tt-20240331

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 March 31, 2024


☐			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

New York Stock Exchange

5.250% Senior Notes due 2033

TT33

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

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 April 26, 2024 was 226,352,436.

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TRANE TECHNOLOGIES PLC

FORM 10-Q

INDEX



PART I FINANCIAL INFORMATION		1

Item 1 -	Financial Statements	1

	Condensed Consolidated Statements of Earnings for the three months ended M arch 31, 2024 and 202 3	1

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023	2

	Condensed Consolidated Balance Sheets at Ma rch 31, 2024 and December 31, 202 3	3

	Condensed Consolidated Statements of Equity for the three months ended March 31, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3 -	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4 -	Controls and Procedures	37

PART II OTHER INFORMATION		38

Item 1 -	Legal Proceedings	38

Item 1A -	Risk Factors	38

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 5 -	Other Information	39

Item 6 -	Exhibits	40
		39
SIGNATURES		41

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements


TRANE TECHNOLOGIES PLC CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

	Three months ended
	March 31,
In millions, except per share amounts	2024		2023
Net revenues	$	4,215.5	$	3,665.8
Cost of goods sold	(2,755.6)		(2,522.3)
Selling and administrative expenses	(826.1)		(686.7)
Operating income	633.8		456.8
Interest expense	(58.1)		(57.6)
Other income/(expense), net	(25.0)		(9.4)
Earnings before income taxes	550.7		389.8
Provision for income taxes	(105.5)		(73.2)
Earnings from continuing operations	445.2		316.6
Discontinued operations, net of tax	(5.4)		(5.5)
Net earnings	439.8		311.1
Less: Net earnings from continuing operations attributable to noncontrolling interests	(3.5)		(4.0)

Net earnings attributable to Trane Technologies plc	$	436.3	$	307.1

Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations	$	441.7	$	312.6
Discontinued operations	(5.4)		(5.5)
Net earnings	$	436.3	$	307.1
Earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations	$	1.94	$	1.36
Discontinued operations	(0.02)		(0.02)
Net earnings	$	1.92	$	1.34
Diluted:
Continuing operations	$	1.92	$	1.35
Discontinued operations	(0.02)		(0.02)
Net earnings	$	1.90	$	1.33
Weighted-average shares outstanding:
Basic	227.4		229.3
Diluted	229.5		231.5

See accompanying notes to Condensed Consolidated Financial Statements.

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TRANE TECHNOLOGIES PLC CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

	Three months ended
	March 31,
In millions	2024		2023
Net earnings	$	439.8	$	311.1
Other comprehensive income (loss):
Currency translation	(76.6)		61.4
Cash flow hedges:
Unrealized net gains (losses) arising during period	(4.9)		0.3
Net (gains) losses reclassified into earnings	3.0		6.9
Tax (expense) benefit	0.1		(1.5)
Total cash flow hedges, net of tax	(1.8)		5.7
Pension and OPEB adjustments:


Amortization reclassified into earnings	1.3		1.8
Net settlement (gains) losses reclassified to earnings	—		1.1
Currency translation and other	0.8		(2.6)
Tax (expense) benefit	(0.5)		—
Total pension and OPEB adjustments, net of tax	1.6		0.3
Other comprehensive income (loss), net of tax	(76.8)		67.4
Comprehensive income, net of tax	$	363.0	$	378.5
Less: Comprehensive income attributable to noncontrolling interests	(2.2)		(4.5)
Comprehensive income attributable to Trane Technologies plc	$	360.8	$	374.0

See accompanying notes to Condensed Consolidated Financial Statements.

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TRANE TECHNOLOGIES PLC

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
In millions	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	849.9	$	1,095.3
Accounts and notes receivable, net	2,939.8		2,956.8
Inventories	2,382.7		2,152.1
Other current assets	714.8		665.7
Total current assets	6,887.2		6,869.9
Property, plant and equipment, net	1,788.3		1,772.2
Goodwill	6,059.7		6,095.3
Intangible assets, net	3,390.9		3,439.8
Other noncurrent assets	1,215.1		1,214.7
Total assets	$	19,341.2	$	19,391.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,008.3	$	2,025.2
Accrued compensation and benefits	432.7		591.7
Accrued expenses and other current liabilities	2,758.8		2,634.7
Short-term borrowings and current maturities of long-term debt	902.1		801.9
Total current liabilities	6,101.9		6,053.5
Long-term debt	3,978.7		3,977.9
Postemployment and other benefit liabilities	602.2		596.9
Deferred and noncurrent income taxes	677.9		703.7
Other noncurrent liabilities	1,069.7		1,042.9
Total liabilities	12,430.4		12,374.9
Equity:
Trane Technologies plc shareholders’ equity:
Ordinary shares	251.2		251.7
Ordinary shares held in treasury, at cost	(1,719.4)		(1,719.4)

Retained earnings	9,104.2		9,133.7
Accumulated other comprehensive income (loss)	(746.3)		(670.8)
Total Trane Technologies plc shareholders’ equity	6,889.7		6,995.2
Noncontrolling interests	21.1		21.8
Total equity	6,910.8		7,017.0
Total liabilities and equity	$	19,341.2	$	19,391.9

See accompanying notes to Condensed Consolidated Financial Statements.

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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, 2023	$	7,017.0	$	251.7	251.7	$	(1,719.4)	$	—	$	9,133.7	$	(670.8)	$	21.8
Net earnings	439.8		—		—	—		—		436.3		—		3.5
Other comprehensive income (loss)	(76.8)		—		—	—		—		—		(75.5)		(1.3)
Shares issued under incentive stock plans	6.1		0.7		0.7	—		5.4		—		—		—
Repurchase of ordinary shares	(300.3)		(1.2)		(1.2)	—		(25.3)		(273.8)		—		—
Share-based compensation	18.5		—		—	—		19.8		(1.3)		—		—
Dividends declared to noncontrolling interest	(2.9)		—		—	—		—		—		—		(2.9)
Dividends declared to common shareholders	(190.7)		—		—	—		—		(190.7)		—		—

Other	0.1		—		—	—		0.1		—		—		—
Balance at March 31, 2024	$	6,910.8	$	251.2	251.2	$	(1,719.4)	$	—	$	9,104.2	$	(746.3)	$	21.1


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, 2022	$	6,105.2	$	253.3	253.3	$	(1,719.4)	$	—	$	8,320.9	$	(766.2)	$	16.6
Net earnings	311.1		—		—	—		—		307.1		—		4.0
Other comprehensive income (loss)	67.4		—		—	—		—		—		66.9		0.5
Shares issued under incentive stock plans	21.3		0.8		0.8	—		20.5		—		—		—
Repurchase of ordinary shares	(300.0)		(1.6)		(1.6)	—		(45.0)		(253.4)		—		—
Share-based compensation	23.8		—		—	—		24.4		(0.6)		—		—
Dividends declared to noncontrolling interest	(2.9)		—		—	—		—		—		—		(2.9)

Dividends declared to common shareholders	(171.7)		—		—	—		—		(171.7)		—		—

Other	0.1		—		—	—		0.1		—		—		—
Balance at March 31, 2023	$	6,054.3	$	252.5	252.5	$	(1,719.4)	$	—	$	8,202.3	$	(699.3)	$	18.2

See accompanying notes to Condensed Consolidated Financial Statements.

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TRANE TECHNOLOGIES PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended
	March 31,
In millions	2024		2023
Cash flows from operating activities:
Net earnings	$	439.8	$	311.1
Discontinued operations, net of tax	5.4		5.5
Adjustments for non-cash transactions:
Depreciation and amortization	91.5		79.8
Pension and other postretirement benefits	10.0		13.5
Stock settled share-based compensation	19.8		24.4
Other non-cash items, net	17.5		(3.1)
Changes in assets and liabilities, net of the effects of acquisitions	(329.6)		(414.4)
Net cash provided by (used in) continuing operating activities	254.4		16.8
Net cash provided by (used in) discontinued operating activities	(7.2)		(8.3)
Net cash provided by (used in) operating activities	247.2		8.5
Cash flows from investing activities:
Capital expenditures	(83.8)		(77.1)





Other investing activities, net	2.1		(13.9)


Net cash provided by (used in) investing activities	(81.7)		(91.0)
Cash flows from financing activities:
Short-term borrowings (payments), net	99.9		—
Proceeds from long-term debt	—		699.1
Payments of long-term debt	—		(700.0)
Net proceeds from (payments of) debt	99.9		(0.9)
Debt issuance costs	—		(6.4)
Dividends paid to ordinary shareholders	(189.5)		(170.3)
Dividends paid to noncontrolling interests	(2.9)		(2.9)

Proceeds (payments) from shares issued under incentive plans, net	6.1		21.3
Repurchase of ordinary shares	(300.3)		(300.0)


Net cash provided by (used in) financing activities	(386.7)		(459.2)

Effect of exchange rate changes on cash and cash equivalents	(24.2)		14.1
Net increase (decrease) in cash and cash equivalents	(245.4)		(527.6)
Cash and cash equivalents - beginning of period	1,095.3		1,220.5
Cash and cash equivalents - end of period	$	849.9	$	692.9

See accompanying notes to Condensed Consolidated Financial Statements.

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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, sales and service of solutions for Heating, Ventilation and Air Conditioning (HVAC), transport refrigeration, and custom refrigeration solutions.

The accompanying unaudited Condensed Consolidated Financial Statements of Trane Technologies reflect 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, 2023. 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.

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 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, a company should disclose qualitative and quantitative information about its supplier finance programs. The Company adopted this standard on January 1, 2023, except for the amendment on roll forward information which is effective on an annual basis for fiscal years beginning after December 15, 2023. See Note 7, “Supplier Financing Arrangements” for more information regarding the Company's supplier financing program.

Accounting Pronouncements Issued but not yet Adopted

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures (Topic 740)" (ASU 2023-09) which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company expects ASU 2023-09 to require additional disclosures in the notes to its consolidated financial statements and does not plan to early adopt.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (ASU 2023-07) which requires public entities to disclose information about their reportable segments' oversight and significant expenses on an interim and annual basis. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company expects ASU 2023-07 to require additional disclosures in the notes to its consolidated financial statements and does not plan to early adopt.

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative" (ASU 2023-06) to amend a variety of disclosure requirements in the ASC. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited. Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures.

Note 3. Inventories

The major classes of inventory were as follows:


In millions	March 31, 2024		December 31, 2023
Raw materials	$	608.6	$	605.1
Work-in-process	427.0		385.1
Finished goods	1,521.9		1,332.3
	2,557.5		2,322.5
LIFO reserve	(174.8)		(170.4)
Total	$	2,382.7	$	2,152.1

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 net realizable value. Reserve balances, primarily related to obsolete and slow-moving inventories, were $153.0 million and $143.5 million at March 31, 2024 and December 31, 2023, respectively.

Note 4. Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 were as follows:


In millions	Americas		EMEA		Asia Pacific		Total
Net balance as of December 31, 2023	$	4,675.3	$	869.0	$	551.0	$	6,095.3


Measurement period adjustments	(4.1)		—		—		(4.1)
Currency translation	(1.9)		(20.9)		(8.7)		(31.5)
Net balance as of March 31, 2024	$	4,669.3	$	848.1	$	542.3	$	6,059.7

The net goodwill balances at March 31, 2024 and December 31, 2023 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:


	March 31, 2024						December 31, 2023
In millions	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer relationships	$	2,377.9	$	(1,765.8)	$	612.1	$	2,384.4	$	(1,731.4)	$	653.0
Other	425.1		(248.3)		176.8		419.6		(243.1)		176.5
Total finite-lived intangible assets	2,803.0		(2,014.1)		788.9		2,804.0		(1,974.5)		829.5
Trademarks (indefinite-lived)	2,602.0		—		2,602.0		2,610.3		—		2,610.3
Total	$	5,405.0	$	(2,014.1)	$	3,390.9	$	5,414.3	$	(1,974.5)	$	3,439.8

Intangible asset amortization expense was $44.9 million and $34.9 million for the three months ended March 31, 2024 and 2023, respectively.

Note 6. Debt and Credit Facilities

Short-term borrowings and current maturities of long-term debt consisted of the following:


In millions	March 31, 2024		December 31, 2023
Debentures with put feature	$	295.0	$	295.0
Commercial paper	100.0		—
3.550% Senior notes due 2024	499.6		499.4
Other current maturities of long-term debt	7.5		7.5


Total	$	902.1	$	801.9

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. Under the commercial paper program, the Company may issue notes from time to time through Trane Technologies HoldCo Inc. or Trane Technologies Financing Limited. Each of Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company, Trane Technologies Lux International Holding Company S.à.r.l., Trane Technologies Americas Holding Corporation, Trane Technologies Global Holding II Company Limited, and Trane Technologies Company LLC provide irrevocable and unconditional guarantees for any notes issued under the commercial paper program. In addition, Trane Technologies HoldCo Inc. and Trane Technologies Financing Limited provide irrevocable and unconditional guarantees for any notes issued by the other. The Company had $100.0 million of commercial paper outstanding at March 31, 2024. The Company had no outstanding balance under its commercial paper program as of December 31, 2023.

Debentures with Put Feature

At March 31, 2024 and December 31, 2023, the Company had $295.0 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 2024, subject to the notice requirement. No exercises were made.

Long-term debt, excluding current maturities, consisted of the following:


In millions	March 31, 2024		December 31, 2023
7.200% Debentures due 2024-2025	$	7.5	$	7.5
6.480% Debentures due 2025	149.7		149.7
3.500% Senior notes due 2026	399.0		398.9
3.750% Senior notes due 2028	547.5		547.3
3.800% Senior notes due 2029	746.6		746.4
5.250% Senior notes due 2033	693.5		693.3
5.750% Senior notes due 2043	495.5		495.4
4.650% Senior notes due 2044	296.6		296.6
4.300% Senior notes due 2048	296.6		296.6
4.500% Senior notes due 2049	346.2		346.2


Total	$	3,978.7	$	3,977.9

Other Credit Facilities

The Company maintains two $1.0 billion senior unsecured revolving credit facilities, one of which matures in June 2026 and the other which matures in April 2027 (collectively, the Facilities), through its wholly-owned subsidiaries, Trane Technologies HoldCo Inc. and Trane Technologies Financing Limited (collectively, the Borrowers). The 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., Trane Technologies Americas Holding Corporation, Trane Technologies Global Holding II Company Limited 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 March 31, 2024 and December 31, 2023.

Fair Value of Debt

The fair value of the Company's debt instruments at March 31, 2024 and December 31, 2023 was $4.8 billion and $4.7 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. Supplier Financing Arrangements

The Company has agreements with financial institutions, primarily in the US, that allow its suppliers to sell their receivables to the financial institution at the sole discretion of both the supplier and the financial institution on terms that are negotiated between them. The Company may not always be notified when its suppliers sell receivables under these arrangements.

The Company’s obligations to its suppliers, including the amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to sell their receivables under the program. Outstanding invoices under the supplier financing arrangements were $239.4 million and $246.0 million at March 31, 2024 and December 31, 2023, respectively, which are included within Accounts payable in the Condensed Consolidated Balance Sheet.

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 March 31, 2024:


In millions	Fair Value		Fair value measurements
			Level 1		Level 2		Level 3

Assets:
Derivative instruments	$	2.3	$	—	$	2.3	$	—

Liabilities:
Derivative instruments	4.4		—		4.4		—
Contingent consideration	86.2		—		—		86.2

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, 2023:


In millions	Fair Value		Fair value measurements
			Level 1		Level 2		Level 3

Assets:
Derivative instruments	$	4.1	$	—	$	4.1	$	—

Liabilities:
Derivative instruments	4.8		—		4.8		—
Contingent consideration	90.3		—		—		90.3

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 derivative instruments 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 derivative instruments is valued under a market approach using published prices, where applicable, or dealer quotes.

On November 2, 2023, the Company acquired 100% of Nuvolo Technologies Corporation (Nuvolo). In connection with the acquisition, the Company agreed to two contingent consideration arrangements. The first contingent consideration arrangement, payable up to $90.0 million in cash, is based on the attainment of key revenue targets from November 2, 2023 through April 2025. If the first contingent consideration targets are met, a second contingent consideration arrangement with no maximum earnout is available to the sellers based on revenues in excess of the initial targets attained from a specified customer contract through April 2025.

Each quarter the Company remeasures 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. Contingent consideration related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The fair value of the contingent consideration is determined using the Monte Carlo simulation model based on revenue projections during the earnout period, implied revenue volatility and a risk adjusted discount rate.

The changes in the fair value of the Company's Level 3 liabilities were as follows:


In millions	March 31, 2024
Balance at beginning of period	$	90.3


Measurement period adjustment	(4.1)
Balance at end of period	$	86.2

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 non-contributory 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.

The components of the Company’s net periodic pension benefit cost for the three months ended March 31 were as follows:


	Three months ended
In millions	2024		2023
Service cost	$	8.1	$	8.6
Interest cost	28.2		29.8
Expected return on plan assets	(29.4)		(29.9)
Net amortization of:
Prior service costs (benefits)	0.7		0.9
Net actuarial (gains) losses	3.8		4.0
Net periodic pension benefit cost	11.4		13.4
Net settlement losses	—		1.1
Net periodic pension benefit cost after net settlement losses	$	11.4	$	14.5
Amounts recorded in continuing operations:
Operating income	$	7.0	$	7.5
Other income/(expense), net	2.7		5.3
Amounts recorded in discontinued operations	1.7		1.7
Total	$	11.4	$	14.5

The Company made required and discretionary contributions to its defined benefit pension plans of $6.0 million and $26.7 million during the three months ended March 31, 2024 and 2023, respectively. The Company currently projects that it will contribute approximately $61 million to its enterprise plans worldwide in 2024.

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 months ended March 31 were as follows:


	Three months ended
In millions	2024		2023
Service cost	$	0.3	$	0.4
Interest cost	2.9		3.3
Net amortization of:
Prior service costs (benefits)	0.1		0.2
Net actuarial (gains) losses	(3.3)		(3.3)
Net periodic postretirement benefit cost	$	—	$	0.6
Amounts recorded in continuing operations:
Operating income	$	0.3	$	0.4
Other income/(expense), net	—		0.3
Amounts recorded in discontinued operations	(0.3)		(0.1)
Total	$	—	$	0.6

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 March 31, 2024 or December 31, 2023.

Changes in ordinary shares and treasury shares for the three months ended March 31, 2024 were as follows:


In millions	Ordinary shares issued	Ordinary shares held in treasury
December 31, 2023	251.7	24.5
Shares issued under incentive plans, net	0.7	—

Repurchase of ordinary shares	(1.2)	—
March 31, 2024	251.2	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 2022, the Company's Board of Directors authorized a share repurchase program of up to $3.0 billion of its ordinary shares (2022 Authorization). During the three months ended March 31, 2024, the Company repurchased and canceled approximately $300 million of its ordinary shares, leaving $2.2 billion remaining under the 2022 Authorization. Additionally, in April 2024, the Company repurchased approximately $131 million of its ordinary shares under the 2022 Authorization.

Accumulated Other Comprehensive Income (Loss)

The changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2024 were as follows:


In millions	Derivative Instruments		Pension and OPEB		Foreign Currency Translation		Total
Balance at December 31, 2023	$	3.0	$	(198.9)	$	(474.9)	$	(670.8)
Other comprehensive income (loss) attributable to Trane Technologies plc	(1.8)		1.6		(75.3)		(75.5)
Balance at March 31, 2024	$	1.2	$	(197.3)	$	(550.2)	$	(746.3)

Other comprehensive income (loss) attributable to noncontrolling interests for the three months ended March 31, 2024 included a loss of $1.3 million related to currency translation.

The changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2023 were as follows:


In millions	Derivative Instruments		Pension and OPEB		Foreign Currency Translation		Total
Balance at December 31, 2022	$	(4.5)	$	(214.1)	$	(547.6)	$	(766.2)
Other comprehensive income (loss) attributable to Trane Technologies plc	5.7		0.3		60.9		66.9
Balance at March 31, 2023	$	1.2	$	(213.8)	$	(486.7)	$	(699.3)

Other comprehensive income (loss) attributable to noncontrolling interests for the three months ended March 31, 2023 included a gain of $0.5 million related to currency translation.

Note 11. Revenue

Disaggregated Revenue

Net revenues by geography and major type of good or service for the three months ended March 31 were as follows:


	Three months ended
In millions	2024		2023
Americas
Equipment	$	2,233.4	$	1,900.6
Services	1,101.4		960.4
Total Americas	$	3,334.8	$	2,861.0
EMEA
Equipment	$	384.7	$	365.1
Services	168.7		145.4
Total EMEA	$	553.4	$	510.5
Asia Pacific
Equipment	$	222.4	$	201.7
Services	104.9		92.6
Total Asia Pacific	$	327.3	$	294.3

Total Net revenues	$	4,215.5	$	3,665.8

Revenue from goods and services transferred to customers at a point in time accounted for approximately 80% and 81% of the Company’s revenue for the three months ended March 31, 2024 and 2023.

Contract Balances

The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended March 31, 2024 and December 31, 2023 were as follows:


In millions	Location on Condensed Consolidated Balance Sheets	March 31, 2024		December 31, 2023
Contract assets - current	Other current assets	$	465.4	$	458.4

Contract liabilities - current	Accrued expenses and other current liabilities	1,368.9		1,301.2
Contract liabilities - noncurrent	Other noncurrent liabilities	256.2		247.2

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 months ended March 31, 2024, changes in contract asset and liability balances were not materially impacted by any other factors.

Approximately 30% of the contract liability balance at December 31, 2023 was recognized as revenue during the three months ended March 31, 2024. Additionally, approximately 16% of the contract liability balance at March 31, 2024 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. 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 months ended March 31 was as follows:


	Three months ended
In millions	2024		2023
Stock options	$	4.1	$	9.0
RSUs	5.8		10.6
Performance shares	9.5		4.4
Deferred compensation	0.7		1.0

Pre-tax expense	20.1		25.0
Tax benefit	(4.9)		(6.1)
After-tax expense	$	15.2	$	18.9

Grants issued during the three months ended March 31 were as follows:


	2024			2023
	Number granted	Weighted- average fair value per award		Number granted	Weighted- average fair value per award
Stock options	245,241	$	76.72	388,150	$	46.71
RSUs	86,199	$	270.23	159,272	$	177.79
Performance shares (1)	158,320	$	331.85	203,186	$	207.41

(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. Beginning with the 2024 grant year, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense over the period during which an employee is required to provide service in exchange for the award, which is generally 12 months. For awards granted to retirement eligible employees prior to 2024, the Company recognized expense for the 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 three months ended March 31:


	2024		2023
Dividend yield	1.11	%	1.50	%
Volatility	29.99	%	29.35	%
Risk-free rate of return	4.00	%	3.60	%
Expected life in years	4.8		4.8

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 shares.

•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 shares 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 US 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. Beginning with the 2024 grant year, for PSUs granted to retirement eligible employees, the Company recognizes the expense over the period during which an employee is required to provide service in exchange for the award, which is 12 months. For awards granted to retirement eligible employees prior to 2024, the expense was recognized over the 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 months ended March 31 were as follows:


	Three months ended
In millions	2024		2023
Interest income	$	3.7	$	4.4
Foreign currency exchange loss	(13.9)		(6.6)
Other components of net periodic benefit credit/(cost)	(2.7)		(5.6)
Other activity, net	(12.1)		(1.6)
Other income/(expense), net	$	(25.0)	$	(9.4)

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 postretirement obligations other than the service cost component. Other activity, net includes several items including legacy legal matters, such as activities related to Murray Boiler LLC (Murray). Refer to Note 17, "Commitments and Contingencies," for more information regarding activities related to Murray.

Note 14. Income Taxes

On December 18, 2023, Ireland enacted legislation related to the 15% minimum tax element of the Organisation for Economic Co-operation and Development (OECD) tax reform initiative, commonly referred to as “Pillar Two," effective January 1, 2024. The Company has included the impact of Pillar Two in its full year 2024 estimated annual effective income tax rate. The Company will continue to monitor and evaluate the potential impact of proposed legislative changes as new guidance becomes available.

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 three months ended March 31, 2024 and 2023, the Company’s effective income tax rate was 19.2% and 18.8%, respectively. 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, including the impacts of Pillar Two, 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, 2023 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.

Total unrecognized tax benefits for March 31, 2024 and December 31, 2023 were $84.7 million and $84.9 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 income 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, Singapore, 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 income 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 provision for income taxes. In general, the examination of the Company’s U.S. federal income tax returns is complete or effectively settled for years prior to 2016. The Company’s U.S. federal income tax returns for 2016 to 2019 are currently under examination by the Internal Revenue Service (IRS). In general, the examination of the Company’s material non-U.S. income 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.

Note 15. 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 months ended March 31:


	Three months ended
In millions, except per share amounts	2024		2023
Weighted-average number of basic shares	227.4		229.3
Shares issuable under incentive share plans	2.1		2.2

Weighted-average number of diluted shares	229.5		231.5
Anti-dilutive shares	0.3		0.8

Dividends declared per ordinary share	$	0.84	$	0.75

Note 16. Business Segment Information

The Company operates under three regional operating segments designed to create deep customer focus and relevance in markets around the world. 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, cooling and ventilation systems, building controls and solutions, 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, cooling and ventilation 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, cooling and ventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.

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, service debt and undertake capital expenditures because it eliminates non-cash charges such as depreciation and amortization expense.

A summary of operations by reportable segment for the three months ended March 31 was as follows:


	Three months ended
In millions	2024		2023
Net revenues
Americas	$	3,334.8	$	2,861.0
EMEA	553.4		510.5
Asia Pacific	327.3		294.3
Total Net revenues	$	4,215.5	$	3,665.8

Segment Adjusted EBITDA
Americas	$	604.8	$	455.8
EMEA	99.4		94.4
Asia Pacific	70.8		57.2
Total Segment Adjusted EBITDA	$	775.0	$	607.4

Reconciliation of Segment Adjusted EBITDA to earnings before income taxes
Total Segment Adjusted EBITDA	$	775.0	$	607.4
Interest expense	(58.1)		(57.6)
Depreciation and amortization	(91.5)		(79.8)
Restructuring costs	(4.7)		(6.3)
Non-cash adjustment for contingent consideration	—		(2.7)

Acquisition inventory step-up	—		(2.2)

Unallocated corporate expenses	(70.0)		(69.0)
Earnings before income taxes	$	550.7	$	389.8

Note 17. Commitments and Contingencies

The Company is involved in various litigation, claims and administrative proceedings, including those related to the bankruptcy proceedings for Aldrich Pump LLC (Aldrich) and Murray and environmental and product liability matters. The Company records accruals for loss contingencies when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, except as expressly set forth in this note, management believes that any liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

Asbestos-Related Matters

Certain wholly-owned subsidiaries and former companies of the Company have been named as defendants in asbestos-related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies have also been named as defendants. The vast majority of those claims were filed against predecessors of Aldrich and Murray, indirect wholly-owned subsidiaries of Trane Technologies plc, and generally allege injury caused by exposure to asbestos contained in certain historical products sold by predecessors of Aldrich or Murray, primarily pumps, boilers and railroad brake shoes. None of the Company’s existing or previously-owned businesses were a producer or manufacturer of asbestos.

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 and Murray 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 Title 11 of the United States Code (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 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, Aldrich and Murray. 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 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. In addition, at the request of Aldrich and Murray, the Bankruptcy Court has entered an order temporarily staying all asbestos-related claims against the Trane Companies that relate to claims against Aldrich or Murray (except for asbestos-related claims for which the exclusive remedy is provided under workers' compensation statutes or similar laws). On August 23, 2021, the Bankruptcy Court entered its findings of facts and conclusions of law and order declaring that the automatic stay applies to certain asbestos related claims against the Trane Companies and enjoining such actions. As a result, all asbestos-related lawsuits against Aldrich, Murray and the Trane Companies remain stayed.

The goal of these Chapter 11 filings is to resolve equitably and permanently all current and future asbestos-related claims in a manner beneficial to claimants and to Aldrich and Murray through court approval of a plan of reorganization that would create a trust pursuant to section 524(g) of the Bankruptcy Code, establish claims resolution procedures for all current and future asbestos-related claims against Aldrich and Murray and channel such claims to the trust for resolution in accordance with those procedures. Aldrich and Murray intend to seek an agreement with representatives of the asbestos claimants on the terms of a plan for the establishment of such a trust.

Prior to the Petition Date, predecessors of each of Aldrich and Murray had been litigating asbestos-related claims brought against them. No such claims have been paid since the Petition Date, and it is not contemplated that any such claims will be paid until the end of the Chapter 11 cases.

From an accounting perspective, the Company no longer has control over Aldrich and Murray as of the Petition Date as their activities are subject to review and oversight by the Bankruptcy Court. Therefore, Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date and their respective assets and liabilities were derecognized from the Company’s Condensed Consolidated Financial Statements. Amounts derecognized in 2020 primarily related to the legacy asbestos-related liabilities and asbestos-related insurance recoveries and $41.7 million of cash.

Upon deconsolidation in 2020, the Company recorded its retained interest in Aldrich and Murray at fair value within Other noncurrent assets in the Condensed Consolidated Balance Sheet. In determining the fair value of its equity investment, the Company used a market-adjusted multiple of earnings valuation technique. As a result, the Company recorded an aggregate equity investment of $53.6 million as of the Petition Date.

Simultaneously, the Company recognized a liability of $248.8 million within Other noncurrent liabilities in the Condensed Consolidated Balance Sheet related to its obligation under the Funding Agreements. The liability was based on asbestos related liabilities and insurance related assets balances previously recorded by the Company prior to the Petition Date.

As a result of the deconsolidation, the Company recognized an aggregate loss of $24.9 million in its Condensed Consolidated Statements of Earnings during the year ended December 31, 2020. A gain of $0.9 million related to Murray and its wholly-owned subsidiary ClimateLabs was recorded within Other income / (expense), net and a loss of $25.8 million related to Aldrich and its wholly-owned subsidiary 200 Park was recorded within Discontinued operations, net of tax. Additionally, the deconsolidation resulted in an investing cash outflow of $41.7 million in the Company’s Condensed Consolidated Statements of Cash Flows, of which $10.8 million was recorded within continuing operations during the year ended December 31, 2020.

On August 26, 2021, the Company announced that Aldrich and Murray reached an agreement in principle with the court-appointed legal representative of future asbestos claimants (the FCR) in the bankruptcy proceedings. The agreement in principle includes the key terms for the permanent resolution of all current and future asbestos claims against Aldrich and Murray pursuant to a plan of reorganization (the Plan). Under the agreed terms, the Plan would create a trust pursuant to section 524(g) of the Bankruptcy Code and establish claims resolution procedures for all current and future claims against Aldrich and Murray (Asbestos Claims). On the effective date of the Plan, Aldrich and Murray would fund the trust with $545.0 million, comprised of $540.0 million in cash and a promissory note to be issued by Aldrich and Murray to the trust in the principal amount of $5.0 million, and the Asbestos Claims would be channeled to the trust for resolution in accordance with the claims resolution procedures. Following the effective date of the Plan, Aldrich and Murray would have no further obligations with respect to the Asbestos Claims. The FCR has agreed to support such Plan. The agreement in principle with the FCR is subject to final documentation and is conditioned on arrangements acceptable to Aldrich and Murray with respect to their asbestos insurance assets. It is currently contemplated that the asbestos insurance assets of Aldrich and Murray would be contributed to the trust, and that, in consideration of their cash contribution to the trust, Aldrich and Murray would have the exclusive right to pursue, collect and retain all insurance reimbursements available in connection with the resolution of Asbestos Claims by the trust. The committee representing current asbestos claimants (the ACC) is not a party to the agreement in principle. Any settlement and its implementation in a plan of reorganization is subject to the approval of the Bankruptcy Court, and there can be no assurance that the Bankruptcy Court will approve the agreement on the terms proposed.

On September 24, 2021, Aldrich and Murray filed the Plan with the Bankruptcy Court. The Plan is supported by, and reflects the agreement in principle reached with the FCR. On the same date, in connection with the Plan, Aldrich and Murray filed a motion with the Bankruptcy Court to create a $270.0 million trust intended to constitute a "qualified settlement fund" within the meaning of the Treasury Regulations under Section 468B of the Internal Revenue Code (QSF). The funds held in the QSF would be available to provide funding for the Section 524(g) Trust upon effectiveness of the Plan.

During the year ended December 31, 2021, in connection with the agreement in principle reached by Aldrich and Murray with the FCR and the motion to create a $270.0 million QSF, the Company recorded a charge of $21.2 million to increase its Funding Agreement liability to $270.0 million. The corresponding charge was bifurcated between Other income / (expense), net of $7.2 million relating to Murray and discontinued operations of $14.0 million relating to Aldrich.

On January 27, 2022, the Bankruptcy Court granted the request to fund the QSF, which was funded on March 2, 2022, resulting in an operating cash outflow of $270.0 million in the Company’s Condensed Consolidated Statements of Cash Flows, of which $91.8 million was allocated to continuing operations and $178.2 million was allocated to discontinued operations for the three months ended March 31, 2022. On April 18, 2022, the Bankruptcy Court entered an order granting Aldrich and Murray's request to seek to estimate their aggregate liability for all current and future asbestos-related personal injury claims. Aldrich and Murray are pursuing discovery and related matters in connection with the estimation proceedings.

On October 18, 2021, the ACC filed a motion seeking standing to pursue and investigate on behalf of the bankruptcy estates of Aldrich and Murray, claims arising from or related to the 2020 Corporate Restructuring. Also on October 18, 2021, the ACC filed a complaint seeking to substantively consolidate the bankruptcy estates of Aldrich and Murray with certain of the Company's subsidiaries. On December 20, 2021, Aldrich, Murray and certain of the Company's subsidiaries filed motions to dismiss the ACC's substantive consolidation complaint. On April 14, 2022, the Bankruptcy Court granted the ACC's standing motion and denied the motions to dismiss the substantive consolidation complaint. On June 18, 2022, the ACC filed complaints against the Company and other related parties asserting various claims and causes of action arising from or related to the 2020 Corporate Restructuring. The Company is vigorously opposing and defending against these claims.

On April 6, 2023, certain individual claimants filed a motion to dismiss the Chapter 11 cases. Subsequently, on May 15, 2023, the ACC filed its own motion to dismiss the Chapter 11 cases. Aldrich, Murray and the FCR filed responses in opposition to each of these motions, and the Company filed papers joining in Aldrich and Murray's opposition. A hearing on the motions to dismiss was held on July 14, 2023. On December 28, 2023, the Bankruptcy Court entered an order denying the motions to dismiss the Chapter 11 cases. On January 11, 2024, the ACC and the individual claimants filed motions seeking leave to appeal the order denying the motions to dismiss and to certify the appeals directly to the Court of Appeals for the Fourth Circuit (the Fourth Circuit). At a hearing on February 9, 2024, the Bankruptcy Court granted the motions to certify direct appeals to the Fourth Circuit. On April 17, 2024, the Fourth Circuit entered an order denying the petitions for direct appeal. It is not possible to predict whether an appellate court will affirm or reverse the Bankruptcy Court order denying the motions to dismiss, whether the Bankruptcy Court will approve the terms of the Plan, what the extent of the asbestos liability will be or how long the Chapter 11 cases will last. The Chapter 11 cases remain pending as of April 30, 2024.

Furthermore, in connection with the 2020 Corporate Restructuring, Aldrich, Murray and their respective subsidiaries entered into several agreements with subsidiaries of the Company to ensure they each have access to services necessary for the effective operation of their respective businesses and access to capital to address any liquidity needs that arise as a result of working capital requirements or timing issues. In addition, the Company regularly transacts business with Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs. As of the Petition Date, these entities are considered related parties and post-deconsolidation activity between the Company and them are reported as third party transactions and are reflected within the Company’s Condensed Consolidated Statements of Earnings. Since the Petition Date, there were no material transactions between the Company and these entities other than as described above.

Environmental Matters

The Company continues to be dedicated to environmental and sustainability programs to minimize the use of natural resources, and reduce the utilization and generation of hazardous materials from our manufacturing processes and remediate identified environmental concerns. As to the latter, the Company is currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former manufacturing facilities.

It is the Company’s policy to establish environmental reserves for investigation and remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. Estimated liabilities are determined based upon existing remediation laws and technologies. Inherent uncertainties exist in such evaluations due to unknown environmental conditions, changes in government laws and regulations, and changes in cleanup technologies. The environmental reserves are updated on a routine basis as remediation efforts progress and new information becomes available.

The Company is sometimes a party to environmental lawsuits and claims and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state and international authorities. The Company has also been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. In most instances at multi-party sites, the Company’s share of the liability is not material.

In estimating its liability at multi-party sites, the Company has assumed it will not bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based on the Company’s understanding of the parties’ financial condition and probable contributions on a per site basis.

Reserves for environmental matters are classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on their expected term. As of March 31, 2024 and December 31, 2023, the Company has recorded reserves for environmental matters of $46.5 million and $47.5 million, respectively. Of these amounts, $38.6 million and $38.9 million, respectively, relate to investigation and remediation of properties and multi-waste disposal sites related to businesses formerly owned by the Company.

Warranty Liability

Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available.

The changes in the standard product warranty liability for the three months ended March 31 were as follows:


In millions	2024
Balance at beginning of period	$	373.9
Reductions for payments	(38.6)
Accruals for warranties issued during the current period	53.0
Changes to accruals related to preexisting warranties	(2.8)
Currency translation	(1.4)
Balance at end of period	$	384.1

Standard product warranty liabilities are classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on their expected payment date. The Company’s total current standard product warranty reserve at March 31, 2024 and December 31, 2023 was $167.0 million and $157.6 million, respectively.

Warranty Deferred Revenue

The Company’s extended warranty liability represents the deferred revenue associated with its extended warranty contracts and is amortized into Net revenues on a straight-line basis over the life of the contract, unless another method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.

The changes in the extended warranty liability for the three months ended March 31 were as follows:


In millions	2024
Balance at beginning of period	$	349.4
Amortization of deferred revenue for the period	(29.5)
Additions for extended warranties issued during the period	44.1
Changes to accruals related to preexisting warranties	0.5
Currency translation	(0.8)
Balance at end of period	$	363.7

The extended warranty liability is classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on the timing of when the deferred revenue is expected to be amortized into revenue. The Company’s total current extended warranty liability at March 31, 2024 and December 31, 2023 was $129.9 million and $123.8 million, respectively.

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Part I, Item 1A – Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated by any disclosures under Part II, Item 1A - Risk Factors in our Quarterly Reports on Form 10-Q. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appears elsewhere in this Quarterly Report.

Overview

Organizational

Trane Technologies plc is a global climate innovator. We bring sustainable and efficient solutions to buildings, homes and transportation through our strategic brands, Trane® and Thermo King®, and our environmentally responsible portfolio of products, services and connected intelligent controls.

2030 Sustainability Commitments

Our commitment to sustainability extends to the environmental and social impacts of our people, operations, products and services. We have announced ambitious sustainability commitments with a goal of achieving these commitments by 2030 (2030 Sustainability Commitments), including our Gigaton Challenge to reduce customers' carbon emissions by a billion metric tons. We are one of a handful of companies whose emissions reductions targets have been validated three times by the Science Based Targets Initiative (SBTi), and one of the very few companies worldwide and first in our industry whose net-zero targets have also been validated. Our emissions reduction commitments align with the Paris Climate Accord net-zero targets, consistent with limiting global temperature rise to no more than 1.5 °C. Our 2030 Sustainability Commitments for scopes 1, 2, and 3 will guide our emissions reduction efforts through 2030, with an emphasis on reducing our largest source: the emissions generated from customer use of our products. We are Leading by Example as we make progress toward carbon-neutral operations and zero waste-to-landfill across our global footprint and net positive water use in water-stressed locations. Our Opportunity for All commitment focuses on gender parity in leadership, workforce diversity reflective of our communities, and a citizenship strategy that helps underserved communities through enhanced learning environments and pathways to green and Science, Technology, Engineering and Math (STEM) careers.

Significant Events

Reorganization of Aldrich and Murray

On June 18, 2020 (Petition Date), our indirect wholly-owned subsidiaries, Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray) each filed a voluntary petition for reorganization 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 in Charlotte (the Bankruptcy Court). 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 goal of these Chapter 11 filings is to resolve equitably and permanently all current and future asbestos-related claims in a manner beneficial to claimants, Aldrich and Murray through court approval of a plan of reorganization that would create a trust pursuant to section 524(g) of the Bankruptcy Code, establish claims resolution procedures for all current and future asbestos-related claims against Aldrich and Murray and channel such claims to the trust for resolution in accordance with those procedures.

Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date and their respective assets and liabilities were derecognized from our Condensed Consolidated Financial Statements.

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On April 6, 2023, certain individual claimants filed a motion to dismiss the Chapter 11 cases. Subsequently, on May 15, 2023, the committee representing current asbestos claimants (the ACC) filed its own motion to dismiss the Chapter 11 cases. Aldrich, Murray and the FCR filed responses in opposition to each of these motions, and the Company filed papers joining in Aldrich and Murray's opposition. A hearing on the motions to dismiss was held on July 14, 2023. On December 28, 2023, the Bankruptcy Court entered an order denying the motions to dismiss the Chapter 11 cases. On January 11, 2024, the ACC and the individual claimants filed motions seeking leave to appeal the order denying the motions to dismiss and to certify the appeals directly to the Court of Appeals for the Fourth Circuit (the Fourth Circuit). At a hearing on February 9, 2024, the Bankruptcy Court granted the motions to certify direct appeals to the Fourth Circuit. On April 17, 2024, the Fourth Circuit entered an order denying the petitions for direct appeal. It is not possible to predict whether an appellate court will affirm or reverse the Bankruptcy Court order denying the motions to dismiss, whether the Bankruptcy Court will approve the terms of a plan of reorganization, what the extent of the asbestos liability will be or how long the Chapter 11 cases will last. The Chapter 11 cases remain pending as of April 30, 2024.

See also the discussion in Note 17, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements.

Trends and Economic Events

We are a global corporation with worldwide operations. As a global business, our operations are affected by worldwide, regional and industry-specific economic factors as well as geopolitical and social factors wherever we operate or do business. Our geographic diversity and the breadth of our product and services portfolios have helped mitigate the impact of any one industry or the economy of any single country on our consolidated operating results.

Given our broad range of products manufactured and geographic markets served, management uses a variety of factors to predict the outlook for the Company. We monitor key competitors and customers in order to gauge relative performance and the outlook for the future. We regularly perform detailed evaluations of the different market segments we are serving to proactively detect trends and to adapt our strategies accordingly, including potential triggers and actions to be taken under recessionary scenarios. In addition, we believe our backlog and order levels are indicative of future revenue and thus are a key measure of anticipated performance.

We expect market conditions to remain mixed across our end markets and geographies where we serve customers. Overall Commercial HVAC markets remain strong due to demand for our differentiated customer driven solutions and the benefits of installing energy efficient products and decarbonizing the built environment, aided by supportive policies and regulations especially in the United States and Europe. Transport refrigeration markets are experiencing lower demand as customers adjust to lower freight rates. Residential markets continue to reflect uncertainty from the normalization of channel inventory across the industry, inflationary and economic risks and higher interest rates.

We continue to see material, wage and energy inflation impact our cost structure. Our performance may be impacted by future developments that are uncertain. Geopolitical risks and macroeconomic events could cause disruptions to operations, supply chains, end markets, financial markets and overall economic conditions which could negatively impact our business.

We believe we have a solid foundation of global brands that are highly differentiated in all of our major product lines. Our geographic mix and the diversity of our portfolio, coupled with our large installed product base, provides growth opportunities from replacement demand and within our service revenue streams. In addition, we are investing substantial resources to innovate and develop new products and services which we expect will drive future growth.

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Results of Operations

Non-GAAP Financial Measures

Organic Revenue

We define organic revenue as net revenues adjusted to eliminate currency fluctuations and the impact of acquisitions and divestitures. Organic revenue is not defined under generally accepted accounting principles in the United States of America (GAAP) and may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for revenue as determined in accordance with GAAP. Selected references are made to revenue growth on an organic basis so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and without the impacts of acquisitions, thereby providing comparisons of operational performance from period to period of the business that we have owned during both periods presented. We believe organic revenue growth provides investors with useful supplemental information about our revenues in both periods presented.

Segment Adjusted EBITDA

Management measures segment operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, non-cash adjustment for contingent consideration, merger and acquisition-related costs, 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. We believe 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 our operating performance from period to period by excluding certain items that we believe are not representative of our core business and we use this measure for business planning purposes. Segment Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and our ability to generate cash, service debt and undertake capital expenditures because it eliminates non-cash charges such as depreciation and amortization expense.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023 - Consolidated Results


Dollar amounts in millions	2024		2023		Period Change		2024 % of revenues		2023 % of revenues
Net revenues	$	4,215.5	$	3,665.8	$	549.7
Cost of goods sold	(2,755.6)		(2,522.3)		(233.3)		65.4	%	68.8	%
Gross profit	1,459.9		1,143.5		316.4		34.6	%	31.2	%
Selling and administrative expenses	(826.1)		(686.7)		(139.4)		19.6	%	18.7	%
Operating income	633.8		456.8		177.0		15.0	%	12.5	%
Interest expense	(58.1)		(57.6)		(0.5)
Other income/(expense), net	(25.0)		(9.4)		(15.6)
Earnings before income taxes	550.7		389.8		160.9
Provision for income taxes	(105.5)		(73.2)		(32.3)
Earnings from continuing operations	445.2		316.6		128.6
Discontinued operations, net of tax	(5.4)		(5.5)		0.1
Net earnings	$	439.8	$	311.1	$	128.7

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Net Revenues

Net revenues for the three months ended March 31, 2024 increased by 15.0%, or $549.7 million, compared with the same period in 2023, which resulted from the following:



Volume	10.6	%
Pricing	3.0	%
Organic revenue (1)	13.6	%
Acquisitions	1.9	%
Currency translation	(0.5)	%
Total	15.0	%

(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."

The increase in Net revenues was primarily driven by higher volumes as a result of increased end-customer demand within our reportable 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.

Gross Profit Margin

Gross profit margin for the three months ended March 31, 2024 increased 340 basis points to 34.6% compared to 31.2% for the same period of 2023 primarily due to gross productivity and price realization, partially offset by inflation.

Selling and Administrative Expenses

Selling and administrative expenses for the three months ended March 31, 2024 increased by 20.3%, or $139.4 million compared with the same period of 2023. 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, merger and acquisition related costs, including additional headcount and amortization of intangibles, and higher levels of business reinvestment. Selling and administrative expenses as a percentage of Net revenues for the three months ended March 31, 2024 increased 90 basis points from 18.7% to 19.6%.

Provision for Income Taxes

On December 18, 2023, Ireland enacted legislation related to the 15% minimum tax element of the Organisation for Economic Co-operation and Development (OECD) tax reform initiative, commonly referred to as “Pillar Two," effective January 1, 2024. We have included the impact of Pillar Two in our full year 2024 estimated annual effective income tax rate. We will continue to monitor and evaluate the potential impacts of proposed legislative changes as new guidance becomes available.

For the three months ended March 31, 2024 and March 31, 2023 our effective tax rate was 19.2% and 18.8%, respectively. The effective income 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, including the impacts of Pillar Two, 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, 2023 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.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023 - Segment Results

We operate under three regional operating segments designed to create deep customer focus and relevance in markets around the world. Intercompany sales between segments are immaterial.

•Our Americas segment innovates for customers in North America and Latin America. The Americas segment encompasses commercial heating, cooling and ventilation systems, building controls and solutions, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.

•Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.

•Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.

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The following discussion compares our results for each of our three reportable segments for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.


In millions	2024			2023			% change

Americas
Net revenues	$	3,334.8		$	2,861.0		16.6	%
Segment Adjusted EBITDA	604.8			455.8			32.7	%
Segment Adjusted EBITDA margin	18.1		%	15.9		%

EMEA
Net revenues	$	553.4		$	510.5		8.4	%
Segment Adjusted EBITDA	99.4			94.4			5.3	%
Segment Adjusted EBITDA margin	18.0		%	18.5		%

Asia Pacific
Net revenues	$	327.3		$	294.3		11.2	%
Segment Adjusted EBITDA	70.8			57.2			23.8	%
Segment Adjusted EBITDA margin	21.6		%	19.4		%

Total Net revenues	$	4,215.5		$	3,665.8		15.0	%
Total Segment Adjusted EBITDA	775.0			607.4			27.6	%
Total Segment Adjusted EBITDA margin	18.4		%	16.6		%

Americas

Net revenues for the three months ended March 31, 2024 increased by 16.6% or $473.8 million, compared with the same period of 2023.

The components of the period change were as follows:


Volume	11.6	%
Pricing	3.6	%
Organic revenue (1)	15.2	%
Acquisitions	1.7	%
Currency translation	(0.3)	%
Total	16.6	%

(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."

The increase in organic revenue was primarily driven by higher volumes led by strong demand and realization of price increases for both equipment and services within our Commercial HVAC business, partially offset by the softening of transport markets.

The increase in revenue from acquisitions includes MTA S.p.A (MTA) and Helmer Scientific Inc (Helmer) which were acquired in May 2023, and Nuvolo Technologies Corporation (Nuvolo) which was acquired in November 2023. Together these acquisitions increased Net revenues in our Americas segment by 1.7% compared to the corresponding prior-year period.

Segment Adjusted EBITDA margin for the three months ended March 31, 2024 increased by 220 basis points to 18.1% compared to 15.9% for the same period in 2023 primarily due to price realization, gross productivity and higher volumes, partially offset by inflation and continued business reinvestment.

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EMEA

Net revenues for the three months ended March 31, 2024 increased by 8.4% or $42.9 million, compared with the same period of 2023.

The components of the period change were as follows:


Volume	3.1	%
Pricing	0.7	%
Organic revenue (1)	3.8	%
Acquisitions	4.1	%
Currency translation	0.5	%
Total	8.4	%

(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."