusted operating income

585.2

 

 

16.7

%

 

553.1

 

 

15.9

%

 

Depreciation and amortization

74.5

 

 

2.1

%

 

72.7

 

 

2.1

%

 

Other income/(expense), net

(4.5)

 

 

(0.1)

%

 

(5.8)

 

 

(0.1)

%

 

Adjusted EBITDA

$

655.2

 

 

18.7

%

 

$

620.0

 

 

17.9

%

*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions.
**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

(a) Other within 2020 Corporate includes Transformation costs of $10.1M

Management measures operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, unallocated corporate expenses and discontinued operations (Segment Adjusted EBITDA). Segment Adjusted EBITDA is not defined under GAAP and may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for net earnings or other results reported in accordance with GAAP. The Company believes Segment Adjusted EBITDA provides the most relevant measure of profitability as well as earnings power and the ability to generate cash. This measure is a useful financial metric to assess the Company's operating performance from period to period by excluding certain items that it believes are not representative of its core business and the Company uses this measure for business planning purposes.

Table 5

TRANE TECHNOLOGIES PLC

Reconciliation of GAAP to non-GAAP

(In millions)

UNAUDITED

 

 

For the quarter

 

ended September 30,

 

2020

 

2019**

Total Company

 

 

 

Adjusted EBITDA *

$

655.2

 

 

$

620.0

 

Less: items to reconcile adjusted EBITDA to net earnings attributable to Trane Technologies plc

 

 

 

Depreciation and amortization

(74.5)

 

 

(72.7)

 

Interest expense

(62.4)

 

 

(63.9)

 

Benefit (provision) for income taxes

(89.9)

 

 

(80.5)

 

Restructuring

(8.2)

 

 

(16.6)

 

Transformation Costs

(10.1)

 

 

 

Discontinued operations, net of tax

(5.5)

 

 

77.1

 

Net earnings from continuing operations attributable to noncontrolling interests

(4.0)

 

 

(3.7)

 

Net earnings from discontinued operations attributable to noncontrolling interests

 

 

(0.9)

 

Net earnings (loss) attributable to Trane Technologies plc

$

400.6

 

 

$

458.8

 

*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions.
**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

Table 6

TRANE TECHNOLOGIES PLC

Condensed Consolidated Balance Sheets

(In millions)

 

UNAUDITED

 

 

September 30,

 

December 31,

 

2020

 

2019**

ASSETS

 

 

 

Cash and cash equivalents

$

3,190.1

 

 

$

1,278.6

 

Accounts and notes receivable, net

2,312.6

 

 

2,184.6

 

Inventories

1,229.2

 

 

1,278.6

 

Other current assets

241.6

 

 

344.8

 

Assets held-for-sale

 

 

4,207.2

 

Total current assets

6,973.5

 

 

9,293.8

 

Property, plant and equipment, net

1,314.1

 

 

1,352.0

 

Goodwill

5,144.3

 

 

5,125.7

 

Intangible assets, net

3,233.0

 

 

3,323.6

 

Other noncurrent assets

1,274.5

 

 

1,397.2

 

Total assets

$

17,939.4

 

 

$

20,492.3

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Accounts payable

$

1,458.8

 

 

$

1,381.3

 

Accrued expenses and other current liabilities

1,936.2

 

 

2,006.6

 

Short-term borrowings and current maturities of long-term debt

775.1

 

 

650.3

 

Liabilities held for sale

 

 

1,200.4

 

Total current liabilities

4,170.1

 

 

5,238.6

 

Long-term debt

4,494.2

 

 

4,922.9

 

Other noncurrent liabilities

2,894.1

 

 

3,018.4

 

Shareholders' equity

6,381.0

 

 

7,312.4

 

Total liabilities and equity

$

17,939.4

 

 

$

20,492.3

 

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

Table 7

TRANE TECHNOLOGIES PLC

Condensed Consolidated Statement of Cash Flows

(In millions)

UNAUDITED

 

 

For the nine months

 

ended September 30,

 

2020

 

2019**

Operating Activities

 

 

 

Earnings from continuing operations

$

741.2

 

 

$

946.2

 

Depreciation and amortization

223.7

 

 

215.8

 

Changes in assets and liabilities and other non-cash items

168.0

 

 

(267.5)

 

Net cash provided by (used in) continuing operating activities

1,132.9

 

 

894.5

 

Net cash provided by (used in) discontinued operating activities

(324.8)

 

 

158.6

 

Net cash provided by (used in) operating activities

808.1

 

 

1,053.1

 

 

 

 

 

Investing Activities

 

 

 

Capital expenditures

(89.1)

 

 

(151.6)

 

Deconsolidation of certain entities under Chapter 11

(10.8)

 

 

 

Acquisition and equity method investments, net of cash acquired, and other

(1.2)

 

 

(76.7)

 

Net cash provided by (used in) continuing investing activities

(101.1)

 

 

(228.3)

 

Net cash provided by (used in) discontinued investing activities

(37.7)

 

 

(1,485.7)

 

Net cash provided by (used in) investing activities

(138.8)

 

 

(1,714.0)

 

 

 

 

 

Financing Activities

 

 

 

Long-term borrowings, net of payments

(307.5)

 

 

1,490.4

 

Dividends paid to ordinary shareholders

(380.3)

 

 

(383.1)

 

Repurchase of ordinary shares

 

 

(500.1)

 

Receipt of a special cash payment

1,900.0

 

 

 

Other financing activities, net

18.7

 

 

8.5

 

Net cash provided by (used in) financing activities of continuing operations

1,230.9

 

 

615.7

 

Net cash provided by (used in) financing activities of discontinued operations

 

 

(1.1)

 

Net cash provided by (used in) financing activities

1,230.9

 

 

614.6

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

11.3

 

 

(26.2)

 

Net increase (decrease) in cash and cash equivalents

1,911.5

 

 

(72.5)

 

Cash and cash equivalents - beginning of period

1,278.6

 

 

878.4

 

Cash and cash equivalents - end of period

$

3,190.1

 

 

$

805.9

 

**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

Table 8

TRANE TECHNOLOGIES PLC

Balance Sheet Metrics and Free Cash Flow

($ in millions)

UNAUDITED

 

 

September 30,

 

September 30,

 

December 31,

 

2020

 

2019**

 

2019**

Net Receivables

$

2,313

 

 

$

2,372

 

 

$

2,185

 

Days Sales Outstanding

60.4

 

 

62.4

 

 

62.6

 

 

 

 

 

 

 

Net Inventory

$

1,229

 

 

$

1,423

 

 

$

1,279

 

Inventory Turns

7.7

 

 

6.7

 

 

7.1

 

 

 

 

 

 

 

Accounts Payable

$

1,459

 

 

$

1,391

 

 

$

1,381

 

Days Payable Outstanding

56.4

 

 

53.6

 

 

55.6

 

 

 

 

 

 

 

-------------------------------------------------------------------------------------------------------------------------------------------------------

 

 

 

 

 

 

 

Nine months ended

 

Nine months ended

 

 

 

September 30, 2020

 

September 30, 2019**

 

 

Cash flow provided by continuing operating activities

$

1,132.9

 

 

$

894.5

 

 

 

Capital expenditures

(89.1)

 

 

(151.6)

 

 

 

Cash payments for restructuring

62.3

 

 

33.4

 

 

 

Transformation costs paid

22.4

 

 

 

 

 

Free cash flow *

$

1,128.5

 

 

$

776.3

 

 

 

*Represents a non-GAAP measure, refer to pages 5-6 in the Earnings Release for definitions.
**Restated to reflect Ingersoll Rand Industrial segment in discontinued operations

 

Media:
Jennifer Regina
630-390-8011, jennifer.regina@tranetechnologies.com

Investors:
Zac Nagle
704-990-3913, InvestorRelations@tranetechnologies.com

Source: Trane Technologies plc

Multimedia Files:

View all news