Trane Technologies plc
For the period ended Dec 31, 2023. Filed Apr 25, 2024.
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Dec 31, 2023 · Filed Apr 25, 2024
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Contents
Appendix A
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |
|---|---|---|
| Total Company | ||
| Adjusted EBITDA | $3,184.4 | $2,694.0 |
| Less: items to reconcile adjusted EBITDA to net earnings attributable to Trane Technologies plc | ||
| Depreciation and Amortization (1) | (336.0) | (323.2) |
| Interest expense | (234.5) | (223.5) |
| Provision for income taxes | (498.4) | (375.9) |
| Restructuring | (15.1) | (20.7) |
| Transformation costs | (4.7) | (5.8) |
| M&A transaction costs | (15.4) | (3.6) |
| Non-cash adjustments for contingent consideration | 49.3 | 46.9 |
| Acquisition inventory step-up and backlog amortization | (18.5) | (1.2) |
| Insurance settlements on property claims | 10.0 | 25.0 |
| Settlement charge for retired executive | — | (15.8) |
| Impairment of equity investment | (52.2) | — |
| Discontinued operations, net of tax | (27.2) | (21.5) |
| Net earnings from continuing operations attributable to noncontrolling interests | (17.8) | (18.2) |
| Net earnings attributable to Trane Technologies plc | $2,023.9 | $1,756.5 |
(1)Depreciation and amortization excludes acquisition backlog amortization of $12.1 million and $0.4 million in 2023 and 2022, respectively, which has been included in the acquisition inventory step-up and backlog amortization line.
| 2024 Proxy Statement | 77 |
|---|
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |
|---|---|---|
| Net revenue growth | 10.5% | 13.1% |
| Exclude growth from acquisitions | (2.1)% | (0.8)% |
| Exclude unfavorable impact from currency translation | 0.3% | 2.2% |
| Organic revenue growth | 8.7% | 14.5% |
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| For the year ended December 31, 2023 · For the year ended December 31, 2022 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As Reported · Adjustments · As Adjusted · As Reported · Adjustments · As Adjusted | ||||||||||||
| Net revenues | $17,677.6 | $— | $17,677.6 | $15,991.7 | $— | $15,991.7 | ||||||
| Operating income | 2,894.0 | (5.6)(a,b,c,d,e,f) | 2,888.4 | 2,418.9 | (39.8)(a,b,c,d,e,f,h) | 2,379.1 | ||||||
| Operating margin | 16.4% | 16.3% | 15.1% | 14.9% | ||||||||
| Earnings from continuing operations before income taxes | 2,567.3 | 46.6(a,b,c,d,e,f,g) | 2,613.9 | 2,172.1 | (24.8)(a,b,c,d,e,f,h) | 2,147.3 | ||||||
| Provision for income taxes | (498.4) | (13.1) (i,k) | (511.5) | (375.9) | (24.7) (j,k) | (400.6) | ||||||
| Tax rate | 19.4% | 19.6% | 17.3% | 18.7% | ||||||||
| Earnings from continuing operations attributable to Trane Technologies plc | $2,051.1 | $33.5(l) | $2,084.6 | $1,778.0 | $(49.5)(l) | $1,728.5 | ||||||
| Diluted earnings per common share continuing operations | $8.89 | $0.15 | $9.04 | $7.57 | $(0.21) | $7.36 | ||||||
| Diluted weighted average number of common shares outstanding | 230.7 | — | 230.7 | 234.9 | — | 234.9 | ||||||
| Detail of Adjustments: | ||||||||||||
| (a)Insurance settlements on property claims (COGS) | (10.0) | (25.0) | ||||||||||
| (b)Restructuring costs (COGS & SG&A) | 15.1 | 20.7 | ||||||||||
| (c)Transformation costs (SG&A) | 4.7 | 5.8 | ||||||||||
| (d)M&A transaction costs (SG&A) | 15.4 | 3.6 | ||||||||||
| (e)Acquisition inventory step-up and backlog amortization (COGS & SG&A) | 18.5 | 1.2 | ||||||||||
| (f)Non-cash adjustment for contingent consideration (SG&A) | (49.3) | (46.9) | ||||||||||
| (g)Impairment of equity investment (OIOE) | 52.2 | — | ||||||||||
| (h)Settlement charge for retired executive (SG&A & OIOE) | — | 15.8 | ||||||||||
| (i)International discrete non-cash tax benefit | (14.9) | — | ||||||||||
| (j)U.S. discrete non-cash tax benefit | — | (33.3) | ||||||||||
| (k)Tax impact of adjustments (a,b,c,d,e,f,g,h,i) | 1.8 | 8.6 | ||||||||||
| (l)Impact of adjustments on earnings from continuing operations attributable to Trane Technologies plc | $33.5 | $(49.5) | ||||||||||
| Pre-tax impact of adjustments on cost of goods sold | 9.6 | (11.8) | ||||||||||
| Pre-tax impact of adjustments on selling & administrative expenses | (15.2) | (28.0) | ||||||||||
| Pre-tax impact of adjustments on operating income | (5.6) | (39.8) | ||||||||||
| Pre-tax impact of adjustments on other, net | 52.2 | 15.0 | ||||||||||
| Pre-tax impact of adjustments on earnings from continuing operations | $46.6 | $(24.8) | ||||||||||
| 2024 Proxy Statement | 79 |
|---|
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |
|---|---|---|
| Cash flow provided by continuing operating activities | $2,426.8 | $1,698.7 |
| Capital expenditures | (300.7) | (291.8) |
| Cash payments for restructuring | 12.3 | 17.9 |
| Transformation costs paid | 3.9 | 9.6 |
| M&A transaction costs | 18.9 | — |
| Insurance settlements on property claims | (10.0) | (25.0) |
| QSF funding (continuing operations component) | — | 91.8 |
| Compensation related payment to a retired executive | — | 64.3 |
| Free cash flow | $2,151.2 | $1,565.5 |
For purposes of our compensation programs, Cash Flow Return on Invested Capital (“CROIC”) is measured by dividing Free Cash Flow by gross fixed assets (Property, Plant & Equipment) plus Working Capital (Accounts and Notes Receivable plus Inventory less Accounts and Notes Payable). CROIC is subject to adjustments for unusual or infrequent items; the impact of any change in accounting principles; and gains or charges associated with discontinued operations or through the acquisition or divestiture of a business.
For purposes of our compensation programs, Total Shareholder Return (“TSR”) is measured as the total stock price appreciation plus dividends earned during the three years of the performance cycle. To account for stock price volatility, a 30-day average stock price at the beginning and ending periods is used. TSR was 73.59% for the 2021-2023 period, which ranked at the 86th percentile of the companies in the S&P 500 Industrials Index.
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