Trane Technologies plc

Previous wording

In the first quarter of 2025, we also acquired two distributors with sales and service businesses in Europe that are reported in the EMEA segment from the dates of acquisition.

Current wording

In the first half of 2025, we also acquired multiple distributors with sales and service businesses in Europe that are reported in the EMEA segment from the dates of acquisition.

Previous wording

Conditions remain mixed across our served end markets and geographies. Overall Commercial HVAC markets in Americas and EMEA remain strong due to demand for our differentiated customer driven solutions and the benefits of installing energy efficient products and decarbonizing the built environment. In Asia, markets remain dynamic, with weak macro-economic conditions driving soft demand in China balanced by strong demand in the rest of Asia. Transport refrigeration markets continue to experience soft demand, particularly in the United States. Residential markets in the United States were strong in the first quarter of 2025 and continue to progress through the regulatory transition, while uncertainties remain from economic risks and higher interest rates.

Current wording

Conditions remain mixed across our served end markets and geographies. Overall Commercial HVAC markets in Americas and EMEA remain strong due to demand for our differentiated customer driven solutions and the benefits of installing energy efficient products and decarbonizing the built environment. In Asia, markets remain dynamic, with weak macro-economic conditions driving soft demand in China balanced by stronger demand in the rest of Asia. Transport refrigeration markets continue to experience soft demand, particularly in the United States. Residential markets in the United States continue to progress through the regulatory transition, while uncertainties remain from economic risks and higher interest rates.

Previous wording

We continue to monitor macroeconomic indicators and uncertainties resulting from the tariffs recently announced and implemented by the United States, as well as the tariffs imposed by other countries in response. These global trade policy changes have been dynamic, and as a result, we may experience supply chain challenges, commodity cost volatility, and consumer and economic uncertainty. We believe our business operating system, our in-region for region strategy, and strength in execution will enable us to navigate potential risks stemming from these recent events.

Current wording

We continue to monitor macroeconomic indicators and uncertainties resulting from the tariffs recently announced and implemented by the United States, as well as the tariffs imposed by other countries in response. These global trade policy changes continue to be dynamic, and as a result, we may experience supply chain challenges, commodity cost volatility, and consumer and economic uncertainty. We believe our business operating system, our in-region for region strategy, and strength in execution will enable us to navigate potential risks stemming from these recent events.

Previous wording

Net revenuesfor the three months ended March 31, 2025 increased by 11.2%, or $473.0 million, compared with the same period in 2024, which resulted from the following:

Current wording

Net revenuesfor the three months ended June 30, 2025 increased by 8.3%, or $439.0 million, compared with the same period in 2024, which resulted from the following:

Previous wording

The increase in Net revenues was primarily driven by higher volumes as a result of stronger end-customer demand within our Americas and EMEA segments, realization of price increases and incremental revenue from acquisitions, partially offset by an unfavorable impact from foreign currency translation. Refer to the "Results by Segment" below for a discussion of Net revenues by segment.

Current wording

The increase in Net revenues was primarily driven by higher volumes as a result of stronger end-customer demand within our Americas and EMEA segments, realization of price increases and incremental revenue from acquisitions. Refer to the "Results by Segment" below for a discussion of Net revenues by segment.

Previous wording

Gross profit margin for the three months ended March 31, 2025 increased 120 basis points to 35.8% compared to 34.6% for the same period of 2024 primarily due to gross productivity and price realization, partially offset by inflation.

Current wording

Gross profit margin for the three months ended June 30, 2025 increased 110 basis points to 37.6% compared to 36.5% for the same period of 2024 primarily due to gross productivity and price realization, partially offset by inflation.

Previous wording

The increase inorganic revenue was primarily driven by higher volumes led by strong demand within both our Commercial HVAC and Residential HVAC businesses and realization of price increases for both equipment and services within our Commercial HVAC business.

Current wording

The increase inorganic revenue was primarily driven by higher volumes led by strong demand within our Commercial HVAC business and realization of price increases.

Previous wording

Segment Adjusted EBITDA margin for the three months ended March 31, 2025 increased by 170 basis points to 19.8% compared to 18.1% for the same period in 2024 primarily due to higher volumes, price realization and gross productivity, partially offset by inflation and continued business reinvestment.

Current wording

Segment Adjusted EBITDA margin for the three months ended June 30, 2025 increased by 120 basis points to 24.0% compared to 22.8% for the same period in 2024 primarily due to price realization and gross productivity, partially offset by inflation and continued business reinvestment.

Previous wording

Segment Adjusted EBITDA margin for the three months ended March 31, 2025 decreased by 190 basis points to 16.1% compared to 18.0% for the same period of 2024, primarily due to continued business reinvestment and inflation, partially offset by favorable productivity and higher volume.

Current wording

Segment Adjusted EBITDA margin for the three months ended June 30, 2025 decreased by 200 basis points to 18.3% compared to 20.3% for the same period of 2024, primarily due to acquisitions, continued business reinvestment and inflation, partially offset by favorable productivity and higher volume.

Previous wording

Selling and administrative expensesfor the three months ended March 31, 2025 increased by 3.9%, or $32.5 million compared with the same period of 2024. The increase in Selling and administrative expenses was primarily driven by an increase in human capital costs related to investing in our people, higher sales commissions, incremental selling and administrative expenses of acquired businesses and higher levels of business reinvestment. Additionally, a non-cash adjustment to contingent consideration reduced Selling and administrative expenses for the three months ended March 31, 2025 by $61.2 million. Selling and administrative expenses as a percentage of Net revenues for the three months ended March 31, 2025 decreased 130 basis points from 19.6% to 18.3%. Excluding the effect of the contingent consideration adjustment, Selling and administrative expenses were 19.6% of Net revenues for the three months ended March 31, 2025.

Current wording

Selling and administrative expensesfor the six months ended June 30, 2025 increased by 7.4%, or $127.6 million, compared with the same period of 2024. The increase in Selling and administrative expenses was primarily driven by an increase in human capital costs related to investing in our people, higher sales commissions, incremental selling and administrative expenses of acquired businesses and higher levels of business reinvestment. Additionally, a non-cash adjustment to contingent consideration reduced Selling and administrative expenses for the six months ended June 30, 2025 by $61.2 million. Selling and administrative expenses as a percentage of Net revenues for the six months ended June 30, 2025 decreased 30 basis points from 18.1% to 17.8%. Excluding the effect of the contingent consideration adjustment, Selling and administrative expenses were 18.4% of Net revenues for the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2025 and March 31, 2024 our effective tax rate was 17.9% and 19.2%, respectively. The effective tax rate for the three months ended March 31, 2025 was lower than the U.S. statutory rate of 21.0% primarily due to excess tax benefits from employee share-based payments, a non-taxable adjustment for contingent consideration, 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. The effective tax rate for the three months ended March 31, 2024 was lower than the U.S. statutory rate of 21.0% 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.

Current wording

For the six months ended June 30, 2025 and June 30, 2024 our effective tax rate was 19.1% and 20.4%, respectively. The effective tax rate for the six months ended June 30, 2025 was lower than the U.S. statutory rate of 21.0% primarily due to excess tax benefits from employee share-based payments, a non-taxable adjustment for contingent consideration, 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. The effective tax rate for the six months ended June 30, 2024 was lower than the U.S. statutory rate of 21.0% 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.

Previous wording

As of March 31, 2025, we had $860.5 million of cash and cash equivalents on hand, of which $734.3 million was held by non-U.S. subsidiaries. Cash and cash equivalents held by our non-U.S. subsidiaries are generally available for use in our U.S. operations via intercompany loans, equity infusions or via distributions from direct or indirectly owned non-U.S. subsidiaries for which we do not assert permanent reinvestment. In general, repatriation of cash to the U.S. can be completed with no significant incremental U.S. tax. However, to the extent that we repatriate funds from non-U.S. subsidiaries for which we assert permanent reinvestment to fund our U.S. operations, we would be required to accrue and pay applicable non-U.S. taxes. As of March 31, 2025, we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.

Current wording

As of June 30, 2025, we had $774.2 million of cash and cash equivalents on hand, of which $625.3 million was held by non-U.S. subsidiaries. Cash and cash equivalents held by our non-U.S. subsidiaries are generally available for use in our U.S. operations via intercompany loans, equity infusions or via distributions from direct or indirectly owned non-U.S. subsidiaries for which we do not assert permanent reinvestment. In general, repatriation of cash to the U.S. can be completed with no significant incremental U.S. tax. However, to the extent that we repatriate funds from non-U.S. subsidiaries for which we assert permanent reinvestment to fund our U.S. operations, we would be required to accrue and pay applicable non-U.S. taxes. As of June 30, 2025, we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.

Previous wording

Share repurchases are made in accordance with our balanced capital allocation strategy, subject to market conditions and regulatory requirements. In February 2022, our Board of Directors authorized the repurchase of up to $3.0 billion of our ordinary shares (2022 Authorization) and in December 2024, our Board of Directors authorized the repurchase of up to an additional $5.0 billion of our ordinary shares (2024 Authorization) upon the conclusion of the 2022 Authorization. During the three months ended March 31, 2025, we repurchased and canceled approximately $477 million of our ordinary shares, leaving $0.8 billion remaining under the 2022 Authorization and $5.0 billion remaining under the 2024 Authorization. Additionally, during the period after March 31, 2025 through April 30, 2025, we repurchased approximately $173 million of our ordinary shares under the 2022 Authorization.

Current wording

Share repurchases are made in accordance with our balanced capital allocation strategy, subject to market conditions and regulatory requirements. In February 2022, our Board of Directors authorized the repurchase of up to $3.0 billion of our ordinary shares (2022 Authorization) and in December 2024, our Board of Directors authorized the repurchase of up to an additional $5.0 billion of our ordinary shares (2024 Authorization) upon the conclusion of the 2022 Authorization. During the six months ended June 30, 2025, we repurchased and canceled approximately $880 million of our ordinary shares, leaving $0.4 billion remaining under the 2022 Authorization and $5.0 billion remaining under the 2024 Authorization. Additionally, during the period after June 30, 2025 through July 30, 2025, we repurchased approximately $120 million of our ordinary shares under the 2022 Authorization.

Previous wording

We expect to pay a competitive and growing dividend. Since the launch of Trane Technologies in March 2020, we have increased our quarterly share dividend by 77%, from $0.53 to $0.94 per ordinary share, or $2.12 to $3.76 per share annualized. The first quarter 2025 dividend was declared and paid during the three months ended March 31, 2025.

Current wording

We expect to pay a competitive and growing dividend. Since the launch of Trane Technologies in March 2020, we have increased our quarterly share dividend by 77%, from $0.53 to $0.94 per ordinary share, or $2.12 to $3.76 per share annualized. The first and second quarter 2025 dividends were declared and paid during the six months ended June 30, 2025, and the third quarter 2025 dividend was declared in June 2025 to be paid in September 2025.

Previous wording

In pursuing our business strategy, we routinely conduct discussions, evaluate targets and enter into agreements regarding possible acquisitions, divestitures, joint ventures and equity investments. We have acquired several businesses, entered into joint ventures and invested in companies that complement existing products and services further enhancing our product portfolio. We paid approximately $265 million in cash for acquisitions completed during the three months ended March 31, 2025.

Current wording

In pursuing our business strategy, we routinely conduct discussions, evaluate targets and enter into agreements regarding possible acquisitions, divestitures, joint ventures and equity investments. We have acquired several businesses, entered into joint ventures and invested in companies that complement existing products and services further enhancing our product portfolio. We paid approximately $277 million in cash for acquisitions completed during the six months ended June 30, 2025.

Previous wording

As of March 31, 2025, our short-term obligations primarily consist of current maturities of $556.7 million, of which $157.2 million mature in June 2025 and $399.5 million mature in March 2026, and $295.0 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder's option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. In accordance with notice requirements as specified in the offering documents, holders had the option to exercise puts up to $37.2 million for settlement in February 2025 but did not exercise such option. In accordance with notice requirements as specified in the offering documents, holders will have the option to exercise puts up to $257.8 million for settlement in November 2025. We also maintain a commercial paper program which is used for general corporate purposes. Under the program, the maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, is $2.0 billion. We had no commercial paper outstanding at March 31, 2025 and December 31, 2024. See Note 6, "Debt and Credit Facilities," to the Condensed Consolidated Financial Statements for additional information regarding the terms of our short-term obligations.

Current wording

As of June 30, 2025, our short-term obligations of $694.6 million primarily consist of current maturities of $399.6 million that mature in March 2026 and $295.0 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder's option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. In accordance with notice requirements as specified in the offering documents, holders had the option to exercise puts up to $37.2 million for settlement in February 2025 but did not exercise such option. In accordance with notice requirements as specified in the offering documents, holders will have the option to exercise puts up to $257.8 million for settlement in November 2025. We also maintain a commercial paper program which is used for general corporate purposes. Under the program, the maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, is $2.0 billion. We had no commercial paper outstanding at June 30, 2025 and December 31, 2024. See Note 6, "Debt and Credit Facilities," to the Condensed Consolidated Financial Statements for additional information regarding the terms of our short-term obligations.

Previous wording

The following table reflects the major categories of cash flows for the three months ended March 31. For additional details, see the Condensed Consolidated Statements of Cash Flows in the Condensed Consolidated Financial Statements.

Current wording

The following table reflects the major categories of cash flows for the six months ended June 30. For additional details, see the Condensed Consolidated Statements of Cash Flows in the Condensed Consolidated Financial Statements.

Previous wording

Net cash provided by continuing operating activities for the three months ended March 31, 2025 was $345.5 million, of which Net earnings provided $676.7 million after adjusting for non-cash transactions. Net cash provided by continuing operating activities for the three months ended March 31, 2024 was $254.4 million, of which Net earnings provided $584.0 million after adjusting for non-cash transactions. The year-over-year increase in net cash from continuing operating activities was primarily due to higher net earnings.

Current wording

Net cash provided by continuing operating activities for the six months ended June 30, 2025 was $1,043.5 million, of which Net earnings provided $1,656.5 million after adjusting for non-cash transactions. Net cash provided by continuing operating activities for the six months ended June 30, 2024 was $958.6 million, of which Net earnings provided $1,457.5 million after adjusting for non-cash transactions. The year-over-year increase in net cash from continuing operating activities was primarily due to higher net earnings.

Previous wording

Cash flows from investing activities represent inflows and outflows regarding the purchase and sale of assets. Primary activities associated with these items include capital expenditures, proceeds from the sale of property, plant and equipment, acquisitions, funding of joint ventures and other equity investments. During the three months ended March 31, 2025, net cash used in investing activities from continuing operations was $385.1 million. The primary drivers of the usage were attributable to capital expenditures of $118.9 million and acquisitions of businesses of $265.3 million, net of cash acquired. During the three months ended March 31, 2024, net cash used in investing activities from continuing operations was $81.7 million. The primary driver of the usage was attributable to capital expenditures of $83.8 million, partially offset by cash provided by other investing activities.

Current wording

Cash flows from investing activities represent inflows and outflows regarding the purchase and sale of assets. Primary activities associated with these items include capital expenditures, proceeds from the sale of property, plant and equipment, acquisitions, funding of joint ventures and other equity investments. During the six months ended June 30, 2025, net cash used in investing activities from continuing operations was $486.0 million. The primary drivers of the usage were attributable to capital expenditures of $208.8 million and acquisitions of businesses of $275.5 million, net of cash acquired. During the six months ended June 30, 2024, net cash used in investing activities from continuing operations was $626.6 million. The primary drivers of the usage were attributable to purchases of short-term investments of $450.0 million as a result of the issuance of 5.100% Senior Notes due 2034 and capital expenditures of $156.7 million.

Previous wording

Cash flows from financing activities represent inflows and outflows that account for external activities affecting equity and debt. Primary activities associated with these actions include paying dividends to shareholders, repurchasing our own shares, net proceeds from debt issuances and proceeds from shares issued in connection with incentive plans. During the three months ended March 31, 2025, net cash used in financing activities from continuing operations was $723.1 million. The primary drivers of the outflow related to the repurchase of $477.5 million in ordinary shares and dividends paid to ordinary shareholders of $209.9 million. During the three months ended March 31, 2024, net cash used in financing activities from continuing operations was $386.7 million. The primary drivers of the outflow related to the repurchase of $300.3 million in ordinary shares and dividends paid to ordinary shareholders of $189.5 million, partially offset by borrowings from commercial paper, net of interest, during the period of $99.9 million.

Current wording

Cash flows from financing activities represent inflows and outflows that account for external activities affecting equity and debt. Primary activities associated with these actions include paying dividends to shareholders, repurchasing our own shares, net proceeds from debt issuances and proceeds from shares issued in connection with incentive plans. During the six months ended June 30, 2025, net cash used in financing activities from continuing operations was $1,480.9 million. The primary drivers of the outflow related to the repurchase of $879.6 million in ordinary shares, dividends paid to ordinary shareholders of $420.0 million, and the repayment of $157.3 million of Debentures that matured in June 2025. During the six months ended June 30, 2024, net cash used in financing activities from continuing operations was $504.3 million. The primary drivers of the outflow related to the repurchase of $624.4 million in ordinary shares and dividends paid to ordinary shareholders of $379.4 million, partially offset by proceeds from the issuance of 5.100% Senior Notes due 2034 during the period of $498.5 million, which were used to purchase short-term investments of $450.0 million.

Previous wording

A reconciliation of Net cash provided by (used in) continuing operating activities to free cash flow for the three months ended March 31 is as follows:

Current wording

A reconciliation of Net cash provided by (used in) continuing operating activities to free cash flow for the six months ended June 30 is as follows:

Previous wording

In addition, we monitor the impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans have experienced a significant impact on their liquidity due to market volatility. The Company currently projects that it will contribute a total of approximately $33 million to our enterprise plans worldwide in 2025. See Note 9, "Pensions and Postretirement Benefits Other Than Pensions," to the Condensed Consolidated Financial Statements for additional information regarding pensions.

Current wording

In addition, we monitor the impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans have experienced a significant impact on their liquidity due to market volatility. The Company currently projects that it will contribute a total of approximately $33 million to our pension plans worldwide in 2025. See Note 9, "Pensions and Postretirement Benefits Other Than Pensions," to the Condensed Consolidated Financial Statements for additional information regarding pensions.

Previous wording

Management believes there have been no significant changes during the three months ended March 31, 2025, to the items that we disclosed as our critical accounting estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Management believes there have been no significant changes during the six months ended June 30, 2025, to the items that we disclosed as our critical accounting estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.