Highlights (second-quarter 2022 versus second-quarter 2021,
unless otherwise noted):
- Reported bookings of $4.6 billion, up 6 percent; organic
bookings* up 7 percent
- Reported revenues of $4.2 billion, up 9 percent; organic
revenues* up 11 percent
- GAAP operating income up 9 percent; adjusted operating
income* up 8 percent
- GAAP continuing EPS of $2.17; adjusted continuing EPS* of
$2.16, up 13 percent
- Record backlog of $6.5 billion, up 43 percent; positioned
well for 2022 and 2023
*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.
Trane Technologies plc (NYSE:TT), a global climate innovator,
today reported diluted earnings per share (EPS) from continuing
operations of $2.17 for the second quarter of 2022. Adjusted
continuing EPS was $2.16, up 13 percent, which excludes a net gain
of $3.3 million related primarily to non-cash adjustments,
transformation and other restructuring costs.
Second-Quarter 2022 Results
Financial Comparisons - Second-Quarter Continuing
Operations
$, millions except EPS
Q2 2022
Q2 2021
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$4,645
$4,384
6%
7%
Net Revenues
$4,190
$3,830
9%
11%
GAAP Operating Income
$711
$651
9%
GAAP Operating Margin
17.0%
17.0%
flat
Adjusted Operating Income*
$707
$656
8%
Adjusted Operating Margin*
16.9%
17.1%
(20 bps)
Adjusted EBITDA*
$786
$731
8%
Adjusted EBITDA Margin*
18.7%
19.1%
(40 bps)
GAAP Continuing EPS
$2.17
$1.91
14%
Adjusted Continuing EPS
$2.16
$1.92
13%
Restructuring and Transformation
Costs**
$3.3
($5.3)
$8.6
**Primarily related to non-cash
adjustments, transformation and other restructuring costs. For
details see table 2 of the news release.
“Trane Technologies delivered another record quarter of
financial performance thanks to strong execution of our
purpose-driven sustainability strategy,” said Dave Regnery, chair
and CEO of Trane Technologies. “Customer demand for our innovative
solutions in decarbonization and healthy, efficient spaces has
never been higher, with second-quarter bookings of $4.6 billion
eclipsing any quarter in the company’s history.
“With the strength of our global team and the power of our
business operating system, we remain confident in our ability to
navigate persistent macro challenges and have raised our full-year
guidance for revenue and EPS. As we look forward, our record
backlog, financial strength, and leading innovation across a
resilient portfolio of products and services position us well to
deliver differentiated financial performance and shareholder
returns in 2022 and over the long-term.”
Highlights from the Second Quarter of 2022 (all comparisons
against second quarter of 2021 unless otherwise noted)
- Robust demand drove record second-quarter revenue, operating
income and strong EPS growth. Well positioned for the second half
of 2022 and 2023 with record backlog of approximately $6.5 billion
and record quarterly bookings.
- Enterprise reported and organic bookings were up 6 percent and
7 percent, respectively.
- Enterprise reported revenues were up 9 percent including
approximately 2 percentage points of negative foreign exchange
impact. Organic revenues were up 11 percent.
- GAAP operating margin was flat, adjusted operating and adjusted
EBITDA margins were down 20 and 40 basis points, respectively.
Price versus material inflation was positive on a dollar basis.
Total productivity and other inflation was negatively impacted by
continued supply chain challenges including continued investment in
spot buys and expedited freight to meet customer needs.
Second-Quarter Business Review (all comparisons against
second quarter of 2021 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
Q2 2022
Q2 2021
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$3,714.5
$3,359.0
11%
10%
Net Revenues
$3,386.3
$2,971.6
14%
13%
GAAP Operating Income
$643.7
$560.1
15%
GAAP Operating Margin
19.0%
18.8%
20 bps
Adjusted Operating Income
$635.2
$561.8
13%
Adjusted Operating Margin
18.8%
18.9%
(10 bps)
Adjusted EBITDA
$702.2
$621.0
13%
Adjusted EBITDA Margin
20.7%
20.9%
(20 bps)
- Americas delivered record quarterly revenue and bookings as
customer demand for innovative products and services remained
strong despite significant impacts from supply chain
constraints.
- Reported and organic bookings were up 11 percent and 10
percent, respectively. Americas exited the second quarter of 2022
with record backlog.
- Reported and organic revenues were up 14 percent and 13
percent, respectively.
- GAAP operating margin was up 20 basis points, adjusted
operating margin was down 10 basis points and adjusted EBITDA
margin was down 20 basis points. Volume growth, positive price
versus material inflation and productivity were more than offset by
negative impacts from other inflation related to supply chain,
freight, logistics and continued business reinvestment.
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
Q2 2022
Q2 2021
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$493.6
$629.8
(22)%
(12)%
Net Revenues
$521.6
$523.2
flat
11%
GAAP Operating Income
$83.7
$99.1
(16)%
GAAP Operating Margin
16.0%
18.9%
(290 bps)
Adjusted Operating Income
$86.3
$99.5
(13)%
Adjusted Operating Margin
16.5%
19.0%
(250 bps)
Adjusted EBITDA
$92.4
$107.3
(14)%
Adjusted EBITDA Margin
17.7%
20.5%
(280 bps)
- Reported and organic bookings were down 22 percent and 12
percent, respectively. As expected, the bookings decline was driven
by the Company's management of order timing in Transport to help
protect the backlog from pricing inflation. Commercial HVAC
bookings were up low-teens.
- Reported revenues were flat, including approximately 11
percentage points of negative foreign exchange impact. Organic
revenues were up 11 percent. Commercial HVAC and Transport
delivered organic revenue growth of high single digits and low
teens, respectively.
- GAAP operating margin was down 290 basis points. Adjusted
operating margin was down 250 basis points and adjusted EBITDA
margin was down 280 basis points. Volume growth and price were more
than offset by material inflation, negative impacts from foreign
exchange, and productivity versus other inflation, arising from
supply chain, freight and logistics challenges.
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
Q2 2022
Q2 2021
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$437.4
$394.9
11%
16%
Net Revenues
$282.5
$334.9
(16)%
(12)%
GAAP Operating Income
$40.6
$57.8
(30)%
GAAP Operating Margin
14.4%
17.3%
(290 bps)
Adjusted Operating Income
$40.4
$57.5
(30)%
Adjusted Operating Margin
14.3%
17.2%
(290 bps)
Adjusted EBITDA
$43.2
$63.0
(31)%
Adjusted EBITDA Margin
15.3%
18.8%
(350 bps)
- Reported bookings were up 11 percent while organic bookings
were up 16 percent. Asia Pacific exited the second quarter of 2022
with record backlog.
- As expected, revenues in the quarter were negatively impacted
by COVID-19 lockdowns in China. Reported revenues were down 16
percent including approximately 4 percentage points of negative
foreign exchange impact. Organic revenues were down 12
percent.
- GAAP operating margin and adjusted operating margin were both
down 290 basis points and adjusted EBITDA margin was down 350 basis
points, driven by lower volumes in the quarter. Price versus
material inflation was positive in the quarter.
Balance Sheet and Cash Flow
$, millions
Q2 2022
Q2 2021
Y-O-Y Change
Cash From Continuing Operating
Activities Y-T-D
$418
$752
($334)
Free Cash Flow Y-T-D*
$387
$696
($309)
Working Capital/Revenue*
4.0%
1.5%
250 bps increase
Cash Balance 30 June
$1,090
$2,912
($1,822)
Debt Balance 30 June
$4,837
$4,965
($128)
- Through June 30, 2022, the Company had cash flow from
continuing operating activities of $418 million and generated free
cash flow of $387 million.
- During the second quarter, the Company deployed $155 million in
dividends, $110 million in M&A and $300 million in share
repurchases. Year-to-date the Company has deployed $650 million for
share repurchases and has approximately $3.7 billion remaining
under current authorizations.
- The Company expects to continue to pay a competitive and
growing dividend and to deploy 100 percent of excess cash to
shareholders over time.
Raises Full-Year 2022 Revenue and EPS Guidance
- The Company expects full-year reported revenue growth of
approximately 11 percent; organic revenue growth of approximately
12 percent versus full-year 2021.
- GAAP continuing EPS of $6.98 to $7.08, including EPS of $(0.07)
for transformation, executive retirement and restructuring and
other items; adjusted continuing EPS of $7.05 to $7.15.
- Additional information regarding the Company's 2022 guidance is
included in the Company's earnings presentation found at
www.tranetechnologies.com in the Investor Relations section.
This news release 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 acquisitions, if any; 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; cybersecurity risks,
global economic conditions taking into account the global COVID-19
pandemic, and the war in Ukraine and potential recessions and
economic downturns; commodity shortages, supply chain constraints
and price increases; the outcome of any litigation, risks and
uncertainties associated with Chapter 11 proceedings for our
deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC;
demand for our products and services; and tax audits 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, 2021, 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.
# # #
8/3/22
(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
*Q2 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.
Adjusted operating income in 2022 is defined as GAAP
operating income plus restructuring costs, transformation costs and
non-cash adjustments for contingent consideration. Adjusted
operating income 2021 is defined as GAAP operating income plus
restructuring costs and transformation 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. Q2 2022)
less the prior period (e.g. Q2 2021), 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 2022 is
defined as GAAP earnings from continuing operations attributable to
Trane Technologies plc plus restructuring costs, transformation
costs and non-cash adjustments for contingent consideration, net of
tax impacts. Adjusted net earnings in 2021 is defined as GAAP
earnings from continuing operations attributable to Trane
Technologies plc plus restructuring costs and transformation 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 2022 is defined as GAAP
continuing EPS plus restructuring costs, transformation costs and
non-cash adjustments for contingent consideration, net of tax
impacts. Adjusted continuing EPS in 2021 is defined as GAAP
continuing EPS plus restructuring costs and transformation 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 2022 and 2021 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 2022 is defined as net cash provided by
(used in) continuing operating activities, less capital
expenditures, plus cash payments for restructuring costs,
transformation costs and the continuing operations component of the
qualified settlement fund (QSF) Funding. Free cash flow in 2021 is
defined as net cash provided by (used in) continuing operating
activities, less capital expenditures, plus cash payments for
restructuring costs and transformation costs. 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 revenue is calculated by
dividing the working capital balance (e.g. as of June 30) by the
annualized revenue for the period (e.g. reported revenues for the
three months ended June 30 multiplied by 4 to annualize for a full
year).
Adjusted effective tax rate for 2022 is defined as the
ratio of income tax expense less the net tax effect of adjustments
for restructuring costs, transformation costs and non-cash
adjustments for contingent consideration divided by earnings from
continuing operations before income taxes plus restructuring costs,
transformation costs and non-cash adjustments for contingent
consideration. Adjusted effective tax rate for 2021 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. 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 six months
ended June 30,
ended June 30,
2022
2021
2022
2021
Net revenues
$
4,190.4
$
3,829.7
$
7,545.9
$
6,847.3
Cost of goods sold
(2,867.0
)
(2,559.0
)
(5,233.5
)
(4,623.4
)
Selling and administrative expenses
(612.8
)
(619.7
)
(1,213.6
)
(1,219.7
)
Operating income
710.6
651.0
1,098.8
1,004.2
Interest expense
(55.9
)
(59.3
)
(111.9
)
(120.0
)
Other income/(expense), net
(1.6
)
0.3
(2.3
)
(6.9
)
Earnings before income taxes
653.1
592.0
984.6
877.3
Provision for income taxes
(136.6
)
(122.8
)
(197.7
)
(171.2
)
Earnings from continuing operations
516.5
469.2
786.9
706.1
Discontinued operations, net of tax
(1.6
)
(0.2
)
(8.6
)
0.7
Net earnings
514.9
469.0
778.3
706.8
Less: Net earnings from continuing
operations attributable to noncontrolling interests
(5.6
)
(4.3
)
(8.8
)
(6.9
)
Net earnings attributable to Trane
Technologies plc
$
509.3
$
464.7
$
769.5
$
699.9
Amounts attributable
to Trane Technologies plc ordinary shareholders:
Continuing operations
$
510.9
$
464.9
$
778.1
$
699.2
Discontinued operations
(1.6
)
(0.2
)
(8.6
)
0.7
Net earnings
$
509.3
$
464.7
$
769.5
$
699.9
Diluted earnings
(loss) per share attributable to Trane Technologies plc ordinary
shareholders:
Continuing operations
$
2.17
$
1.91
$
3.29
$
2.87
Discontinued operations
(0.01
)
—
(0.03
)
0.01
Net earnings
$
2.16
$
1.91
$
3.26
$
2.88
Weighted-average number of common shares
outstanding:
Diluted
235.7
243.4
236.4
243.3
Table 2
TRANE TECHNOLOGIES PLC
Reconciliation of GAAP to
non-GAAP
(In millions, except per share
amounts)
UNAUDITED
For the quarter ended June 30,
2022
For the six months ended June 30,
2022
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
Net revenues
$
4,190.4
$
—
$
4,190.4
$
7,545.9
$
—
$
7,545.9
Operating income
710.6
(3.3
)
(a,b,c)
707.3
1,098.8
(6.6
)
(a,b,c)
1,092.2
Operating margin
17.0
%
16.9
%
14.6
%
14.5
%
Earnings from continuing operations before
income taxes
653.1
(3.3
)
(a,b,c)
649.8
984.6
(6.6
)
(a,b,c)
978.0
Benefit (Provision) for income taxes
(136.6
)
1.1
(d)
(135.5
)
(197.7
)
1.9
(d)
(195.8
)
Tax rate
20.9
%
20.9
%
20.1
%
20.0
%
Earnings from continuing operations
attributable to Trane Technologies plc
$
510.9
$
(2.2
)
(e)
$
508.7
$
778.1
$
(4.7
)
(e)
$
773.4
Diluted earnings per
common share
Continuing operations
$
2.17
$
(0.01
)
$
2.16
$
3.29
$
(0.02
)
$
3.27
Weighted-average number of common shares
outstanding:
Diluted
235.7
—
235.7
236.4
—
236.4
Detail of
Adjustments:
(a)
Non-cash adjustments for contingent
consideration (SG&A)
$
(9.6
)
$
(16.1
)
(b)
Restructuring costs (COGS &
SG&A)
4.1
5.4
(c)
Transformation costs (SG&A)
2.2
4.1
(d)
Tax impact of adjustments (a,b,c)
1.1
1.9
(e)
Impact of adjustments on earnings from
continuing operations attributable to Trane Technologies plc
$
(2.2
)
$
(4.7
)
Pre-tax impact of adjustments on cost of
goods sold
$
1.3
$
4.5
Pre-tax impact of adjustments on selling
& administrative expenses
(4.6
)
(11.1
)
Pre-tax impact of adjustments on operating
income
$
(3.3
)
$
(6.6
)
Table 3
TRANE TECHNOLOGIES PLC
Reconciliation of GAAP to
non-GAAP
(In millions, except per share
amounts)
UNAUDITED
For the quarter ended June 30,
2021
For the six months ended June 30,
2021
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
Net revenues
$
3,829.7
$
—
$
3,829.7
$
6,847.3
$
—
$
6,847.3
Operating income
651.0
5.3
(a,b)
656.3
1,004.2
20.0
(a,b)
1,024.2
Operating margin
17.0
%
17.1
%
14.7
%
15.0
%
Earnings from continuing operations before
income taxes
592.0
5.3
(a,b)
597.3
877.3
20.0
(a,b)
897.3
Provision for income taxes
(122.8
)
(1.8
)
(c)
(124.6
)
(171.2
)
(5.4
)
(c)
(176.6
)
Tax rate
20.7
%
20.9
%
19.5
%
19.7
%
Earnings from continuing operations
attributable to Trane Technologies plc
$
464.9
$
3.5
(d)
$
468.4
$
699.2
$
14.6
(d)
$
713.8
Diluted earnings per
common share
Continuing operations
$
1.91
$
0.01
$
1.92
$
2.87
$
0.06
$
2.93
Weighted-average number of common shares
outstanding:
Diluted
243.4
—
243.4
243.3
—
243.3
Detail of
Adjustments:
(a)
Restructuring costs (COGS &
SG&A)
$
1.5
$
11.8
(b)
Transformation costs (SG&A)
3.8
8.2
(c)
Tax impact of adjustments (a,b)
(1.8
)
(5.4
)
(d)
Impact of adjustments on earnings from
continuing operations attributable to Trane Technologies plc
$
3.5
$
14.6
Pre-tax impact of adjustments on cost of
goods sold
$
0.8
$
2.6
Pre-tax impact of adjustments on selling
& administrative expenses
4.5
17.4
Pre-tax impact of adjustments on operating
income
$
5.3
$
20.0
Table 4
TRANE TECHNOLOGIES PLC
Reconciliation of GAAP to
non-GAAP
(In millions)
UNAUDITED
For the quarter ended
June 30, 2022
For the quarter ended
June 30, 2021
As Reported
Margin
As Reported
Margin
Americas
Net revenues
$
3,386.3
$
2,971.6
Segment operating income
$
643.7
19.0
%
$
560.1
18.8
%
Restructuring/Other (a)
(8.5
)
(0.2
)%
1.7
0.1
%
Adjusted operating income *
635.2
18.8
%
561.8
18.9
%
Depreciation and amortization
63.4
1.9
%
56.3
1.9
%
Other income/(expense), net
3.6
—
%
2.9
0.1
%
Adjusted EBITDA *
$
702.2
20.7
%
$
621.0
20.9
%
Europe, Middle
East & Africa
Net revenues
$
521.6
$
523.2
Segment operating income
$
83.7
16.0
%
$
99.1
18.9
%
Restructuring
2.6
0.5
%
0.4
0.1
%
Adjusted operating income
86.3
16.5
%
99.5
19.0
%
Depreciation and amortization
6.9
1.3
%
8.6
1.6
%
Other income/(expense), net
(0.8
)
(0.1
)%
(0.8
)
(0.1
)%
Adjusted EBITDA
$
92.4
17.7
%
$
107.3
20.5
%
Asia
Pacific
Net revenues
$
282.5
$
334.9
Segment operating income
$
40.6
14.4
%
$
57.8
17.3
%
Restructuring
(0.2
)
(0.1
)%
(0.3
)
(0.1
)%
Adjusted operating income
40.4
14.3
%
57.5
17.2
%
Depreciation and amortization
4.2
1.5
%
4.5
1.3
%
Other income/(expense), net
(1.4
)
(0.5
)%
1.0
0.3
%
Adjusted EBITDA
$
43.2
15.3
%
$
63.0
18.8
%
Corporate
Unallocated corporate expense
$
(57.4
)
$
(66.0
)
Restructuring/Other (b)
2.8
3.5
Adjusted corporate expense
(54.6
)
(62.5
)
Depreciation and amortization
5.3
5.4
Other income/(expense), net
(3.0
)
(2.8
)
Adjusted EBITDA
$
(52.3
)
$
(59.9
)
Total
Company
Net revenues
$
4,190.4
$
3,829.7
Operating income
$
710.6
17.0
%
$
651.0
17.0
%
Restructuring/Other (a,b)
(3.3
)
(0.1
)%
5.3
0.1
%
Adjusted operating income
707.3
16.9
%
656.3
17.1
%
Depreciation and amortization
79.8
1.9
%
74.8
2.0
%
Other income/(expense), net
(1.6
)
(0.1
)%
0.3
—
%
Adjusted EBITDA
$
785.5
18.7
%
$
731.4
19.1
%
*Represents a non-GAAP measure, refer to
pages 5-6 in the Earnings Release for definitions.
(a) Other within the Americas segment
includes a non-cash adjustment for contingent consideration of
$9.6M in 2022
(b) Other within Corporate includes
Transformation costs of $2.2M in 2022 and $3.8M in 2021
Management measures operating performance based on net earnings
excluding interest expense, income taxes, depreciation and
amortization, restructuring, non-cash adjustments for contingent
consideration, 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 June 30,
2022
2021
Total Company
Adjusted EBITDA *
$
785.5
$
731.4
Less: items to reconcile adjusted EBITDA
to net earnings attributable to Trane Technologies plc
Depreciation and amortization
(79.8
)
(74.8
)
Interest expense
(55.9
)
(59.3
)
Provision for income taxes
(136.6
)
(122.8
)
Restructuring
(4.1
)
(1.5
)
Transformation Costs
(2.2
)
(3.8
)
Non-cash adjustments for contingent
consideration
9.6
—
Discontinued operations, net of tax
(1.6
)
(0.2
)
Net earnings from continuing operations
attributable to noncontrolling interests
(5.6
)
(4.3
)
Net earnings attributable to Trane
Technologies plc
$
509.3
$
464.7
*Represents a non-GAAP measure, refer to
pages 5-6 in the Earnings Release for definitions.
Table 6
TRANE TECHNOLOGIES PLC
Condensed Consolidated Balance
Sheets
(In millions)
UNAUDITED
June 30,
December 31,
2022
2021
ASSETS
Cash and cash equivalents
$
1,090.2
$
2,159.2
Accounts and notes receivable, net
2,758.2
2,429.4
Inventories
1,886.9
1,530.8
Other current assets
389.9
351.5
Total current assets
6,125.2
6,470.9
Property, plant and equipment, net
1,425.9
1,398.8
Goodwill
5,456.6
5,504.8
Intangible assets, net
3,282.5
3,305.6
Other noncurrent assets
1,390.6
1,379.7
Total assets
$
17,680.8
$
18,059.8
LIABILITIES AND EQUITY
Accounts payable
$
2,000.2
$
1,787.3
Accrued expenses and other current
liabilities
2,580.3
2,614.7
Short-term borrowings and current
maturities of long-term debt
1,049.8
350.4
Total current liabilities
5,630.3
4,752.4
Long-term debt
3,786.7
4,491.7
Other noncurrent liabilities
2,524.5
2,542.6
Shareholders' Equity
5,739.3
6,273.1
Total liabilities and equity
$
17,680.8
$
18,059.8
Table 7
TRANE TECHNOLOGIES PLC
Condensed Consolidated
Statement of Cash Flows
(In millions)
UNAUDITED
For the six months
ended June 30,
2022
2021
Operating Activities
Earnings from continuing operations
$
786.9
$
706.1
Depreciation and amortization
157.1
150.8
Changes in assets and liabilities and
other non-cash items
(526.3
)
(105.1
)
Net cash provided by (used in) continuing
operating activities
417.7
751.8
Net cash provided by (used in)
discontinued operating activities
(184.2
)
(1.2
)
Net cash provided by (used in) operating
activities
233.5
750.6
Investing Activities
Capital expenditures, net
(143.9
)
(77.5
)
Acquisition of businesses, net of cash
acquired
(109.6
)
(12.8
)
Other investing activities, net
(4.6
)
(71.8
)
Net cash provided by (used in) continuing
investing activities
(258.1
)
(162.1
)
Net cash provided by (used in)
discontinued investing activities
(0.6
)
—
Net cash provided by (used in) investing
activities
(258.7
)
(162.1
)
Financing Activities
Payments of long-term debt
(7.5
)
(307.5
)
Dividends paid to ordinary
shareholders
(310.9
)
(281.6
)
Repurchase of ordinary shares
(650.1
)
(354.2
)
Other financing activities, net
(33.1
)
5.7
Net cash provided by (used in) financing
activities of continuing operations
(1,001.6
)
(937.6
)
Effect of exchange rate changes on cash
and cash equivalents
(42.2
)
(28.4
)
Net increase (decrease) in cash and cash
equivalents
(1,069.0
)
(377.5
)
Cash and cash equivalents - beginning of
period
2,159.2
3,289.9
Cash and cash equivalents - end of
period
$
1,090.2
$
2,912.4
Table 8
TRANE TECHNOLOGIES PLC
Balance Sheet Metrics and Free
Cash Flow
($ in millions)
UNAUDITED
June 30,
June 30,
December 31,
2022
2021
2021
Net Receivables
$
2,758
$
2,532
$
2,429
Days Sales Outstanding
60.1
60.3
62.1
Net Inventory
$
1,887
$
1,386
$
1,531
Inventory Turns
6.1
7.4
6.6
Accounts Payable
$
2,000
$
1,833
$
1,787
Days Payable Outstanding
63.7
65.4
64.5
-------------------------------------------------------------------------------------------------------------------------------------------------------
Six months ended
Six months ended
June 30, 2022
June 30, 2021
Cash flow provided by continuing operating
activities
$
417.7
$
751.8
Capital expenditures
(143.9
)
(77.5
)
Cash payments for restructuring
14.2
15.7
Transformation costs paid
7.4
6.4
QSF funding (continuing operations
component)1
91.8
—
Free cash flow *
$
387.2
$
696.4
1 On March 2, 2022, the Company funded
$270.0 million to the qualified settlement fund (QSF), of which
$91.8 million was allocated to continuing operations and $178.2
million was allocated to discontinued operations
*Represents a non-GAAP measure, refer to
pages 5-6 in the Earnings Release for definitions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005213/en/
Media: Jennifer Regina 704-712-5721,
jennifer.regina@tranetechnologies.com
Investors: Zac Nagle 704-990-3913,
InvestorRelations@tranetechnologies.com
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