Item 1. BUSINESS

Overview

Trane Technologies plc (formerly known as Ingersoll-Rand plc), a public limited company incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, we, our, the Company) is a global climate innovator that brings efficient and sustainable climate solutions to buildings, homes and transportation driven by strategic brands Trane® and Thermo King® and an environmentally responsible portfolio of products and services. We generate revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of climate control products and services for Heating, Ventilation and Air Conditioning (HVAC) and transport solutions.

To achieve our mission of being a world leader in creating comfortable, sustainable and efficient environments, we continue to focus on growth by increasing our recurring revenue stream from parts, services, controls, used equipment and rentals; and to continuously improve efficiencies and capabilities of our operations and products and services for our customers. We also continue to focus on operational excellence strategies as a central theme to improving our earnings and cash flow.

Separation of Industrial Segment Businesses

On February 29, 2020 (Distribution Date), we completed our Reverse Morris Trust transaction (the Transaction) with Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand Inc. after the Transaction) whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained our former Industrial segment (Ingersoll Rand Industrial), through a pro rata distribution (the Distribution) to our shareholders of record as of February 24, 2020. Ingersoll Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. Upon close of the Transaction, our existing shareholders received approximately 50.1% of the shares of Gardner Denver common stock on a fully-diluted basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Gardner Denver on a fully diluted basis. As a result, our shareholders received .8824 shares of Gardner Denver common stock with respect to each share owned as of February 24, 2020. In connection with the Transaction, Ingersoll-Rand Services Company, an affiliate of Ingersoll Rand Industrial, borrowed an aggregate principal amount of $1.9 billion under a senior secured first lien term loan facility (Term Loan), the proceeds of which were used to make a special cash payment of $1.9 billion to a subsidiary of ours. The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the Transaction is a wholly-owned subsidiary of Gardner Denver.

In connection with the Transaction, we entered into several agreements covering supply, administrative and tax matters to provide or obtain services on a transitional basis for varying periods after the Distribution Date. The agreements cover services such as manufacturing, information technology, human resources and finance. Income and expenses under these agreements were not material. In accordance with several customary transaction-related agreements between us and Gardner Denver, the parties are in a process to determine final adjustments to working capital, cash and indebtedness amounts as of the Distribution Date, as well as another process to determine funding levels related to pension plans, non-qualified deferred compensation plans and retiree health benefits. As of December 31, 2020, both are ongoing in accordance with the transaction-related agreements. Upon finalization of these agreements, any adjustments will be recognized within Retained earnings.

Reportable Segments

Prior to the separation of our Industrial segment on February 29, 2020, we announced a new organizational model and business segment structure designed to enhance our regional go-to-market capabilities, aligning the structure with our strategy and increased focus on climate innovation. Under the revised structure, we created three new regional operating segments from the former climate segment, which also serve as our reportable segments.

• Our Americas segment innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating and cooling systems, building controls, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions. This segment had 2020 net revenues of $9.7 billion.

• Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating and cooling systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions. This segment had 2020 net revenues of $1.6 billion.

• Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport refrigeration systems and solutions. This segment had 2020 net revenues of $1.1 billion.

This model is designed to create deep customer focus and relevance in markets around the world. Each segment reports through separate management teams and regularly reviews their operating results with the Chief Executive Officer, our Chief Operating

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Decision Maker (CODM) determined in accordance with applicable accounting guidance. All prior period comparative segment information has been recast to reflect the current reportable segments.

Products and Services

Our principal products and services include the following:

Aftermarket and OEM parts and supplies						Hybrid-powered trailer refrigeration
Air conditioners						Ice energy storage solutions
Air exchangers						Indoor air quality assessments and related products for HVAC and Transport solutions
Air handlers						Industrial refrigeration
Airside and terminal devices						Installation contracting
Auxiliary power units						Large commercial unitary
Building management systems						Light commercial unitary
Bus and rail HVAC systems						Motor replacements
Chillers						Multi-pipe HVAC systems
Coils and condensers						Package heating and cooling systems
Container refrigeration systems and gensets						Performance contracting
Control systems						Rail refrigeration systems
Cryogenic refrigeration systems						Refrigerant reclamation
Diesel-powered refrigeration systems						Repair and maintenance services
Ductless systems						Rental services
Electric-powered trailer refrigeration systems						Self-powered truck refrigeration systems
Electric-powered truck refrigeration systems						Service agreements
Energy management services						Temporary heating and cooling systems
Facility management services						Thermostats/controls
Furnaces						Trailer refrigeration systems
Geothermal systems						Transport heater products
Heat pumps						Unitary systems (light and large)
Home automation						Variable Refrigerant Flow
Humidifiers						Vehicle-powered truck refrigeration systems
Hybrid and non-diesel transport refrigeration solutions						Water source heat pumps

These products are sold primarily under our name and under our tradenames including Trane®, Thermo King® and American Standard®.

Competitive Conditions

Our products and services are sold in highly competitive markets throughout the world. Due to the diversity of these products and services and the variety of markets served, we encounter a wide variety of competitors that vary by product line and services. They include well-established regional or specialized competitors, as well as larger U.S. and non-U.S. corporations or divisions of larger companies.

The principal methods of competition in these markets relate to price, quality, delivery, service and support, technology and innovation. We believe that we are one of the leading manufacturers in the world of HVAC systems and services and transport temperature control products.

Distribution

Our products are distributed by a number of methods, which we believe are appropriate to the type of product. U.S. sales are made through branch sales offices, distributors and dealers across the country. Non-U.S. sales are made through numerous subsidiary sales and service companies with a supporting chain of distributors throughout the world.

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Operations by Geographic Area

Approximately 28% of our net revenues in 2020 were derived outside the U.S. and we sold products in more than 100 countries. Therefore, the attendant risks of manufacturing or selling in a particular country, such as currency devaluation, nationalization and establishment of common markets, may have an adverse impact on our non-U.S. operations.

Customers

We have no customer that accounted for more than 10% of our consolidated net revenues in 2020, 2019 or 2018. No material part of our business is dependent upon a single customer or a small group of customers; therefore, the loss of any one customer would not have a material adverse effect on our results of operations or cash flows.

Raw Materials

We manufacture many of the components included in our products, which requires us to employ a wide variety of commodities. Principal commodities, such as steel, copper and aluminum, are purchased from a large number of independent sources around the world, primarily within the region where the products are manufactured. We believe that available sources of supply will generally be sufficient for the foreseeable future. There have been no commodity shortages which have had a material adverse effect on our businesses.

Seasonality

Demand for certain of our products and services is influenced by weather conditions. For instance, sales in our commercial and residential HVAC businesses historically tend to be seasonally higher in the second and third quarters of the year because this represents spring and summer in the U.S. and other northern hemisphere markets, which are the peak seasons for sales of air conditioning systems and services. Therefore, results of any quarterly period may not be indicative of expected results for a full year and unusual weather patterns or events could negatively or positively affect certain segments of our business and impact overall results of operations.

Research and Development

We engage in research and development activities in an effort to introduce new products, enhance existing product effectiveness, improve ease of use and reliability as well as expand the various applications for which our products may be appropriate. We also continually evaluate developing technologies in areas that we believe will enhance our business for possible investment or acquisition. In addition, we have a strong focus on sustaining activities, which include costs incurred to reduce production costs, improve existing products, create custom solutions for customers and provide support to our manufacturing facilities. We anticipate that we will continue to make significant expenditures for research and development and sustaining activities as we look to maintain and improve our competitive position.

Patents and Licenses

Our intellectual property rights are important to our business and include numerous patents, trademarks, copyrights, trade secrets, proprietary technology, technical data, business processes, and other confidential information. Although in aggregate we consider our intellectual property rights to be valuable to our operations, we do not believe that our business is materially dependent on a single intellectual property right or any group of them. In our opinion, engineering, production skills and experience are more responsible for our market position than our intellectual property rights.

Backlog

Our approximate backlog of orders, believed to be firm, at December 31, was as follows:

In millions						2020						2019
Americas						$	1,788.0					$	1,592.4
EMEA						426.2						336.9
Asia Pacific						680.6						584.0
Total						$	2,894.8					$	2,513.3

These backlog figures are based on orders received and only include amounts associated with our equipment and contracting and installation performance obligations. A major portion of our products are built in advance of order and either shipped or assembled from stock. As a result, we expect to ship a majority of the December 31, 2020 backlog during 2021. However, orders for specialized machinery or specific customer application are submitted with extensive lead times and are often subject

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to revision and deferral, and to a lesser extent cancellation or termination. To the extent projects are delayed, the timing of our revenue could be affected.

Environmental Matters

We continue 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 to remediate identified environmental concerns. As to the latter, we are currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former manufacturing facilities.

We are sometimes a party to environmental lawsuits and claims and have received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. We have 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. For all such sites, there are other PRPs and, in most instances, our involvement is minimal.

In estimating our liability, we have assumed that we 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 our understanding of the parties’ financial condition and probable contributions on a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future.

For a further discussion of our potential environmental liabilities, see Note 22 to the Consolidated Financial Statements.

Asbestos-Related Matters

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 an efficient and permanent resolution of all current and future asbestos claims through court approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the Bankruptcy Code, a trust to pay all asbestos claims. Such a resolution, if achieved, would likely include a channeling injunction to enjoin asbestos claims resolved in the Chapter 11 cases from being filed or pursued against us or our affiliates. The Chapter 11 cases remain pending as of December 31, 2020.

Prior to the Petition Date, certain of our wholly-owned subsidiaries and former companies were named as defendants in asbestos-related lawsuits in state and federal courts. In many of the lawsuits, a large number of other companies have also been named as defendants. The vast majority of those claims allege injury caused by exposure to asbestos contained in certain historical products, primarily pumps, boilers and railroad brake shoes. None of our existing or previously-owned businesses were a producer or manufacturer of asbestos.

See also the discussion under Part I, Item 3, "Legal Proceedings," and in Note 22 to the Consolidated Financial Statements.

Human Capital Management

Our people and culture management are critical to achieving our operational, financial and strategic goals. Further information is available in our Environmental Social and Governance (ESG) report available on our website.

As of December 31, 2020, we employed approximately 35,000 people in nearly 60 countries including approximately 12,500 outside of the U.S. As of December 31, 2020, 25.3% of our global employees were women and 35.5% of our employees in the United States were racially and ethnically diverse. In 2020, 31.2% of our new hires globally were women and 47.9% of new hires in the United States were racially and ethnically diverse. Approximately 21.7% of leadership and management positions were held by women as of December 31, 2020.

Culture and Purpose

In 2020, as Trane Technologies, we refined and reaffirmed dimensions of our culture as a climate innovator dedicated to our purpose of boldly challenging what’s possible for a sustainable world. We engaged thousands of employees in surveys and online focus groups to define the core Leadership Behaviors for all employees to live our new purpose.

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Since its launch in 2006, our annual employee engagement survey has enabled employees to share their experiences and perceptions of our Company. Employees provided ratings and written comments for continuous improvement. In 2020, 90% of our workforce participated in our annual engagement survey and our overall employee engagement score positions us well into the top quartile of all companies globally.

Diversity and Inclusion

Our commitment to Diversity and Inclusion is core to our purpose and our 2030 sustainability commitments. We are proud members of Paradigm for Parity (a coalition of more than 100 corporations who have committed to closing the gender gap in corporate leadership) and OneTen (a coalition dedicated to hiring one million Black Americans in the next ten years to achieve economic mobility). In addition, our CEO is a 2018 signatory to the CEO Action for Diversity and Inclusion pledge (the largest CEO-driven business commitment to advance diversity and inclusion within the workplace).

We offer company-sponsored forums to promote diversity and inclusion in the workplace including:

• Bridging Connections – a safe forum created to allow our employees to speak from the heart about a variety of topics without fear of retribution.

• Unity Squads – site-based committees of employees that foster diversity and inclusion by celebrating cultural heritage milestones and offering cross-cultural awareness programs, open to all employees.

• Black Leader Forum – a half day intensive session bringing together company leaders to learn, further a sense of community, and build upon our strategic intent to advance Black leaders.

• Employee Resources Groups (ERGs) – Trane Technologies sponsors eight ERGs (the Women's Employee Network, the Black Employee Network, the Veterans Employee Resource Group, the Asian Employee Resource Group, the Global Organization of Latinos, the LGBTA Employee Resource Group, the InterGenerational Employee Network, and Visibility). All ERGs are voluntary, open and inclusive organizations that offer employees a sense of belonging, networking and learning opportunities.

Learning and Development

We offer learning and career development opportunities that enhance our employees’ skills and abilities and ensure contemporary technical and functional skills and competencies such as innovation, collaboration and leadership. Examples of these programs include:

• Team Leader Development Program – An eight-week experiential development program that engages, teaches and empowers front-line plant leaders to apply continuous improvement methods, make sound business decisions, solve problems, and serve as a coach of direct workers.

• Graduate Training Program (GTP) – A five-month development program designed to prepare university graduate engineers for a rewarding career in technical sales. The program prepares sales engineers to sell Trane’s complex HVAC systems and energy services. The program, started in 1926, is recognized as the industry’s most comprehensive training program and provides intensive technical, business, sales, and leadership training. GTP accelerates careers and provides the skills needed to help us lower the energy intensity of the world.

• Accelerated Development Program (ADP) – An early career rotational program focused on both functional and leadership development, designed to build a pipeline of strong talent for key roles in the organization. Participants rotate to multiple geographic locations and business units during the 2.5 year program, while experiencing diverse assignments, and receiving dedicated functional training and developmental experiences. Established in 1979, the ADP holds a rich history of developing early talent and spans six functions and four regions.

• Women’s Leadership Program – An award-winning cohort program that enables high-potential women around the world to gain individual insights and skills through mentoring and peer networking, and to build their leadership competencies and business acumen through action-learning projects and exposure to senior leaders.

• Engaging Your Employees – Approximately 4,000 Trane managers have completed this program since its launch. During 2020, we delivered 14 virtual Engaging Your Employees workshops to approximately 311 managers globally.

• Professional development – We have numerous online learning courses in professional development skills as varied as working virtually, resiliency, Microsoft Teams, unconscious bias, effective communication, alert driving, sustainability, and strategic capability initiatives such as product management and other programs that support our strategy of being a world class lean enterprise.

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• Compliance Training – Our Compliance Training curriculum covers key topics that are important to protect our Company, our people and our customers. Topics include certification in our Code of Conduct, Information Security, Understanding and Preventing Sexual Harassment and Human Trafficking Prevention. All salaried employees globally complete our annual compliance curriculum.

Employee Volunteerism

In 2020, due to the restrictions of the COVID-19 global pandemic many of our employees sought out virtual volunteering opportunities, and more than 15,000 of our people contributed more than 20,000 volunteer hours in support of building sustainable futures in our communities. Our support for those in need also included our own colleagues support for one another. Due to the impacts of the pandemic, we accelerated our employee fundraising efforts and employees donated $1.4 million to our Helping Hand Fund (our employee crisis relief program). These funds provided approximately 1,100 employees with emergency relief grants for themselves and their families. We also developed a new Global Volunteer Time program, providing all salaried employees a full work day (8 hours) per calendar year to volunteer with non-profit organizations. This program will be piloted for hourly employees at select locations around the world in 2021, with an expected full global implementation in 2022.

Health, Safety and Well-Being

Trane Technologies believes in supporting the total health and safety of our employees. It was even more critical in 2020, given COVID-19. Therefore, we expanded the support we offered, by:

• Providing 100% of our employees around the world access to at least one company-sponsored wellness activity.

• Accelerating the rollout of our global Employee Assistance Program (EAP). Each year, we expand our EAP to five to six countries. This year, we accelerated rollout of our global EAP to 25 remaining countries (final country pending Works Council approvals). Employees received frequent communications on resources, targeted to crisis concerns such as mental health, childcare, and education.

• Amending the U.S. medical plans to cover COVID-19 testing and telehealth visits at no cost to employees.

• Modifying our Short-Term Disability Plan to eliminate previous waiting period, by ensuring benefits started on first day of absence for COVID-related illness or required quarantine.

• Amending the defined contribution plans for U.S. employees to allow for COVID-19 related distributions and a delay for loan repayments without penalties.

• Providing back-up care and working parent resource enhancements in the U.S.

• Accelerating our “Future of Work” initiative to create revised Flex Time and Flex Place policies and resources that vary by type of role, continued work-from-home arrangements, and other approaches to ensuring productivity while being supportive to employee needs.

In 2020 we continued our multi-year, world class safety record with Lost-time Incident Rate of 0.07 and Recordable Rate of 0.79. In response to the pandemic, we quickly developed a pandemic response team that developed over 50 elements of standard work such as travel restrictions, active screenings, 100% requirement for face masks, etc. In our factories, we reconfigured over 5,000 work stations to meet the social distancing guidelines. We also completed over 30,000 observations of our service technicians and manufacturing employees to ensure all employees were following our COVID-19 protocols.

Competitive Pay and Benefits

Our compensation programs and policies are based on a strong connection to our strategy, to attract and retain a talented workforce and to meet the needs of employees globally. We are committed to competitive wages and benefits and equal pay for equal work, regardless of background. We have rigorous pay practices to ensure we compensate our employees fairly, equitably and competitively. In addition, our incentive compensation programs are tied to our 2030 Commitments. Beginning in 2021, management incentive compensation will include environmental sustainability and workforce diversity goals, in addition to financial goals.

Our proxy statement provides more detail on the competitive compensation programs we offer.

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Available Information

We have used, and intend to continue to use, the homepage, the investor relations and the “News” section of our website (www.tranetechnologies.com), among other sources such as press releases, public conference calls and webcasts, as a means of disclosing additional information, which may include future developments related to the COVID-19 global pandemic and/or material non-public information. We encourage investors, the media, and others interested in our Company to review the information it makes public in these locations on its website.

We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

This Annual Report on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on our Internet website (www.tranetechnologies.com) as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission. The Board of Directors of our Company have also adopted and posted in the Investor Relations section of our website the Corporate Governance Guidelines and charters for each of the Board’s standing committees. The contents of our website are not incorporated by reference in this report.

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Executive Officers of the Registrant

The following is a list of our executive officers as of February 9, 2021.

Name and Age						Date of Service as an Executive Officer						Principal Occupation and Other Information for Past Five Years
Michael W. Lamach (57)						2/16/2004						Chairman of the Board (since June 2010) and Chief Executive Officer and Director (since February 2010)
Christopher J. Kuehn (48)						6/1/2015						Senior Vice President and Chief Financial Officer (since March 2020); Vice President and Chief Accounting Officer (June 2015 to February 2020)
David S. Regnery (58)						8/5/2017						President and Chief Operating Officer (since January 1, 2020); Executive Vice President (September 2017 to December 2019); Vice President, President of Commercial HVAC, North America and EMEA (2013-2017)
Marcia J. Avedon (59)						2/7/2007						Executive Vice President, Chief Human Resources, Marketing and Communications Officer (since January 1, 2020); Senior Vice President, Human Resources, Communications and Corporate Affairs (June 2013 to December 2019)
Paul A. Camuti (59)						8/1/2011						Executive Vice President and Chief Technology and Strategy Officer (since January 1, 2020); Senior Vice President, Innovation and Chief Technology Officer (August 2011 to December 2019)
Evan M. Turtz (52)						4/3/2019						Senior Vice President and General Counsel (since April 2019); Secretary (since October 2013); Vice President (2008-2019); Deputy General Counsel, Industrial, General Counsel, CTS (2016-2019); Deputy General Counsel-Labor and Employment (2008-2016)
Keith A. Sultana (51)						10/12/2015						Senior Vice President, Supply Chain and Operational Services (since January 2020); Senior Vice President, Global Operations and Integrated Supply Chain (October 2015-December 2019); Vice President, Global Procurement (January 2015 to October 2015)
Heather R. Howlett (43)						3/1/2020						Vice President and Chief Accounting Officer (since March 2020); Vice President and Corporate Controller (August 2019 to February 2020); Vice President and Corporate Controller, Catalent, Inc. (2015 to August 2019)

No family relationship exists between any of the above-listed executive officers of our Company. All officers are elected to hold office for one year or until their successors are elected and qualified.

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