\nTable 8: Balance Sheet Metrics and Free Cash Flow\n<\/li>\n<\/ul>\n*Q1 Non-GAAP measures definitions<\/b><\/p>\n
Organic revenue<\/b> is defined as GAAP net revenues adjusted for the impact of currency and acquisitions. Organic bookings<\/b> is defined as reported orders in the current period adjusted for the impact of currency and acquisitions.\n<\/p>\n
Adjusted operating income<\/b> in 2021 and 2020 is defined as GAAP operating income plus restructuring costs and transformation costs. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2, 3 and 4 of the news release.\n<\/p>\n
Adjusted operating margin<\/b> is defined as the ratio of adjusted operating income divided by net revenues.\n<\/p>\n
Operating leverage<\/b> is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q1 2021) less the prior period (e.g. Q1 2020), divided by the change in net revenues for the current period less the prior period.\n<\/p>\n
Adjusted earnings from continuing operations attributable to Trane Technologies plc (Adjusted net earnings)<\/b> in 2021 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs and transformation costs, net of tax impacts. Adjusted net earnings in 2020 is defined as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring costs and transformation costs less the legacy legal liability adjustment, net of tax impacts plus separation-related tax adjustments. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.\n<\/p>\n
Adjusted continuing EPS<\/b> in 2021 is defined as GAAP continuing EPS plus restructuring costs and transformation costs, net of tax impacts. Adjusted continuing EPS in 2020 is defined as GAAP continuing EPS plus restructuring costs and transformation costs less the legacy legal liability adjustment, net of tax impacts plus separation-related tax adjustments. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 2 and 3 of the news release.\n<\/p>\n
Adjusted EBITDA<\/b> in 2021 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income \/ (expense), net. Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other income \/ (expense), net less the legacy legal liability adjustment. Please refer to the reconciliation of GAAP to non-GAAP measures on tables 4 and 5 of the news release.\n<\/p>\n
Adjusted EBITDA margin<\/b> is defined as the ratio of adjusted EBITDA divided by net revenues.\n<\/p>\n
Free cash flow<\/b> in 2021 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring costs and transformation costs. Free cash flow in 2020 is defined as net cash provided by (used in) continuing operating activities, less capital expenditures plus cash payments for restructuring and transformation costs. Please refer to the free cash flow reconciliation on table 8 of the news release.\n<\/p>\n
Working capital<\/b> measures a firm\u2019s operating liquidity position and its overall effectiveness in managing the enterprise’s current accounts.\n<\/p>\n\n- Working capital<\/b> is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabilities that exclude short-term debt, dividend payables and income tax payables.\n<\/li>\n
- Working capital as a percent of revenue <\/b>is calculated by dividing the working capital balance (e.g. as of March 31) by the annualized revenue for the period (e.g. reported revenues for the three months ended March 31 multiplied by 4 to annualize for a full year).\n<\/li>\n<\/ul>\n
Adjusted effective tax rate<\/b> for 2021 is defined as the ratio of income tax expense less the net tax effect of adjustments for restructuring costs and transformation costs divided by earnings from continuing operations before income taxes plus restructuring costs and transformation costs. Adjusted effective tax rate for 2020 is defined as the ratio of income tax expense less the net tax effect of adjustments for restructuring costs, transformation costs and the legacy legal liability adjustment plus separation-related tax adjustments divided by earnings from continuing operations before income taxes plus restructuring costs and transformation costs less the legacy legal liability adjustment. This measure allows for a direct comparison of the effective tax rate between periods.\n<\/p>\n
\nThe Company reports its financial results in accordance with generally accepted accounting principles in the United States (GAAP). The following schedules provide non-GAAP financial information and a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP.\n<\/p>\n
\nThe non-GAAP financial measures should be considered supplemental to, not a substitute for or superior to, financial measures calculated in accordance with GAAP. They have limitations in that they do not reflect all of the costs associated with the operations of our businesses as determined in accordance with GAAP. In addition, these measures may not be comparable to non-GAAP financial measures reported by other companies.\n<\/p>\n
\nWe believe the non-GAAP financial information provides important supplemental information to both management and investors regarding financial and business trends used in assessing our financial condition and results of operations.\n<\/p>\n
\nNon-GAAP financial measures assist investors with analyzing our business results as well as with predicting future performance. In addition, these non-GAAP financial measures are also reviewed by management in order to evaluate the financial performance of each segment. Presentation of these non-GAAP financial measures helps investors and management to assess the operating performance of the Company.\n<\/p>\n
\nAs a result, one should not consider these measures in isolation or as a substitute for our results reported under GAAP. We compensate for these limitations by analyzing results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to non-GAAP results.\n<\/p>\n
\n\n| \n \nTable 1\n<\/p>\n TRANE TECHNOLOGIES PLC<\/b><\/p>\n Condensed Consolidated Income Statement<\/b><\/p>\n \n(In millions, except per share amounts)\u00a0\n<\/p>\n UNAUDITED<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n\n | \n\n \nFor the quarter\n<\/p>\n<\/td>\n<\/tr>\n | \n | \n\n \nended March 31,\n<\/p>\n<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \n \n2021\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n2020\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet revenues\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n3,017.6\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n2,641.3\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nCost of goods sold\n<\/p>\n<\/td>\n | \n \n(2,064.4\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(1,898.8\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSelling and administrative expenses\n<\/p>\n<\/td>\n | \n \n(600.0\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(588.1\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOperating income\n<\/p>\n<\/td>\n | \n \n353.2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n154.4\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInterest expense\n<\/p>\n<\/td>\n | \n \n(60.7\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(63.1\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther income\/(expense), net\n<\/p>\n<\/td>\n | \n \n(7.2\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n12.5\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEarnings before income taxes\n<\/p>\n<\/td>\n | \n \n285.3\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n103.8\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nProvision for income taxes\n<\/p>\n<\/td>\n | \n \n(48.4\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(51.0\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEarnings from continuing operations\n<\/p>\n<\/td>\n | \n \n236.9\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n52.8\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDiscontinued operations, net of tax\n<\/p>\n<\/td>\n | \n \n0.9\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(78.7\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet earnings (loss)\n<\/p>\n<\/td>\n | \n \n237.8\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(25.9\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLess: Net earnings from continuing operations attributable to noncontrolling interests\n<\/p>\n<\/td>\n | \n \n(2.6\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(2.8\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLess: Net earnings from discontinued operations attributable to noncontrolling interests\n<\/p>\n<\/td>\n | \n \n\u2014\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(0.5\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet earnings (loss) attributable to Trane Technologies plc\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n235.2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n(29.2\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Amounts attributable to Trane Technologies plc ordinary shareholders:<\/span><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nContinuing operations\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n234.3\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n50.0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDiscontinued operations\n<\/p>\n<\/td>\n | \n \n0.9\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(79.2\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet earnings (loss)\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n235.2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n(29.2\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Diluted earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:<\/span><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nContinuing operations\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n0.96\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n0.21\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDiscontinued operations\n<\/p>\n<\/td>\n | \n \n0.01\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(0.33\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet earnings (loss)\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n0.97\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n(0.12\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nWeighted-average number of common shares outstanding:\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDiluted\n<\/p>\n<\/td>\n | \n \n243.1\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n242.3\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n | |
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<\/td>\n<\/tr>\n