8-K
Trane Technologies plc (TT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________
FORM 8-K
____________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) — May 21, 2020
____________________________________________
TRANE TECHNOLOGIES PLC
(Exact name of registrant as specified in its charter)
____________________________________________
| Ireland | 001-34400 | 98-0626632 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
170/175 Lakeview Drive
Airside Business Park
Swords Co. Dublin
Ireland
(Address of principal executive offices, including zip code)
+(353)(0)18707400
(Registrant’s phone number, including area code)
(Former name or former address, if changed since last report)
____________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Securities registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Ordinary Shares, Par Value $1.00 per Share | TT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
| Item 7.01. | Regulation FD Disclosure |
|---|
Segment Results
Prior to the separation of Trane Technologies plc's (the Company) Industrial segment (Ingersoll Rand Industrial) on February 29, 2020, the Company announced a new organizational model and business segment structure designed to enhance its regional go-to-market capabilities, aligning the structure with the Company's strategy and increased focus on climate innovation. Under the revised structure, the Company created three new regional operating segments from the former climate segment, which also serve as the Company's reportable segments. This model is designed to create deep customer focus and relevance in markets around the world. The three new regional operating segments are as follows:
Americas
The Company's 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.
Europe, Middle East and Africa (EMEA)
The Company's 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.
Asia Pacific
The Company's Asia Pacific segment innovates for customers throughout the Asia Pacific region and India. The Asia Pacific segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
Exhibit 99.1 to this Current Report on Form 8-K provides a summary of the Company's historical segment results recast for the new reporting structure. The recast historical segment results reflect only the continuing operations of the Company and, accordingly, exclude the financial results of Ingersoll Rand Industrial, which were reclassified to discontinued operations (in accordance with applicable accounting guidance) during the three-months ended March 31, 2020 as a result of the completion of the Reverse Morris Trust Transaction. The information contained in Exhibit 99.1 is being furnished in order to provide the financial community with historical financial information that is presented on a basis consistent with the new reporting structure and further supplements the unaudited pro forma consolidated financial statements included in the Company's Current Report on Form 8-K filed on March 5, 2020 and the annual unaudited business segment financial information included in the Company's Current Report on Form 8-K furnished on April 8, 2020.
Non-GAAP Financial Measures
We use certain non-GAAP financial information to provide important supplemental information to both management and investors regarding financial and business trends used in assessing our financial condition and results of operations. We have disclosed this non-GAAP financial information in our past quarterly earning releases so that investors have the same financial data that we use to make comparisons with our historical operating results and analyze our underlying performance. The non-GAAP reconciliation in Exhibit 99.2 presents selected adjusted non-GAAP financial information derived from the unaudited recast financial information presented in Exhibit 99.1.
The non-GAAP financial measures have been presented for informational purposes only. The non-GAAP financial measures do not purport to project our results of operations or financial condition for any period subsequent to December 31, 2019.
The information in Item 7.01 in this Current Report on Form 8-K, Exhibit 99.1 and Exhibit 99.2 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference.
| Item 9.01. | Financial Statements and Exhibits |
|---|---|
| (d) Exhibits. | |
| Exhibit No. | Description |
| --- | --- |
| 99.1 | Recast Unaudited Business Segments - for the quarters ended March 31, 2019; June 30, 2019; September 30, 2019; December 31, 2019; March 31, 2018; June 30, 2018; September 30, 2018; and December 31, 2018. |
| 99.2 | Unaudited Selected Adjusted Non-GAAP Financial Information - for the quarters ended March 31, 2019; June 30, 2019; September 30, 2019; December 31, 2019; March 31, 2018; June 30, 2018; September 30, 2018; and December 31, 2018. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRANE TECHNOLOGIES PLC<br><br>(Registrant) | ||
|---|---|---|
| Date: | May 21, 2020 | /s/ Christopher J. Kuehn |
| Christopher J. Kuehn, Senior Vice President<br><br>and Chief Financial Officer |
Exhibit
Exhibit 99.1
RECAST UNAUDITED BUSINESS SEGMENTS
On February 29, 2020 (Distribution date), Trane Technologies plc (the Company) completed its Reverse Morris Trust transaction (the Transaction) with Gardner Denver Holdings, Inc. (Gardner Denver) whereby the Company separated its former Industrial segment (Ingersoll Rand Industrial) through a pro rata distribution to shareholders of record as of February 24, 2020. The Company now operates as a global climate innovator that brings efficient and sustainable climate solutions to buildings, homes and transportation driven by strategic brands and an environmentally responsible portfolio of products and services.
Prior to the Transaction, the Company announced a new organizational model and business segment structure designed to enhance its regional go-to-market capabilities, aligning the structure with the Company's strategy and increased focus on climate innovation. Under the revised structure, the Company created three new regional operating segments from the former climate segment, which also serve as the Company's reportable segments. This model is designed to create deep customer focus and relevance in markets around the world. The three new regional operating segments are the Americas segment, the Europe, Middle East and Africa (EMEA) segment and the Asia Pacific segment.
Management measures operating performance based on net earnings before interest expense, income taxes, depreciation and amortization, restructuring and discontinued operations (adjusted EBITDA). Adjusted EBITDA is not defined under generally accepted accounting principles in the United States (GAAP) and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP and is subject to important limitations. The Company believes 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. Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and its ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures because it eliminates depreciation and amortization expense.
1
The following tables provide certain recast segment information for the quarters ended March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019 (Table 1) and for the quarters ended March 31, 2018, June 30, 2018, September 30, 2018, and December 31, 2018 (Table 2). The Company's presentation of segment operating income, adjusted operating income, segment adjusted EBITDA and adjusted EBITDA 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 following quarterly results exclude Ingersoll Rand Industrial’s financial results and separation-related costs, as it is presented as a discontinued operation for periods prior to the Distribution date. The recast of previously issued financial information does not represent a restatement of previously issued financial statements and does not affect our reported net earnings, earnings per share, total assets, or stockholders’ equity for any of the previously reported periods.
| TABLE 1 | Three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollar amounts in millions | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | ||||||||
| Americas | ||||||||||||
| Net revenues | $ | 2,144.3 | $ | 2,833.7 | $ | 2,707.5 | $ | 2,374.0 | ||||
| Segment operating income* | 250.3 | 503.8 | 467.9 | 293.7 | ||||||||
| Segment operating income as a percentage of net revenues* | 11.7 | % | 17.8 | % | 17.3 | % | 12.4 | % | ||||
| Restructuring costs | 3.4 | 9.5 | 15.4 | 10.7 | ||||||||
| Adjusted operating income* | 253.7 | 513.3 | 483.3 | 304.4 | ||||||||
| Adjusted operating income as a percentage of revenues* | 11.8 | % | 18.1 | % | 17.9 | % | 12.8 | % | ||||
| Depreciation and amortization | 52.1 | 53.1 | 53.9 | 54.5 | ||||||||
| Other income/(expense), net | (8.0 | ) | (5.8 | ) | (7.3 | ) | (5.1 | ) | ||||
| Segment adjusted EBITDA | $ | 297.8 | $ | 560.6 | $ | 529.9 | $ | 353.8 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 13.9 | % | 19.8 | % | 19.6 | % | 14.9 | % | ||||
| Europe, Middle East and Africa | ||||||||||||
| Net revenues | $ | 383.8 | $ | 449.3 | $ | 456.3 | $ | 473.2 | ||||
| Segment operating income* | 39.2 | 62.3 | 73.6 | 57.9 | ||||||||
| Segment operating income as a percentage of net revenues* | 10.2 | % | 13.9 | % | 16.1 | % | 12.2 | % | ||||
| Restructuring costs | 0.5 | 2.3 | 0.8 | 1.5 | ||||||||
| Adjusted operating income* | 39.7 | 64.6 | 74.4 | 59.4 | ||||||||
| Adjusted operating income as a percentage of revenues* | 10.3 | % | 14.4 | % | 16.3 | % | 12.6 | % | ||||
| Depreciation and amortization | 7.7 | 7.6 | 7.7 | 8.0 | ||||||||
| Other income/(expense), net | (2.7 | ) | (2.8 | ) | (0.1 | ) | 4.2 | |||||
| Segment adjusted EBITDA | $ | 44.7 | $ | 69.4 | $ | 82.0 | $ | 71.6 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 11.6 | % | 15.4 | % | 18.0 | % | 15.1 | % | ||||
| Asia Pacific | ||||||||||||
| Net revenues | $ | 275.6 | $ | 334.6 | $ | 307.1 | $ | 336.5 | ||||
| Segment operating income* | 23.6 | 47.4 | 42.0 | 46.8 | ||||||||
| Segment operating income as a percentage of net revenues* | 8.6 | % | 14.2 | % | 13.7 | % | 13.9 | % | ||||
| Restructuring costs | 1.3 | 1.6 | 0.4 | 3.4 | ||||||||
| Adjusted operating income* | 24.9 | 49.0 | 42.4 | 50.2 | ||||||||
| Adjusted operating income as a percentage of revenues* | 9.0 | % | 14.6 | % | 13.8 | % | 14.9 | % | ||||
| Depreciation and amortization | 3.3 | 3.4 | 3.4 | 3.3 | ||||||||
| Other income/(expense), net | (0.7 | ) | 1.6 | 1.0 | 1.0 | |||||||
| Segment adjusted EBITDA | $ | 27.5 | $ | 54.0 | $ | 46.8 | $ | 54.5 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 10.0 | % | 16.1 | % | 15.2 | % | 16.2 | % |
2
| TABLE 1 (continued) | Three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollar amounts in millions | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | ||||||||
| Total net revenues | $ | 2,803.7 | $ | 3,617.6 | $ | 3,470.9 | $ | 3,183.7 | ||||
| Reconciliation to adjusted operating income* | ||||||||||||
| Segment operating income* from reportable segments | $ | 313.1 | $ | 613.5 | $ | 583.5 | $ | 398.4 | ||||
| Restructuring costs from reportable segments | 5.2 | 13.4 | 16.6 | 15.6 | ||||||||
| Adjusted operating income from reportable segments* | 318.3 | 626.9 | 600.1 | 414.0 | ||||||||
| Adjusted operating income from reportable segments as a percentage of net revenues* | 11.4 | % | 17.3 | % | 17.3 | % | 13.0 | % | ||||
| Unallocated corporate expense | (76.6 | ) | (46.6 | ) | (47.0 | ) | (68.2 | ) | ||||
| Corporate and other restructuring costs | 0.9 | (0.1 | ) | — | 1.0 | |||||||
| Total adjusted unallocated corporate expense | (75.7 | ) | (46.7 | ) | (47.0 | ) | (67.2 | ) | ||||
| Total adjusted operating income* | 242.6 | 580.2 | 553.1 | 346.8 | ||||||||
| Adjusted operating income as a percentage of net revenues* | 8.7 | % | 16.0 | % | 15.9 | % | 10.9 | % | ||||
| Reconciliation to adjusted EBITDA* | ||||||||||||
| Adjusted operating income from reportable segments* | 318.3 | 626.9 | 600.1 | 414.0 | ||||||||
| Depreciation and amortization from reportable segments | 63.1 | 64.1 | 65.0 | 65.8 | ||||||||
| Other income/(expense), net from reportable segments | (11.4 | ) | (7.0 | ) | (6.4 | ) | 0.1 | |||||
| Total segment adjusted EBITDA | 370.0 | 684.0 | 658.7 | 479.9 | ||||||||
| Total segment adjusted EBITDA as a percentage of net revenues | 13.2 | % | 18.9 | % | 19.0 | % | 15.1 | % | ||||
| Total adjusted unallocated corporate expense | (75.7 | ) | (46.7 | ) | (47.0 | ) | (67.2 | ) | ||||
| Unallocated depreciation and amortization | 7.8 | 8.1 | 7.7 | 7.2 | ||||||||
| Unallocated other income/(expense), net | (6.6 | ) | 9.1 | 0.6 | (6.8 | ) | ||||||
| Total adjusted EBITDA* | $ | 295.5 | $ | 654.5 | $ | 620.0 | $ | 413.1 | ||||
| Total adjusted EBITDA as a percentage of net revenues* | 10.5 | % | 18.1 | % | 17.9 | % | 13.0 | % | ||||
| Reconciliation of adjusted EBITDA* to net earnings | ||||||||||||
| Total adjusted EBITDA* | $ | 295.5 | $ | 654.5 | $ | 620.0 | $ | 413.1 | ||||
| Interest expense | (51.0 | ) | (64.5 | ) | (63.9 | ) | (63.4 | ) | ||||
| Provision for income taxes | (20.2 | ) | (91.9 | ) | (80.5 | ) | (46.0 | ) | ||||
| Depreciation and amortization | (70.9 | ) | (72.2 | ) | (72.7 | ) | (73.0 | ) | ||||
| Restructuring costs | (6.1 | ) | (13.3 | ) | (16.6 | ) | (16.6 | ) | ||||
| Net earnings from continuing operations | 147.3 | 412.6 | 386.3 | 214.1 | ||||||||
| Discontinued operations | 56.4 | 47.7 | 77.1 | 87.0 | ||||||||
| Net earnings | $ | 203.7 | $ | 460.3 | $ | 463.4 | $ | 301.1 |
*Represents a non-GAAP measure, refer to page 6 for definitions.
3
| TABLE 2 | Three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollar amounts in millions | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | ||||||||
| Americas | ||||||||||||
| Net revenues | $ | 1,918.3 | $ | 2,657.8 | $ | 2,456.4 | $ | 2,186.9 | ||||
| Segment operating income* | 191.0 | 459.9 | 419.6 | 269.0 | ||||||||
| Segment operating income as a percentage of net revenues* | 10.0 | % | 17.3 | % | 17.1 | % | 12.3 | % | ||||
| Restructuring costs | 2.3 | 1.5 | 13.4 | 10.3 | ||||||||
| Adjusted operating income* | 193.3 | 461.4 | 433.0 | 279.3 | ||||||||
| Adjusted operating income as a percentage of revenues* | 10.1 | % | 17.4 | % | 17.6 | % | 12.8 | % | ||||
| Depreciation and amortization | 53.6 | 52.3 | 51.2 | 51.7 | ||||||||
| Other income/(expense), net | (2.4 | ) | 0.7 | (4.5 | ) | (4.1 | ) | |||||
| Segment adjusted EBITDA | $ | 244.5 | $ | 514.4 | $ | 479.7 | $ | 326.9 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 12.7 | % | 19.4 | % | 19.5 | % | 14.9 | % | ||||
| Europe, Middle East and Africa | ||||||||||||
| Net revenues | $ | 409.6 | $ | 485.3 | $ | 459.2 | $ | 477.0 | ||||
| Segment operating income* | 47.1 | 76.0 | 76.1 | 72.8 | ||||||||
| Segment operating income as a percentage of net revenues* | 11.5 | % | 15.7 | % | 16.6 | % | 15.3 | % | ||||
| Restructuring costs | 1.6 | 1.9 | 0.8 | 0.3 | ||||||||
| Adjusted operating income* | 48.7 | 77.9 | 76.9 | 73.1 | ||||||||
| Adjusted operating income as a percentage of revenues* | 11.9 | % | 16.1 | % | 16.7 | % | 15.3 | % | ||||
| Depreciation and amortization | 7.4 | 7.6 | 7.7 | 7.3 | ||||||||
| Other income/(expense), net | 1.2 | (3.2 | ) | (1.3 | ) | (0.6 | ) | |||||
| Segment adjusted EBITDA | $ | 57.3 | $ | 82.3 | $ | 83.3 | $ | 79.8 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 14.0 | % | 17.0 | % | 18.1 | % | 16.7 | % | ||||
| Asia Pacific | ||||||||||||
| Net revenues | $ | 281.9 | $ | 350.7 | $ | 323.1 | $ | 337.6 | ||||
| Segment operating income* | 22.3 | 46.8 | 39.9 | 45.7 | ||||||||
| Segment operating income as a percentage of net revenues* | 7.9 | % | 13.3 | % | 12.3 | % | 13.5 | % | ||||
| Restructuring costs | — | 0.8 | 0.7 | 0.5 | ||||||||
| Adjusted operating income* | 22.3 | 47.6 | 40.6 | 46.2 | ||||||||
| Adjusted operating income as a percentage of revenues* | 7.9 | % | 13.6 | % | 12.6 | % | 13.7 | % | ||||
| Depreciation and amortization | 3.3 | 3.3 | 3.3 | 3.3 | ||||||||
| Other income/(expense), net | 0.1 | 3.2 | (0.8 | ) | 0.8 | |||||||
| Segment adjusted EBITDA | $ | 25.7 | $ | 54.1 | $ | 43.1 | $ | 50.3 | ||||
| Segment adjusted EBITDA as a percentage of net revenues | 9.1 | % | 15.4 | % | 13.3 | % | 14.9 | % |
4
| TABLE 2 (continued) | Three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollar amounts in millions | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | ||||||||
| Total net revenues | $ | 2,609.8 | $ | 3,493.8 | $ | 3,238.7 | $ | 3,001.5 | ||||
| Reconciliation to adjusted operating income* | ||||||||||||
| Segment operating income* from reportable segments | $ | 260.4 | $ | 582.7 | $ | 535.6 | $ | 387.5 | ||||
| Restructuring costs from reportable segments | 3.9 | 4.2 | 14.9 | 11.1 | ||||||||
| Adjusted operating income from reportable segments* | 264.3 | 586.9 | 550.5 | 398.6 | ||||||||
| Adjusted operating income from reportable segments as a percentage of net revenues* | 10.1 | % | 16.8 | % | 17.0 | % | 13.3 | % | ||||
| Unallocated corporate expense | (76.9 | ) | (63.6 | ) | (59.3 | ) | (54.3 | ) | ||||
| Corporate and other restructuring costs | 4.8 | 1.4 | 0.4 | 2.8 | ||||||||
| Total adjusted unallocated corporate expense | (72.1 | ) | (62.2 | ) | (58.9 | ) | (51.5 | ) | ||||
| Total adjusted operating income* | 192.2 | 524.7 | 491.6 | 347.1 | ||||||||
| Adjusted operating income as a percentage of net revenues* | 7.4 | % | 15.0 | % | 15.2 | % | 11.6 | % | ||||
| Reconciliation to adjusted EBITDA* | ||||||||||||
| Adjusted operating income from reportable segments* | 264.3 | 586.9 | 550.5 | 398.6 | ||||||||
| Depreciation and amortization from reportable segments | 64.3 | 63.2 | 62.2 | 62.3 | ||||||||
| Other income/(expense), net from reportable segments | (1.1 | ) | 0.7 | (6.6 | ) | (3.9 | ) | |||||
| Total segment adjusted EBITDA | 327.5 | 650.8 | 606.1 | 457.0 | ||||||||
| Total segment adjusted EBITDA as a percentage of net revenues | 12.5 | % | 18.6 | % | 18.7 | % | 15.2 | % | ||||
| Total adjusted unallocated corporate expense | (72.1 | ) | (62.2 | ) | (58.9 | ) | (51.5 | ) | ||||
| Unallocated depreciation and amortization | 8.1 | 10.9 | 3.7 | 7.6 | ||||||||
| Unallocated other income/(expense), net | (3.1 | ) | (3.0 | ) | (0.9 | ) | (15.4 | ) | ||||
| Total adjusted EBITDA* | $ | 260.4 | $ | 596.5 | $ | 550.0 | $ | 397.7 | ||||
| Total adjusted EBITDA as a percentage of net revenues* | 10.0 | % | 17.1 | % | 17.0 | % | 13.3 | % | ||||
| Reconciliation of adjusted EBITDA* to net earnings | ||||||||||||
| Total adjusted EBITDA* | $ | 260.4 | $ | 596.5 | $ | 550.0 | $ | 397.7 | ||||
| Interest expense | (72.8 | ) | (50.6 | ) | (48.6 | ) | (49.0 | ) | ||||
| Provision for income taxes | (16.8 | ) | (98.5 | ) | 17.6 | (137.2 | ) | |||||
| Depreciation and amortization | (72.4 | ) | (74.1 | ) | (65.9 | ) | (69.9 | ) | ||||
| Restructuring costs | (8.7 | ) | (5.6 | ) | (15.3 | ) | (13.9 | ) | ||||
| Net earnings from continuing operations | 89.7 | 367.7 | 437.8 | 127.7 | ||||||||
| Discontinued operations | 34.4 | 84.9 | 81.6 | 133.7 | ||||||||
| Net earnings | $ | 124.1 | $ | 452.6 | $ | 519.4 | $ | 261.4 |
*Represents a non-GAAP measure, refer to page 6 for definitions.
5
Non-GAAP measures definitions
Segment operating income is defined as GAAP operating income excluding unallocated corporate expenses.
Segment operating income as a percentage of net revenues is defined as segment operating income divided by net revenues.
Adjusted operating income is defined as GAAP operating income plus restructuring costs.
Adjusted operating income as a percentage of net revenues is defined as adjusted operating income divided by net revenues.
Adjusted EBITDA is defined as GAAP net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring and discontinued operations.
Adjusted EBITDA as a percentage of net revenues is defined as adjusted EBITDA divided by net revenues.
6
Exhibit
Exhibit 99.2
UNAUDITED SELECTED ADJUSTED NON-GAAP FINANCIAL INFORMATION
The following unaudited selected adjusted non-GAAP financial information of Trane Technologies plc (the "Company", "we" or "our") for the quarters ended March 31, June 30, September 30, and December 31 of 2019 and 2018 was derived from the unaudited recast financial information presented in Exhibit 99.1 to this Current Report on Form 8-K, and further adjusted as described under "Non-GAAP Financial Information" below and the footnotes to the tables.
Non-GAAP Financial Information
The Company reports its financial results in accordance with generally accepted accounting principles in the United States ("GAAP"). The unaudited selected adjusted non-GAAP financial information provides adjusted non-GAAP financial information and a quantitative reconciliation of the difference between the non-GAAP financial measures and the GAAP financial measures.
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. We believe that it is meaningful to provide the relative impact of restructuring and financing charges and the corresponding tax impact in order to present a better understanding of our results on a period to period comparative basis.
The non-GAAP financial measures assist investors with analyzing our business results. We believe that the presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as management. 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.
The following unaudited selected adjusted non-GAAP financial information should be read in conjunction with the historical consolidated financial statements of the Company, the accompanying notes to those financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and 2019, for the six months ended June 30, 2019 and for the nine months ended September 30, 2019 and in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
1
TRANE TECHNOLOGIES PLC
2019 UNAUDITED SELECTED ADJUSTED NON-GAAP FINANCIAL INFORMATION
| For the quarter ended March 31, 2019 | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | ||||||||||||||||||||
| Net revenues | $ | 2,803.7 | $ | — | $ | 2,803.7 | ||||||||||||||||||
| Operating income | 236.5 | 6.1 | (b) | 242.6 | ||||||||||||||||||||
| Operating margin | 8.4 | % | 8.7 | % | ||||||||||||||||||||
| Earnings from continuing operations before income taxes | 167.5 | 6.1 | (b) | 173.6 | ||||||||||||||||||||
| Provision for income taxes | (20.2 | ) | (1.1 | ) | (d) | (21.3 | ) | |||||||||||||||||
| Tax rate | 12.1 | % | 12.3 | % | ||||||||||||||||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 144.2 | $ | 5.0 | (h) | $ | 149.2 | |||||||||||||||||
| Diluted earnings per common share | ||||||||||||||||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 0.59 | $ | 0.02 | $ | 0.61 | ||||||||||||||||||
| Weighted-average number of common shares outstanding | ||||||||||||||||||||||||
| Diluted | 245.2 | — | 245.2 | For the quarter ended June 30, 2019 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | ||||||||||||||||||||
| Net revenues | $ | 3,617.6 | $ | — | $ | 3,617.6 | ||||||||||||||||||
| Operating income | 566.9 | 13.3 | (b) | 580.2 | ||||||||||||||||||||
| Operating margin | 15.7 | % | 16.0 | % | ||||||||||||||||||||
| Earnings from continuing operations before income taxes | 504.5 | 13.3 | (b) | 517.8 | ||||||||||||||||||||
| Provision for income taxes | (91.9 | ) | (2.3 | ) | (d) | (94.2 | ) | |||||||||||||||||
| Tax rate | 18.2 | % | 18.2 | % | ||||||||||||||||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 409.1 | $ | 11.0 | (h) | $ | 420.1 | |||||||||||||||||
| Diluted earnings per common share | ||||||||||||||||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 1.67 | $ | 0.05 | $ | 1.72 | ||||||||||||||||||
| Weighted-average number of common shares outstanding | ||||||||||||||||||||||||
| Diluted | 244.9 | — | 244.9 |
See Notes to Unaudited Selected Adjusted Non-GAAP Financial Information
2
TRANE TECHNOLOGIES PLC
2019 UNAUDITED SELECTED ADJUSTED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
| For the quarter ended September 30, 2019 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 3,470.9 | $ | — | $ | 3,470.9 | |||||
| Operating income | 536.5 | 16.6 | (b) | 553.1 | |||||||
| Operating margin | 15.5 | % | 15.9 | % | |||||||
| Earnings from continuing operations before income taxes | 466.8 | 16.6 | (b) | 483.4 | |||||||
| Provision for income taxes | (80.5 | ) | (3.0 | ) | (d) | (83.5 | ) | ||||
| Tax rate | 17.2 | % | 17.3 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 382.6 | $ | 13.6 | (h) | $ | 396.2 | ||||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 1.57 | $ | 0.05 | $ | 1.62 | |||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 244.6 | — | 244.6 | ||||||||
| For the quarter ended December 31, 2019 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 3,183.7 | $ | — | $ | 3,183.7 | |||||
| Operating income | 330.2 | 16.6 | (b) | 346.8 | |||||||
| Operating margin | 10.4 | % | 10.9 | % | |||||||
| Earnings from continuing operations before income taxes | 260.1 | 16.6 | (b) | 276.7 | |||||||
| Provision for income taxes | (46.0 | ) | (2.6 | ) | (d)(e) | (48.6 | ) | ||||
| Tax rate | 17.7 | % | 17.6 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 209.2 | $ | 14.0 | (h) | $ | 223.2 | ||||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 0.86 | $ | 0.06 | $ | 0.92 | |||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 242.9 | — | 242.9 |
See Notes to Unaudited Selected Adjusted Non-GAAP Financial Information
3
TRANE TECHNOLOGIES PLC
2018 UNAUDITED SELECTED ADJUSTED NON-GAAP FINANCIAL INFORMATION
| For the quarter ended March 31, 2018 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 2,609.8 | $ | — | $ | 2,609.8 | |||||
| Operating income | 183.5 | 8.7 | (b) | 192.2 | |||||||
| Operating margin | 7.0 | % | 7.4 | % | |||||||
| Earnings from continuing operations before income taxes | 106.5 | 25.3 | (b)(c) | 131.8 | |||||||
| Provision for income taxes | (16.8 | ) | (5.6 | ) | (d) | (22.4 | ) | ||||
| Tax rate | 15.8 | % | 17.0 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 86.9 | $ | 19.7 | (h) | $ | 106.6 | ||||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 0.35 | $ | 0.07 | $ | 0.42 | |||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 253.0 | — | 253.0 | ||||||||
| For the quarter ended June 30, 2018 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 3,493.8 | $ | — | $ | 3,493.8 | |||||
| Operating income | 519.1 | 5.6 | (b) | 524.7 | |||||||
| Operating margin | 14.9 | % | 15.0 | % | |||||||
| Earnings from continuing operations before income taxes | 466.2 | 5.6 | (b) | 471.8 | |||||||
| Provision for income taxes | (98.5 | ) | 0.1 | (d)(f) | (98.4 | ) | |||||
| Tax rate | 21.1 | % | 20.9 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 364.2 | $ | 5.7 | (h) | $ | 369.9 | ||||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 1.46 | $ | 0.02 | $ | 1.48 | |||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 250.1 | — | 250.1 |
See Notes to Unaudited Selected Adjusted Non-GAAP Financial Information
4
TRANE TECHNOLOGIES PLC
2018 UNAUDITED SELECTED ADJUSTED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
| For the quarter ended September 30, 2018 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 3,238.7 | $ | — | $ | 3,238.7 | |||||
| Operating income | 476.3 | 15.3 | (b) | 491.6 | |||||||
| Operating margin | 14.7 | % | 15.2 | % | |||||||
| Earnings from continuing operations before income taxes | 420.2 | 15.3 | (b) | 435.5 | |||||||
| Provision for income taxes | 17.6 | (89.9 | ) | (d)(f)(g) | (72.3 | ) | |||||
| Tax rate | 4.2 | % | 16.6 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 434.2 | $ | (74.6 | ) | (h) | $ | 359.6 | |||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 1.74 | $ | (0.29 | ) | $ | 1.45 | ||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 249.5 | — | 249.5 | ||||||||
| For the quarter ended December 31, 2018 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| In millions, except per share amounts | Trane Technologies | Non-GAAP Adjustments (a) | Note | As Adjusted | |||||||
| Net revenues | $ | 3,001.5 | $ | — | $ | 3,001.5 | |||||
| Operating income | 333.2 | 13.9 | (b) | 347.1 | |||||||
| Operating margin | 11.1 | % | 11.6 | % | |||||||
| Earnings from continuing operations before income taxes | 264.9 | 13.9 | (b) | 278.8 | |||||||
| Provision for income taxes | (137.2 | ) | 65.7 | (d)(f)(g) | (71.5 | ) | |||||
| Tax rate | 51.8 | % | 25.6 | % | |||||||
| Net earnings from continuing operations attributable to Trane Technologies plc | $ | 122.5 | $ | 79.6 | (h) | $ | 202.1 | ||||
| Diluted earnings per common share | |||||||||||
| Continuing operations attributable to Trane Technologies plc | $ | 0.50 | $ | 0.32 | $ | 0.82 | |||||
| Weighted-average number of common shares outstanding | |||||||||||
| Diluted | 247.7 | — | 247.7 |
See Notes to Unaudited Selected Adjusted Non-GAAP Financial Information
5
Trane Technologies plc
Notes to Unaudited Selected Adjusted Non-GAAP Financial Information
| (a) | Non-GAAP adjustments to reconcile GAAP financial information to non-GAAP financial information: |
|---|
2019 Non-GAAP adjustments
| In millions | For the quarter ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Detail of Non-GAAP Adjustments: | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | ||||||||||
| (b) | Restructuring costs | $ | 6.1 | $ | 13.3 | $ | 16.6 | $ | 16.6 | |||||
| (d) | Tax impact of adjustment (b) | (1.1 | ) | (2.3 | ) | (3.0 | ) | (3.2 | ) | |||||
| (e) | Separation related tax costs | — | — | — | 0.6 | |||||||||
| (h) | Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc | $ | 5.0 | $ | 11.0 | $ | 13.6 | $ | 14.0 |
2018 Non-GAAP adjustments
| In millions | For the quarter ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Detail of Non-GAAP Adjustments: | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | ||||||||||
| (b) | Restructuring costs | $ | 8.7 | $ | 5.6 | $ | 15.3 | $ | 13.9 | |||||
| (c) | Debt redemption premium and related charges | 16.6 | — | — | — | |||||||||
| (d) | Tax impact of adjustments (b,c) | (5.6 | ) | (1.5 | ) | (3.3 | ) | (3.0 | ) | |||||
| (f) | Tax Reform non-cash measurement period adjustments | — | 1.6 | (77.1 | ) | 66.5 | ||||||||
| (g) | U.S. discrete non-cash tax adjustment | — | — | (9.5 | ) | 2.2 | ||||||||
| (h) | Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc | $ | 19.7 | $ | 5.7 | $ | (74.6 | ) | $ | 79.6 |
The non-GAAP adjustments above exclude the financial results of Ingersoll Rand Industrial as it is presented as a discontinued operation for periods prior to February 29, 2020 (Distribution date).
6