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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
_______________________________
FORM 10-Q
_______________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-34400
_____________________________ 
TRANE TECHNOLOGIES PLC
(Exact name of registrant as specified in its charter)
_______________________________
Ireland 98-0626632
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
170/175 Lakeview Dr.
Airside Business Park
Swords Co. Dublin
Ireland
(Address of principal executive offices, including zip code)
+(353) (0) 18707400
(Registrant’s telephone number, including area code)
_______________________________
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x Accelerated filer ¨ Emerging growth company
Non-accelerated filer ¨ Smaller reporting 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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  x
The number of ordinary shares outstanding of Trane Technologies plc as of October 21, 2022 was 230,307,296.


TRANE TECHNOLOGIES PLC
FORM 10-Q
INDEX

1
Item 1 -
1
1
2
3
4
6
7
Item 2 -
Item 3 -
Item 4 -
Item 1 -
Item 1A -
Item 2 -
Item 6 -



PART I - FINANCIAL INFORMATION

Item 1.Financial Statements
TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended Nine months ended
  September 30, September 30,
In millions, except per share amounts 2022 2021 2022 2021
Net revenues $ 4,371.9  $ 3,719.8  $ 11,917.9  $ 10,567.1 
Cost of goods sold (2,939.1) (2,515.6) (8,172.6) (7,139.0)
Selling and administrative expenses (693.3) (620.8) (1,907.0) (1,840.5)
Operating income 739.5  583.4  1,838.3  1,587.6 
Interest expense (55.8) (57.7) (167.6) (177.7)
Other income/(expense), net (18.7) (6.9) (21.0) (13.8)
Earnings before income taxes 665.0  518.8  1,649.7  1,396.1 
Provision for income taxes (104.7) (96.8) (302.4) (268.0)
Earnings from continuing operations 560.3  422.0  1,347.3  1,128.1 
Discontinued operations, net of tax (7.9) (13.3) (16.6) (12.6)
Net earnings 552.4  408.7  1,330.7  1,115.5 
Less: Net earnings from continuing operations attributable to noncontrolling interests (4.5) (3.0) (13.3) (9.9)
Net earnings attributable to Trane Technologies plc $ 547.9  $ 405.7  $ 1,317.4  $ 1,105.6 
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations $ 555.8  $ 419.0  $ 1,334.0  $ 1,118.2 
Discontinued operations (7.9) (13.3) (16.6) (12.6)
Net earnings $ 547.9  $ 405.7  $ 1,317.4  $ 1,105.6 
Earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations $ 2.40  $ 1.76  $ 5.72  $ 4.68 
Discontinued operations (0.04) (0.06) (0.08) (0.06)
Net earnings $ 2.36  $ 1.70  $ 5.64  $ 4.62 
Diluted:
Continuing operations $ 2.38  $ 1.73  $ 5.66  $ 4.61 
Discontinued operations (0.04) (0.05) (0.07) (0.06)
Net earnings $ 2.34  $ 1.68  $ 5.59  $ 4.55 
Weighted-average shares outstanding:
Basic 231.9  238.2  233.4  239.2 
Diluted 234.0  241.7  235.7  242.8 
See accompanying notes to Condensed Consolidated Financial Statements.

1


TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
In millions 2022 2021 2022 2021
Net earnings $ 552.4  $ 408.7  $ 1,330.7  $ 1,115.5 
Other comprehensive income (loss):
Currency translation (189.5) (67.7) (383.8) (101.4)
Cash flow hedges:
Unrealized net gains (losses) arising during period (9.7) 5.1  (31.3) 1.3 
Net (gains) losses reclassified into earnings 3.3  (7.9) 0.6  (5.1)
Tax (expense) benefit (0.7) 0.5  4.4  1.9 
Total cash flow hedges, net of tax (7.1) (2.3) (26.3) (1.9)
Pension and OPEB adjustments:
Amortization reclassified into earnings 5.3  9.7  16.2  29.1 
Net curtailment and settlement (gains) losses reclassified to earnings 15.0  —  15.0  6.9 
Currency translation and other 9.6  4.6  22.2  4.9 
Tax (expense) benefit (3.6) (2.4) (6.4) (17.1)
Total pension and OPEB adjustments, net of tax 26.3  11.9  47.0  23.8 
Other comprehensive income (loss), net of tax (170.3) (58.1) (363.1) (79.5)
Comprehensive income, net of tax $ 382.1  $ 350.6  $ 967.6  $ 1,036.0 
Less: Comprehensive income attributable to noncontrolling interests (2.6) (1.9) (10.1) (8.1)
Comprehensive income attributable to Trane Technologies plc $ 379.5  $ 348.7  $ 957.5  $ 1,027.9 
See accompanying notes to Condensed Consolidated Financial Statements.



2

TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents $ 1,080.2  $ 2,159.2 
Accounts and notes receivable, net 2,867.4  2,429.4 
Inventories 1,949.2  1,530.8 
Other current assets 402.3  351.5 
Total current assets 6,299.1  6,470.9 
Property, plant and equipment, net 1,432.1  1,398.8 
Goodwill 5,370.3  5,504.8 
Intangible assets, net 3,241.1  3,305.6 
Other noncurrent assets 1,397.2  1,379.7 
Total assets $ 17,739.8  $ 18,059.8 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,061.3  $ 1,787.3 
Accrued compensation and benefits 477.9  544.8 
Accrued expenses and other current liabilities 1,956.4  2,069.9 
Short-term borrowings and current maturities of long-term debt 1,049.9  350.4 
Total current liabilities 5,545.5  4,752.4 
Long-term debt 3,787.5  4,491.7 
Postemployment and other benefit liabilities 730.9  810.9 
Deferred and noncurrent income taxes 639.1  581.5 
Other noncurrent liabilities 1,168.4  1,150.2 
Total liabilities 11,871.4  11,786.7 
Equity:
Trane Technologies plc shareholders’ equity:
Ordinary shares 254.8  259.7 
Ordinary shares held in treasury, at cost (1,719.4) (1,719.4)
Capital in excess of par value —  — 
Retained earnings 8,320.4  8,353.2 
Accumulated other comprehensive income (loss) (997.5) (637.6)
Total Trane Technologies plc shareholders’ equity 5,858.3  6,255.9 
Noncontrolling interests 10.1  17.2 
Total equity 5,868.4  6,273.1 
Total liabilities and equity $ 17,739.8  $ 18,059.8 
See accompanying notes to Condensed Consolidated Financial Statements.

3


TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
In millions, except per share amounts Total
equity
Ordinary shares Ordinary shares held
 in treasury,
at cost
Capital in
excess of
par value
Retained
earnings
Accumulated  other
comprehensive
income (loss)
Noncontrolling Interests
Amount at par value Shares
Balance at December 31, 2021 $ 6,273.1  $ 259.7  259.7  $ (1,719.4) $ —  $ 8,353.2  $ (637.6) $ 17.2 
Net earnings 263.4  —  —  —  —  260.2  —  3.2 
Other comprehensive income (loss) (1.4) —  —  —  —  —  (1.4) — 
Shares issued under incentive stock plans (24.2) 0.5  0.5  —  (24.7) —  —  — 
Repurchase of ordinary shares (350.0) (1.9) (1.9) —  3.3  (351.4) —  — 
Share-based compensation 21.4  —  —  —  21.3  0.1  —  — 
Dividends declared to noncontrolling interest (2.5) —  —  —  —  —  —  (2.5)
Dividends declared to common shareholders (156.7) —  —  —  —  (156.7) —  — 
Separation of Ingersoll Rand Industrial (6.7) —  —  —  —  (6.7) —  — 
Other 0.1  —  —  —  0.1  —  —  — 
Balance at March 31, 2022 $ 6,016.5  $ 258.3  258.3  $ (1,719.4) $ —  $ 8,098.7  $ (639.0) $ 17.9 
Net earnings 514.9  —  —  —  —  509.3  —  5.6 
Other comprehensive income (loss) (191.4) —  —  —  —  —  (190.1) (1.3)
Shares issued under incentive stock plans 4.1  0.2  0.2  —  3.9  —  —  — 
Repurchase of ordinary shares (300.1) (2.3) (2.3) —  (5.7) (292.1) —  — 
Share-based compensation 13.1  —  —  —  13.9  (0.8) —  — 
Dividends declared to noncontrolling interest (6.4) —  —  —  —  —  —  (6.4)
Dividends declared to common shareholders (311.1) —  —  —  —  (311.1) —  — 
Separation of Ingersoll Rand Industrial (0.3) —  —  —  —  (0.3) —  — 
Balance at June 30, 2022 $ 5,739.3  $ 256.2  256.2  $ (1,719.4) $ 12.1  $ 8,003.7  $ (829.1) $ 15.8 
Net earnings 552.4  —  —  —  —  547.9  —  4.5 
Other comprehensive income (loss) (170.3) —  —  —  —  —  (168.4) (1.9)
Shares issued under incentive stock plans 6.5  0.2  0.2  —  6.3  —  —  — 
Repurchase of ordinary shares (250.0) (1.6) (1.6) —  (16.7) (231.7) —  — 
Share-based compensation 10.0  —  —  —  10.7  (0.7) —  — 
Dividends declared to noncontrolling interest (5.6) —  —  —  —  —  —  (5.6)
Acquisition of noncontrolling interest (15.1) —  —  —  (12.4) —  —  (2.7)
Dividends declared to common shareholders 0.4  —  —  —  —  0.4  —  — 
Separation of Ingersoll Rand Industrial 0.8  —  —  —  —  0.8  —  — 
Balance at September 30, 2022 $ 5,868.4  $ 254.8  254.8  $ (1,719.4) $ —  $ 8,320.4  $ (997.5) $ 10.1 
See accompanying notes to Condensed Consolidated Financial Statements.
4

TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(Unaudited)
In millions, except per share amounts Total
equity
Ordinary shares Ordinary shares held
 in treasury,
at cost
Capital in
excess of
par value
Retained
earnings
Accumulated  other
comprehensive
income (loss)
Noncontrolling Interests
Amount at par value Shares
December 31, 2020 $ 6,427.1  $ 263.3  263.3  $ (1,719.4) $ —  $ 8,495.3  $ (631.5) $ 19.4 
Net earnings 237.8  —  —  —  —  235.2  —  2.6 
Other comprehensive income (loss) (70.7) —  —  —  —  —  (68.3) (2.4)
Shares issued under incentive stock plans (7.0) 1.0  1.0  —  (8.0) —  —  — 
Repurchase of ordinary shares (104.2) (0.7) (0.7) —  (16.7) (86.8) —  — 
Share-based compensation 24.2  —  —  —  24.7  (0.5) —  — 
Dividends declared to noncontrolling interest (3.5) —  —  —  —  —  —  (3.5)
Dividends declared to common shareholders (141.0) —  —  —  —  (141.0) —  — 
Separation of Ingersoll Rand Industrial (49.9) —  —  —  —  (49.9) —  — 
Balance at March 31, 2021 $ 6,312.8  $ 263.6  263.6  $ (1,719.4) $ —  $ 8,452.3  $ (699.8) $ 16.1 
Net earnings 469.0  —  —  —  —  464.7  —  4.3 
Other comprehensive income (loss) 49.3  —  —  —  —  —  47.6  1.7 
Shares issued under incentive stock plans 25.7  0.5  0.5  —  25.2  —  —  — 
Repurchase of ordinary shares (250.0) (1.4) (1.4) —  (40.0) (208.6) —  — 
Share-based compensation 13.9  —  —  —  14.8  (0.9) —  — 
Dividends declared to noncontrolling interest (6.7) —  —  —  —  —  —  (6.7)
Dividends declared to common shareholders (281.4) —  —  —  —  (281.4) —  — 
Balance at June 30, 2021 $ 6,332.6  $ 262.7  262.7  $ (1,719.4) $ —  $ 8,426.1  $ (652.2) $ 15.4 
Net earnings 408.7  —  —  —  —  405.7  —  3.0 
Other comprehensive income (loss) (58.1) —  —  —  —  —  (57.0) (1.1)
Shares issued under incentive stock plans 43.1  0.6  0.6  —  42.5  —  —  — 
Repurchase of ordinary shares (246.0) (1.3) (1.3) —  (40.0) (204.7) —  — 
Share-based compensation 11.9  —  —  —  12.6  (0.7) —  — 
Dividends declared to noncontrolling interest (4.7) —  —  —  —  —  —  (4.7)
Dividends declared to common shareholders —  —  —  —  —  —  —  — 
Other 0.2  —  —  —  0.1  0.1  —  — 
Balance at September 30, 2021 $ 6,487.7  $ 262.0  262.0  $ (1,719.4) $ 15.2  $ 8,626.5  $ (709.2) $ 12.6 
See accompanying notes to Condensed Consolidated Financial Statements.

5

TRANE TECHNOLOGIES PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
  September 30,
In millions 2022 2021
Cash flows from operating activities:
Net earnings $ 1,330.7  $ 1,115.5 
Discontinued operations, net of tax 16.6  12.6 
Adjustments for non-cash transactions:
Depreciation and amortization 241.0  223.0 
Pension and other postretirement benefits 45.4  40.4 
Stock settled share-based compensation 46.0  52.2 
Changes in assets and liabilities, net of the effects of acquisitions (710.0) (258.9)
Other non-cash items, net (36.3) (22.2)
Net cash provided by (used in) continuing operating activities 933.4  1,162.6 
Net cash provided by (used in) discontinued operating activities (189.7) (1.4)
Net cash provided by (used in) operating activities 743.7  1,161.2 
Cash flows from investing activities:
Capital expenditures (202.8) (121.6)
Acquisitions of businesses, net of cash acquired (109.6) (18.0)
Other investing activities, net (12.8) (69.2)
Net cash provided by (used in) continuing investing activities (325.2) (208.8)
Net cash provided by (used in) discontinued investing activities (0.6) — 
Net cash provided by (used in) investing activities (325.8) (208.8)
Cash flows from financing activities:
Payments of long-term debt (7.5) (432.5)
Debt issuance costs (2.1) (2.6)
Dividends paid to ordinary shareholders (467.0) (421.9)
Dividends paid to noncontrolling interests (14.5) (14.9)
Proceeds (payments) from shares issued under incentive plans, net (13.6) 61.8 
Repurchase of ordinary shares (900.1) (600.2)
Settlement related to special cash payment (6.2) (49.5)
Other financing activities, net (2.0) (5.2)
Net cash provided by (used in) financing activities (1,413.0) (1,465.0)
Effect of exchange rate changes on cash and cash equivalents (83.9) (38.5)
Net increase (decrease) in cash and cash equivalents (1,079.0) (551.1)
Cash and cash equivalents - beginning of period 2,159.2  3,289.9 
Cash and cash equivalents - end of period $ 1,080.2  $ 2,738.8 
See accompanying notes to Condensed Consolidated Financial Statements.
6

TRANE TECHNOLOGIES PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
Trane Technologies plc, a public limited company, incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, we, our, the Company or Trane Technologies), is a global climate innovator. The Company brings sustainable and efficient solutions to buildings, homes and transportation through the Company's strategic brands, Trane® and Thermo King®, and its environmentally responsible portfolio of products, services and connected intelligent controls. The Company generates revenue and cash primarily through the design, manufacture, sale and service of solutions for Heating, Ventilation and Air Conditioning (HVAC) and transport refrigeration. As an industry leader with an extensive global install base, the Company’s growth strategy includes expanding recurring revenue through services and rental options. The Company’s unique business operating system, uplifting culture and highly engaged team around the world are also central to its earnings and cash flow growth.
The accompanying unaudited Condensed Consolidated Financial Statements of Trane Technologies reflects the consolidated operations of the Company and have been prepared in accordance with United States Securities and Exchange Commission (SEC) interim reporting requirements. Accordingly, the accompanying Condensed Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for full financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated results for the interim periods presented.
Reorganization of Aldrich and Murray
On May 1, 2020, certain subsidiaries of the Company underwent an internal corporate restructuring that was effectuated through a series of transactions (2020 Corporate Restructuring). As a result, Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray), indirect wholly-owned subsidiaries of Trane Technologies plc, became solely responsible for the asbestos-related liabilities, and the beneficiaries of the asbestos-related insurance assets, of Trane Technologies Company LLC and Trane U.S. Inc, respectively. On a consolidated basis, the 2020 Corporate Restructuring did not have an impact on the Condensed Consolidated Financial Statements. In connection with the 2020 Corporate Restructuring, certain subsidiaries of the Company entered into funding agreements with Aldrich and Murray (collectively the Funding Agreements), pursuant to which those subsidiaries are obligated, among other things, to pay the costs and expenses of Aldrich and Murray during the pendency of the Chapter 11 cases to the extent distributions from their respective subsidiaries are insufficient to do so and to provide an amount for the funding for a trust established pursuant to section 524(g) of the Bankruptcy Code, to the extent that the other assets of Aldrich and Murray are insufficient to provide the requisite trust funding.
On June 18, 2020 (Petition Date), Aldrich and Murray filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Western District of North Carolina (the Bankruptcy Court) to resolve equitably and permanently all current and future asbestos related claims in a manner beneficial to claimants and to Aldrich and Murray. As a result of the Chapter 11 filings, all asbestos-related lawsuits against Aldrich and Murray have been stayed due to the imposition of a statutory automatic stay applicable in Chapter 11 bankruptcy cases. Only Aldrich and Murray have filed for Chapter 11 relief. Neither Aldrich's wholly-owned subsidiary, 200 Park, Inc. (200 Park), Murray's wholly-owned subsidiary, ClimateLabs LLC (ClimateLabs), Trane Technologies plc nor its other subsidiaries (the Trane Companies) are part of the Chapter 11 filings. The Trane Companies are expected to continue to operate as usual, with no disruption to their employees, suppliers, or customers globally. As of the Petition Date, Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated and their respective assets and liabilities were derecognized from the Company's Condensed Consolidated Financial Statements. Refer to Note 18, "Commitments and Contingencies," for more information regarding the status of Chapter 11 bankruptcy and asbestos-related matters.
7


Note 2. Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. ASU's not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Condensed Consolidated Financial Statements.
Recently Adopted Accounting Pronouncements
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (ASU 2021-10), which requires additional disclosures regarding government grants and cash contributions. The additional disclosures required by this update include information about the nature of the transactions and the related accounting policy used to account for the transaction, the financial statement line items affected by the transactions and the amounts applicable to each financial statement line item and significant terms and conditions of the transactions, including commitments and contingencies. ASU 2021-10 is effective for annual periods beginning after December 15, 2021 with early adoption permitted. The Company adopted this standard on January 1, 2022 with no material impact on its financial statements.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (ASU 2021-08), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” (ASC 606). ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 including interim periods therein with early adoption permitted. The Company early adopted this standard during the fourth quarter of 2021 and applied it retrospectively to all business combinations for which the acquisition date occurred on or after January 1, 2021 resulting in no material impact on its financial statements.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplifies certain aspects of income tax accounting guidance in ASC 740, reducing the complexity of its application. Certain exceptions to ASC 740 presented within the ASU include: intraperiod tax allocation, deferred tax liabilities related to outside basis differences and year-to-date loss in interim periods, among others. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020 including interim periods therein with early adoption permitted. The Company adopted this standard on January 1, 2021 with no material impact on its financial statements.
Recently Issued Accounting Pronouncements
In September 2022, the FASB issued ASU 2022-04, “Liabilities - Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Program Finance Obligations”, which requires that a company that enters into a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the company should disclose qualitative and quantitative information about its supplier finance programs. ASU 2022-04 is effective for fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact of this ASU on the financial statements, and does not expect a material impact. The Company will adopt this standard on January 1, 2023.
8


Note 3. Inventories
Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost and net realizable value (NRV) using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost and NRV using the FIFO method.
The major classes of inventory were as follows:
In millions September 30,
2022
December 31,
2021
Raw materials $ 503.0  $ 404.6 
Work-in-process 316.0  215.9 
Finished goods 1,243.6  982.9 
2,062.6  1,603.4 
LIFO reserve (113.4) (72.6)
Total $ 1,949.2  $ 1,530.8 
The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to the lower of cost and NRV. Reserve balances, primarily related to obsolete and slow-moving inventories, were $80.3 million and $79.0 million at September 30, 2022 and December 31, 2021, respectively.
Note 4. Goodwill
The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 were as follows:
In millions Americas EMEA Asia Pacific Total
Net balance as of December 31, 2021 $ 4,185.2  $ 740.8  $ 578.8  $ 5,504.8 
Acquisitions (1)
42.2  (1.0) —  41.2 
Currency translation (5.8) (113.0) (56.9) (175.7)
Net balance as of September 30, 2022 $ 4,221.6  $ 626.8  $ 521.9  $ 5,370.3 
(1) Includes measurement period adjustment related to prior year acquisition.
The net goodwill balances at September 30, 2022 and December 31, 2021 include $2,496.0 million of accumulated impairment, primarily related to the Americas segment. The accumulated impairment relates entirely to a charge recorded in 2008.
Note 5. Intangible Assets
The gross amount of the Company’s intangible assets and related accumulated amortization were as follows:
September 30, 2022 December 31, 2021
In millions Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount
Customer relationships $ 2,131.4  $ (1,550.9) $ 580.5  $ 2,110.8  $ (1,475.3) $ 635.5 
Other 244.0  (205.6) 38.4  245.5  (201.3) 44.2 
Total finite-lived intangible assets 2,375.4  (1,756.5) 618.9  2,356.3  (1,676.6) 679.7 
Trademarks (indefinite-lived) 2,622.2  —  2,622.2  2,625.9  —  2,625.9 
Total $ 4,997.6  $ (1,756.5) $ 3,241.1  $ 4,982.2  $ (1,676.6) $ 3,305.6 
Intangible asset amortization expense was $35.8 million and $29.0 million for the three months ended September 30, 2022 and 2021, respectively. Intangible asset amortization expense was $105.6 million and $90.7 million for the nine months ended September 30, 2022 and 2021, respectively.
9


Note 6. Debt and Credit Facilities
Short-term borrowings and current maturities of long-term debt consisted of the following:
In millions September 30,
2022
December 31,
2021
Debentures with put feature $ 342.9  $ 342.9 
4.250% Senior notes due 2023
699.5  — 
Other current maturities of long-term debt 7.5  7.5 
Total $ 1,049.9  $ 350.4 
Commercial Paper Program
The Company uses borrowings under its commercial paper program for general corporate purposes. The maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, under the commercial paper program is $2.0 billion. The Company had no outstanding balance under its commercial paper program as of September 30, 2022 and December 31, 2021.
Debentures with Put Feature
At September 30, 2022 and December 31, 2021, the Company had $342.9 million of fixed rate debentures outstanding which contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, the Company is obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount of the debentures plus accrued interest. If these options are not exercised, the final contractual maturity dates would range between 2027 and 2028. Holders of these debentures had the option to exercise the put feature on $37.2 million of the outstanding debentures in February 2022, subject to the notice requirement. No exercises were made.
Long-term debt, excluding current maturities, consisted of the following:
In millions September 30,
2022
December 31,
2021
4.250% Senior notes due 2023
$ —  $ 699.1 
7.200% Debentures due 2022-2025
14.9  22.4 
3.550% Senior notes due 2024
498.5  498.0 
6.480% Debentures due 2025
149.7  149.7 
3.500% Senior notes due 2026
398.2  397.8 
3.750% Senior notes due 2028
546.6  546.2 
3.800% Senior notes due 2029
745.6  745.0 
5.750% Senior notes due 2043
495.2  495.0 
4.650% Senior notes due 2044
296.4  296.3 
4.300% Senior notes due 2048
296.4  296.3 
4.500% Senior notes due 2049
346.0  345.9 
Total $ 3,787.5  $ 4,491.7 
10



Other Credit Facilities
On April 25, 2022, the Company entered into a new $1.0 billion senior unsecured revolving credit facility which matures in April 2027 (2027 Credit Facility) and terminated its $1.0 billion credit facility that would have expired in April 2023. As a result, the Company maintains two $1.0 billion senior unsecured revolving credit facilities, one of which matures in June 2026 (2026 Credit Facility) and the other which matures in April 2027 (collectively, the Facilities) through its wholly-owned subsidiaries, Trane Technologies HoldCo Inc., Trane Technologies Global Holding Company Limited and Trane Technologies Financing Limited (collectively, the Borrowers). On June 30, 2022, the Company amended its 2026 Credit Facility to include a Secured Overnight Financing Rate (SOFR) borrowing index provision and to eliminate the London Interbank Offer Rate (LIBOR) index provision. These provisions are consistent with the 2027 Credit Facility. Additionally, both Facilities include Environmental, Social, and Governance (ESG) metrics related to two of the Company’s sustainability commitments: a reduction in greenhouse gas intensity and an increase in the percentage of women in management. The Company's annual performance against these ESG metrics may result in price adjustments to the commitment fee and applicable interest rate.
The Facilities provide support for the Company’s commercial paper program and can be used for working capital and other general corporate purposes. Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company, Trane Technologies Lux International Holding Company S.à.r.l. and Trane Technologies Company LLC each provide irrevocable and unconditional guarantees for these Facilities. In addition, each Borrower will guarantee the obligations under the Facilities of the other Borrowers. Total commitments of $2.0 billion were unused at September 30, 2022 and December 31, 2021.
Fair Value of Debt
The fair value of the Company's debt instruments at September 30, 2022 and December 31, 2021 was $4.5 billion and $5.6 billion, respectively. The Company measures the fair value of its debt instruments for disclosure purposes based upon observable market prices quoted on public exchanges for similar assets. These fair value inputs are considered Level 2 within the fair value hierarchy. See Note 8, “Fair Value Measurements” for information on the fair value hierarchy.
Note 7. Financial Instruments
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. These fluctuations can increase the cost of financing, investing and operating the business. The Company uses various financial instruments, including derivative instruments, to manage the risks associated with interest rate, commodity price and foreign currency exposures. These financial instruments are not used for trading or speculative purposes. The Company recognizes all derivatives in the Condensed Consolidated Balance Sheets at their fair value as either assets or liabilities.
On the date a derivative contract is entered into, the Company designates the derivative instrument as a cash flow hedge of a forecasted transaction or as an undesignated derivative. The Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions.
The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed to be a highly effective hedge, the fair market value changes of the instrument are recorded to Accumulated other comprehensive income (loss) (AOCI). If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument will be recorded in Net earnings.
11


The fair values of derivative instruments included within the Condensed Consolidated Balance Sheets were as follows:
  Derivative assets Derivative liabilities
In millions September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
Derivatives designated as hedges:
Currency derivatives $ 0.1  $ 0.1  $ 5.5  $ 2.7 
Commodity derivatives —  4.9  19.9  0.2 
Derivatives not designated as hedges:
Currency derivatives 2.1  10.5  1.4  14.0 
Total derivatives $ 2.2  $ 15.5  $ 26.8  $ 16.9 
Asset and liability derivatives included in the table above are recorded within Other current assets and Accrued expenses and other current liabilities, respectively.
Currency Derivative Instruments
The notional amount of the Company’s currency derivatives was approximately $400 million and $500 million at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022 and December 31, 2021, a net loss of $5.1 million and $2.2 million, net of tax, respectively, was included in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount expected to be reclassified into Net earnings over the next twelve months is a net loss of $5.1 million. The actual amounts that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. Gains and losses associated with the Company’s currency derivatives not designated as hedges are recorded in Net earnings as changes in fair value occur. At September 30, 2022, the maximum term of the Company’s currency derivatives was 12 months.
Commodity Derivative Instruments
At September 30, 2022 and December 31, 2021, a net loss of $14.9 million and net gain of $3.5 million, net of tax, respectively, was included in AOCI related to the fair market value of the Company's commodity derivatives designated as accounting hedges. A change in fair value of commodity derivative instruments deemed highly effective is included in AOCI and is reclassified to Cost of goods sold in the period the sale of the finished goods inventory containing the commodity impacts Net earnings. The amount expected to be reclassified into Net earnings over the next twelve months is a net loss of $14.9 million. The actual amounts that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. At September 30, 2022, the Company has commodity contracts to hedge certain forecasted purchases over the next 12 months.
The Company had the following outstanding contracts to hedge forecasted commodity purchases:
  Volume outstanding as of
Commodity September 30,
2022
December 31,
2021
Aluminum
22,149 metric tons
16,488 metric tons
Copper
3,630,000 pounds
4,035,000 pounds
Other Derivative Instruments
Prior to 2015, the Company utilized forward-starting interest rate swaps and interest rate locks to manage interest rate exposure in periods prior to the anticipated issuance of certain fixed-rate debt. These instruments were designated as cash flow hedges and had a notional amount of $1,250.0 million. Consequently, when the contracts were settled upon the issuance of the underlying debt, any realized gains or losses in the fair values of the instruments were deferred into AOCI. These deferred gains or losses are subsequently recognized in Interest expense over the term of the related notes. The net unrecognized gain in AOCI was $4.2 million at September 30, 2022 and $4.7 million at December 31, 2021. The net deferred gain at September 30, 2022 will continue to be amortized over the term of notes with maturities ranging from 2023 to 2044. The amount expected to be amortized over the next twelve months is a net gain of $0.5 million. The Company had no forward-starting interest rate swaps or interest rate lock contracts outstanding at September 30, 2022 or December 31, 2021.
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The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the three months ended September 30:
   Amount of gain (loss)
recognized in AOCI
Location of gain (loss) reclassified from
AOCI and recognized
into Net earnings
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
In millions 2022 2021 2022 2021
Currency derivatives designated as hedges (1)
$ (2.1) $ (0.9) Cost of goods sold $ (2.5) $ 7.5 
Commodity derivatives designated as hedges (7.6) 6.0  Cost of goods sold (1.0) 0.2 
Interest rate swaps & locks —  —  Interest expense 0.2  0.2 
Total $ (9.7) $ 5.1  $ (3.3) $ 7.9 
(1) Amounts excluded from effectiveness testing and recognized into Cost of goods sold based on changes in fair value and amortization was a loss of $0.2 million and a gain of $0.9 million for the three months ended September 30, 2022 and 2021, respectively.
The following table represents the amounts associated with derivatives not designated as hedges affecting Net earnings for the three months ended September 30:
   Location of gain (loss) recognized in Net earnings Amount of gain (loss)
recognized in Net earnings
In millions 2022 2021
Currency derivatives Other income (expense), net $ (3.3) $ 0.9 
Total $ (3.3) $ 0.9 
The gains and losses associated with the Company’s undesignated currency derivatives are materially offset in Net earnings by changes in the fair value of the underlying transactions.
The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the nine months ended September 30:
  
Amount of gain (loss)
recognized in AOCI
Location of gain (loss) reclassified from
AOCI and recognized
into Net earnings
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
In millions 2022 2021 2022 2021
Currency derivatives designated as hedges (1)
$ (10.2) $ (6.2) Cost of goods sold $ (6.3) $ 4.4 
Commodity derivatives designated as hedges (21.1) 7.5  Cost of goods sold 5.2  0.2 
Interest rate swaps & locks —  —  Interest expense 0.5  0.5 
Total $ (31.3) $ 1.3  $ (0.6) $ 5.1 
(1) Amounts excluded from effectiveness testing and recognized into Cost of goods sold based on changes in fair value and amortization was a loss of $0.3 million and $0.7 million for the nine months ended September 30, 2022 and 2021, respectively.
The following table represents the amounts associated with derivatives not designated as hedges affecting Other income/(expense), net for the nine months ended September 30:
  
Location of gain (loss)
recognized in Net earnings
Amount of gain (loss)
recognized in Net earnings
In millions 2022 2021
Currency derivatives Other income (expense), net $ (9.0) $ (5.0)
Total $ (9.0) $ (5.0)
Concentration of Credit Risk
The counterparties to the Company’s forward contracts consist of a number of investment grade major international financial institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties. However, the credit ratings and the concentration of risk in these financial institutions are monitored on a continuous basis and present no significant credit risk to the Company.
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Note 8. Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability is as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.
Observable market data is required to be used in making fair value measurements when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2022:
In millions Fair Value Fair value measurements
Level 1 Level 2 Level 3
Assets:
Derivative instruments $ 2.2  $ —  $ 2.2  $ — 
Liabilities:
Derivative instruments 26.8  —  26.8  — 
Contingent consideration $ 80.8  $ —  $ —  $ 80.8 
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2021:
In millions Fair Value Fair value measurements
Level 1 Level 2 Level 3
Assets:
Derivative instruments $ 15.5  $ —  $ 15.5  $ — 
Liabilities:
Derivative instruments 16.9  —  16.9  — 
Contingent consideration $ 96.2  $ —  $ —  $ 96.2 
Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency balance sheet exposures and commodity swaps. The fair value of the foreign exchange derivatives is determined based on a pricing model that uses spot rates and forward prices from actively quoted currency markets that are readily accessible and observable. The fair value of the commodity derivatives is valued under a market approach using published prices, where applicable, or dealer quotes.
On October 15, 2021, the Company acquired 100% of Farrar Scientific Corporation's (Farrar Scientific) assets. In connection with the acquisition, the Company agreed to contingent consideration of up to $115.0 million to be paid in 2025, tied to the attainment of key financial targets during the period January 1, 2022 through December 31, 2024. This additional payment, to the extent earned, will be payable in cash. The fair value of the contingent consideration is determined using the Monte Carlo simulation model based on projections of revenues for Farrar Scientific during the period of January 1, 2022 through December 31, 2024, implied revenue volatility and a risk adjusted discount rate. Each quarter the Company is required to remeasure the fair value of the liability as assumptions change and such non-cash adjustments are recorded in Selling and administrative expenses in the Condensed Consolidated Statements of Earnings.
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Contingent consideration related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The changes in the fair value of the Company's Level 3 liabilities were as follows:
In millions September 30,
2022
December 31,
2021
Balance at beginning of period $ 96.2  $ — 
Fair value of contingent consideration recorded in connection with acquisition —  98.7 
Change in fair value of contingent consideration (15.4) (2.5)
Balance at end of period $ 80.8  $ 96.2 
The fair value of the contingent consideration is measured on a recurring basis at each reporting date. The following inputs and assumptions were used in the Monte Carlo simulation model to estimate the fair value of the contingent consideration:
September 30,
2022
December 31,
2021
Discount rate 12.00  % 8.00  %
Volatility 20.00  % 20.00  %
The carrying values of cash and cash equivalents, accounts receivable, and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. There have been no transfers between levels of the fair value hierarchy.
Note 9. Pensions and Postretirement Benefits Other than Pensions
The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the Company's U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.
Pension Plans
The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key or highly compensated employees.
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The components of the Company’s net periodic pension benefit cost for the three and nine months ended September 30 were as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Service cost $ 11.8  $ 12.6  $ 35.7  $ 38.2 
Interest cost 17.4  14.7  52.8  44.0 
Expected return on plan assets (25.7) (26.5) (78.0) (79.7)
Net amortization of:
Prior service costs 0.9  1.3  2.9  3.8 
Net actuarial losses 5.8  8.9  17.5  26.8 
Net periodic pension benefit cost $ 10.2  $ 11.0  $ 30.9  $ 33.1 
Net curtailment and settlement losses 15.0  —  15.0  6.9 
Net periodic pension benefit cost after net curtailment and settlement losses $ 25.2  $ 11.0  $ 45.9  $ 40.0 
Amounts recorded in continuing operations:
      Operating income $ 10.7  $ 11.8  $ 32.4  $ 35.5 
      Other income/(expense), net 13.5  (1.8) 10.6  1.4 
Amounts recorded in discontinued operations 1.0  1.0  2.9  3.1 
Total $ 25.2  $ 11.0  $ 45.9  $ 40.0 
The Company made contributions to its defined benefit pension plans of $82.4 million and $47.1 million during the nine months ended September 30, 2022 and 2021, respectively. The Company currently projects that it will contribute a total of approximately $90 million to its enterprise plans worldwide in 2022.
The Net curtailment and settlement losses are associated with lump sum distribution under supplemental benefit plans for officers and other key employees.
Postretirement Benefits Other Than Pensions
The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.
The components of net periodic postretirement benefit cost for the three and nine months ended September 30 were as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Service cost $ 0.4  $ 0.6  $ 1.4  $ 1.6 
Interest cost 1.7  1.3  5.1  4.1 
Net amortization of net actuarial (gains) (1.4) (0.5) (4.2) (1.5)
Net periodic postretirement benefit cost $ 0.7  $ 1.4  $ 2.3  $ 4.2 
Amounts recorded in continuing operations:
     Operating income $ 0.4  $ 0.6  $ 1.4  $ 1.6 
     Other income/(expense), net 0.4  0.6  1.0  1.9 
Amounts recorded in discontinued operations (0.1) 0.2  (0.1) 0.7 
Total $ 0.7  $ 1.4  $ 2.3  $ 4.2 
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Note 10. Equity
The authorized share capital of Trane Technologies plc is 1,185,040,000 shares, consisting of (1) 1,175,000,000 ordinary shares, par value $1.00 per share, (2) 40,000 ordinary shares, par value EUR 1.00 and (3) 10,000,000 preference shares, par value $0.001 per share. There were no Euro-denominated ordinary shares or preference shares outstanding at September 30, 2022 or December 31, 2021.
Changes in ordinary shares and treasury shares for the nine months ended September 30, 2022 were as follows:
In millions Ordinary shares issued Ordinary shares held in treasury
December 31, 2021 259.7  24.5 
Shares issued under incentive plans, net 0.9  — 
Repurchase of ordinary shares (5.8) — 
September 30, 2022 254.8  24.5 
Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. Shares acquired and canceled upon repurchase are accounted for as a reduction of Ordinary shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess of par value is exhausted. Shares acquired and held in treasury are presented separately on the balance sheet as a reduction to Equity and recognized at cost.
In February 2021, the Company's Board of Directors authorized the repurchase of up to $2.0 billion of its ordinary shares under a share repurchase program (2021 Authorization). During the nine months ended September 30, 2022, the Company repurchased and canceled approximately $900 million of its ordinary shares leaving approximately $500 million remaining under the 2021 Authorization. In February 2022, the Company's Board of Directors authorized the repurchase of up to $3.0 billion of its ordinary shares under a new share repurchase program (2022 Authorization) upon completion of the 2021 Authorization.
Accumulated Other Comprehensive Income (Loss)
The changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2022 were as follows:
In millions Derivative Instruments Pension and OPEB Foreign Currency Translation Total
Balance at December 31, 2021 $ 7.1  $ (297.9) $ (346.8) $ (637.6)
Other comprehensive income (loss) attributable to Trane Technologies plc (26.3) 47.0  (380.6) (359.9)
Balance at September 30, 2022 $ (19.2) $ (250.9) $ (727.4) $ (997.5)
Other comprehensive income (loss) attributable to noncontrolling interests for the nine months ended September 30, 2022 included a loss of $3.2 million related to currency translation.
The changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2021 were as follows:
In millions Derivative Instruments Pension and OPEB Foreign Currency Translation Total
Balance at December 31, 2020 $ 10.8  $ (416.5) $ (225.8) $ (631.5)
Other comprehensive income (loss) attributable to Trane Technologies plc (1.9) 23.8  (99.6) (77.7)
Balance at September 30, 2021 $ 8.9  $ (392.7) $ (325.4) $ (709.2)
Other comprehensive income (loss) attributable to noncontrolling interests for the nine months ended September 30, 2021 included a loss of $1.8 million related to currency translation.
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Note 11. Revenue
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company’s revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company’s revenues are recognized over time as the customer simultaneously receives control as the Company performs work under a contract. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs.
Disaggregated Revenue
Net revenues by geography and major type of good or service for the three and nine months ended September 30 were as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Americas
     Equipment $ 2,331.1  $ 1,878.6  $ 6,411.9  $ 5,458.0 
     Services 1,150.3  1,031.7  3,089.1  2,749.6 
Total Americas $ 3,481.4  $ 2,910.3  $ 9,501.0  $ 8,207.6 
EMEA
     Equipment $ 345.1  $ 322.7  $ 1,015.8  $ 996.7 
     Services 168.0  172.3  460.2  465.4 
Total EMEA $ 513.1  $ 495.0  $ 1,476.0  $ 1,462.1 
Asia Pacific
     Equipment $ 274.9  $ 218.9  $ 670.6  $ 619.7 
     Services 102.5  95.6  270.3  277.7 
Total Asia Pacific $ 377.4  $ 314.5  $ 940.9  $ 897.4 
Total Net revenues $ 4,371.9  $ 3,719.8  $ 11,917.9  $ 10,567.1 
Revenue from goods and services transferred to customers at a point in time accounted for approximately 82% and 81% of the Company’s revenue for the nine months ended September 30, 2022 and 2021, respectively.
Contract Balances
The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended September 30, 2022 and December 31, 2021 were as follows:
In millions Location on Condensed Consolidated Balance Sheets September 30,
2022
December 31, 2021
Contract assets- - current Other current assets $ 193.6  $ 164.8 
Contract assets - noncurrent Other noncurrent assets 237.7  218.5 
Contract liabilities - current Accrued expenses and other current liabilities 919.8  805.4 
Contract liabilities - noncurrent Other noncurrent liabilities 464.2  446.6 
The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets, and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Contract assets relate to the conditional right to consideration for any completed performance under the contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities relate to payments received in advance of performance under the contract or when the Company has a right to consideration that is unconditional before it transfers a good or service to the customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. During the three and nine months ended September 30, 2022, changes in contract asset and liability balances were not materially impacted by any other factors.
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Approximately 8% and 47% of the contract liability balance at December 31, 2021 was recognized as revenue during the three and nine months ended September 30, 2022, respectively. Additionally, approximately 34% of the contract liability balance at September 30, 2022 was classified as noncurrent and not expected to be recognized as revenue in the next 12 months.
Note 12. Share-Based Compensation
The Company accounts for share-based compensation plans under the fair value based method. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs) and deferred compensation.
Share-based compensation expense related to continuing operations is included in Selling and administrative expenses. The expense recognized for the three and nine months ended September 30 was as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Stock options $ 2.1  $ 2.9  $ 12.3  $ 14.7 
RSUs 3.0  3.6  16.7  19.0 
Performance shares 5.2  5.8  15.6  17.4 
Deferred compensation 0.8  0.8  0.6  2.4 
Pre-tax expense 11.1  13.1  45.2  53.5 
Tax benefit (2.7) (3.2) (10.9) (13.1)
After-tax expense $ 8.4  $ 9.9  $ 34.3  $ 40.4 
Amounts recorded in continuing operations 8.6  9.9  34.7  40.4 
Amounts recorded in discontinued operations (0.2) —  (0.4) — 
Total $ 8.4  $ 9.9  $ 34.3  $ 40.4 
Grants issued during the nine months ended September 30 were as follows:
  2022 2021
  Number
granted
Weighted-
average fair
value per award
Number
granted
Weighted-
average fair
value per award
Stock options 429,796  $ 35.96  582,657  $ 29.55 
RSUs 135,625  $ 165.32  149,214  $ 153.53 
Performance shares (1)
192,826  $ 170.30  283,412  $ 181.71 
(1) The number of performance shares represents the maximum award level.
Stock Options / RSUs
Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. The fair value of each of the Company’s stock option and RSU awards is expensed on a straight-line basis over the required service period, which is generally the 3-year vesting period. However, for stock options and RSUs granted to retirement eligible employees, the Company recognizes an expense for the entire fair value at the grant date.
The average fair value of the stock options granted is determined using the Black-Scholes option-pricing model. The following assumptions were used during the nine months ended September 30:
2022 2021
Dividend yield 1.60  % 1.60  %
Volatility 28.23  % 27.90  %
Risk-free rate of return 1.56  % 0.45  %
Expected life in years 4.8 4.8
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A description of the significant assumptions used to estimate the fair value of the stock option awards is as follows:
Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments as of the grant date and the current fair market value of the Company’s stock.
Volatility - The expected volatility is based on a weighted average of the Company’s implied volatility and the most recent historical volatility of the Company’s stock commensurate with the expected life.
Risk-free rate of return - The Company applies a yield curve of continuous risk-free rates based upon the published U.S. Treasury spot rates on the grant date.
Expected life in years - The expected life of the Company’s stock option awards represents the weighted-average of the actual period since the grant date for all exercised or canceled options and an expected period for all outstanding options.
Performance Shares
The Company has a Performance Share Program (PSP) for key employees. The program provides awards in the form of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a number of the Company’s ordinary shares based on the fair market value of the Company’s stock on the date of grant. All PSUs are settled in the form of ordinary shares.
PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) to the S&P 500 Industrials Index over a 3-year performance period, and 50% upon a market condition, measured by the Company’s relative total shareholder return (TSR) as compared to the TSR of the S&P 500 Industrials Index over a 3-year performance period. The fair value of the market condition is estimated using a Monte Carlo simulation model in a risk-neutral framework based upon historical volatility, risk-free rates and correlation matrix.
Deferred Compensation
The Company allows key employees to defer a portion of their eligible compensation into a number of investment choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution.
Note 13. Other Income/(Expense), Net
The components of Other income/(expense), net for the three and nine months ended September 30 were as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Interest income $ 2.4  $ 0.8  $ 5.2  $ 3.0 
Foreign currency exchange loss (5.5) (2.2) (13.1) (8.9)
Other components of net periodic benefit credit/(cost) (13.9) 1.2  (11.6) (3.3)
Other activity, net
(1.7) (6.7) (1.5) (4.6)
Other income/(expense), net $ (18.7) $ (6.9) $ (21.0) $ (13.8)
Other income/(expense), net includes the results from activities other than core business operations such as interest income and foreign currency gains and losses on transactions that are denominated in a currency other than an entity’s functional currency. In addition, the Company includes the components of net periodic benefit credit/(cost) for pension and post retirement obligations other than the service cost component. During the three and nine months ended September 30, 2022, the Company recorded a $15.0 million settlement charge for a retired executive within other components of net periodic benefit credit/(cost). Other activity, net primarily includes items associated with certain legal matters, as well as asbestos-related activities of Murray. During the three and nine months ended September 30, 2021, the Company recorded a charge of $7.2 million to increase its Funding Agreement liability from asbestos-related activities of Murray within other activity, net. Refer to Note 18, "Commitments and Contingencies," for more information regarding asbestos-related matters.
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Note 14. Income Taxes
The Company accounts for its Provision for income taxes by applying an estimate of the annual effective income tax rate for the full year to the respective interim period, taking into account year-to-date amounts and projected results for the full year. For the nine months ended September 30, 2022 and September 30, 2021, the Company’s effective income tax rate was 18.3% and 19.2%, respectively. The effective income tax rate for the nine months ended September 30, 2022 was lower than the U.S. statutory rate of 21% primarily due to a $33.1 million reduction in valuation allowances on certain net state deferred tax assets partially offset by a related $4.2 million expense associated with a deferred tax revaluation resulting from U.S. legal entity restructurings. These items have reduced the effective tax rate for the nine months ended September 30, 2022 by 1.7 percentage points. In addition, excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate, partially offset by U.S. state and local taxes, provided net effective tax rate benefits. The effective tax rate for the nine months ended September 30, 2021 was lower than the U.S. statutory rate of 21% primarily due to excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate, partially offset by U.S. state and local taxes.
Total unrecognized tax benefits as of September 30, 2022 and December 31, 2021 were $63.2 million and $65.2 million, respectively. Although management believes its tax positions and related provisions reflected in the Condensed Consolidated Financial Statements are fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretations of tax laws, developments in case law and closing of statute of limitations. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in Provision for income taxes.
The Provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Belgium, Brazil, Canada, China, France, Germany, Ireland, Italy, Luxembourg, Mexico, Spain, the Netherlands, the United Kingdom and the United States. These examinations on their own, or any subsequent litigation related to the examinations, may result in additional taxes or penalties against the Company. If the ultimate result of these audits differ from original or adjusted estimates, they could have a material impact on the Company’s tax provision. In general, the examination of the Company’s U.S. federal tax returns is complete or effectively settled for years prior to 2016. The Company’s U.S. federal returns for 2016 to 2018 are currently under examination by the Internal Revenue Service (IRS). In general, the examination of the Company’s material non-U.S. tax returns is complete or effectively settled for the years prior to 2013, with certain matters prior to 2013 being resolved through appeals and litigation and also unilateral procedures as provided for under double tax treaties.
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Note 15. Acquisitions
On April 1, 2022, the Company acquired a Commercial HVAC independent dealer, reported within the Americas segment, to support the Company’s ongoing strategy to expand its distribution network and service area. The aggregate cash paid, net of cash acquired, totaled $110.0 million and was financed through cash on hand. Intangible assets associated with this acquisition totaled $52.7 million and primarily relate to customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $42.5 million.
The fair values of the customer relationship intangible assets were determined using the multi-period excess earnings method based on discounted projected net cash flows associated with the net earnings attributable to the acquired customer relationships. These projected cash flows are estimated over the remaining economic life of the intangible asset and are considered from a market participant perspective. Key assumptions used in estimating future cash flows included projected revenue growth rates and customer attrition rates. The projected future cash flows are discounted to present value using an appropriate discount rate. The customer relationships had a weighted-average useful life of 15 years. The Company has not included pro forma financial information as the pro forma impact was deemed not material.
On October 31, 2022, the Company acquired 100% of AL-KO Air Technology (AL-KO). AL-KO designs, engineers, manufactures, sells, installs, and services air handling and extraction systems in commercial applications. The results of the acquisition will be reported within the EMEA and Asia Pacific segments starting in the fourth quarter of 2022.
Due to the close proximity of the acquisition date and the Company's filing of its quarterly report on Form 10-Q for the nine months ended September 30, 2022, the initial accounting for the business combination is still in process, and therefore the Company has not disclosed the information required by ASC 805, Business Combinations. Such information will be included in the Company's subsequent Form 10-K for the year ended December 31, 2022.
Note 16. Earnings Per Share
Basic EPS is calculated by dividing Net earnings attributable to Trane Technologies plc by the weighted-average number of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes shares issuable under share-based compensation plans. The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per share calculations for the three and nine months ended September 30:
Three months ended Nine months ended
In millions, except per share amounts 2022 2021 2022 2021
Weighted-average number of basic shares 231.9  238.2  233.4  239.2 
Shares issuable under incentive share plans 2.1  3.5  2.3  3.6 
Weighted-average number of diluted shares 234.0  241.7  235.7  242.8 
Anti-dilutive shares 0.7  —  0.9  0.3 
Dividends declared per ordinary share $ —  $ —  $ 2.01  $ 1.77 


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Note 17. Business Segment Information
The Company operates under four regional operating segments designed to create deep customer focus and relevance in markets around the world. The Company determined that its two Europe, Middle East and Africa (EMEA) operating segments meet the aggregation criteria based on similar operating and economic characteristics, resulting in one reportable segment. Therefore, the Company has three regional reportable segments, Americas, EMEA and Asia Pacific. Intercompany sales between segments are immaterial.
The Company’s Americas segment innovates for customers in North America and Latin America. 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.
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.
The Company’s 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.
Management measures operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, non-cash adjustments for contingent consideration, insurance settlement on property claim in Q3 2022, 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. Segment Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and the Company’s ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures because it eliminates non-cash charges such as depreciation and amortization expense.
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A summary of operations by reportable segment for the three and nine months ended September 30 was as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Net revenues
Americas $ 3,481.4  $ 2,910.3  $ 9,501.0  $ 8,207.6 
EMEA 513.1  495.0  1,476.0  1,462.1 
Asia Pacific 377.4  314.5  940.9  897.4