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 II, Item 1A - Risk Factors in this Quarterly Report on Form 10-Q; and under Part I, Item 1A – Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020. 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 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.

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. (Ingersoll Rand) 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 Ingersoll Rand. Upon close of the Transaction, our existing shareholders received approximately 50.1% of the shares of Ingersoll Rand common stock on a fully-diluted basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Ingersoll Rand on a fully diluted basis. As a result, our shareholders received .8824 shares of Ingersoll Rand 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 Ingersoll Rand.

During the nine months ended September 30, 2021, we paid Ingersoll Rand $49.5 million to settle certain items related to the Transaction. We recorded the $49.5 million settlement as a reduction to Retained earnings during the first quarter of 2021. This payment was related to working capital, cash and indebtedness amounts as of the Distribution Date, as well as funding levels related to pension plans, non-qualified deferred compensation plans and retiree health benefits.

After the Distribution Date, we do not beneficially own any Ingersoll Rand Industrial shares of common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. In accordance with accounting principles generally accepted in the United States of America (GAAP), the historical results of Ingersoll Rand Industrial are presented as a discontinued operation in the Condensed Consolidated Statements of Income (Loss) and Condensed Consolidated Statements of Cash Flows.

Significant Events

COVID-19 Global Pandemic

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. During the first half of 2020, the COVID-19 global pandemic adversely impacted our business globally including, but not limited to, lower end customer demand, certain supply chain delays, temporary facility closures and limitations of our workforce to essential crews only. In response, we proactively initiated cost cutting actions and actively managed our supply chain in an effort to mitigate the impact of the global pandemic on our business. Despite the challenges set forth by the COVID-19 global pandemic, we continued to sell, install and service our products, invest in our businesses, develop and launch new products and deliver innovative customer solutions for electrification of heating, cooling and transport, enhanced indoor air quality, and precise temperature control along the full vaccine cold chain.

During the nine months ended September 30, 2021, we experienced significant increases in end market demand, executed price increases to cover rapidly increasing material, component and logistics costs, shifted to higher margin product sales and realized strong earnings growth as a result of strong execution across our organization. In addition, to meet our increased customer demand, we are proactively managing industry-wide supply chain and resource constraints and are working closely with our suppliers, customers and logistics providers to mitigate the impacts on our business as we continue to sell, install and service our products.

We will continue to monitor the ongoing COVID-19 global pandemic as it evolves and will assess any potential impacts to our business and financial statements as necessary.

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Reorganization of Aldrich and Murray

On May 1, 2020, certain subsidiaries of ours underwent an internal corporate restructuring that was effectuated through a series of transactions (2020 Corporate Restructuring). As a result, Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray), indirect wholly-owned subsidiaries of Trane Technologies plc, 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. However, in connection with the 2020 Corporate Restructuring, certain subsidiaries 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 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 Title 11 of the United States Code (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. 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. However, in connection with the Chapter 11 filings, at the request of Aldrich and Murray, the Bankruptcy Court 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 due to the continuance of the statutory automatic stay applicable in Chapter 11 bankruptcy cases.

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 which all asbestos claims would be channeled for resolution. Further to this goal and as discussed more fully below, Aldrich and Murray have reached an agreement in principle with the court-appointed legal representative of future asbestos claimants (the FCR) 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, we no longer have 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 our Condensed Consolidated Financial Statements. Amounts derecognized primarily related to the legacy asbestos-related liabilities and asbestos-related insurance recoveries and $41.7 million of cash.

Upon deconsolidation, we recorded our 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, we used a market-adjusted multiple of earnings valuation technique. As a result, we recorded an aggregate equity investment of $53.6 million as of the Petition Date.

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

As a result of the deconsolidation, we recognized an aggregate loss of $22.7 million in our Condensed Consolidated Statements of Income (Loss) during the second quarter of 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 $23.6 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 our Condensed Consolidated Statements of Cash Flows, of which $10.8 million was recorded within continuing operations during the second quarter of 2020.

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On August 26, 2021, we announced that Aldrich and Murray reached an agreement in principle with the court-appointed legal representative of 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 previously announced agreement in principle reached with the FCR. 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 (QSF Trust). The funds held in the QSF Trust would be available to provide funding for the Section 524(g) Trust upon effectiveness of the Plan. If approved by the Bankruptcy Court and other conditions are satisfied, the QSF Trust is expected to be funded prior to January 31, 2022. At this point in the Chapter 11 cases of Aldrich and Murray, it is not possible to predict 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.

During the three and nine months ended September 30, 2021, in connection with the above noted agreement in principle reached by Aldrich and Murray with the FCR and the motion to create a $270.0 million QSF Trust, we recorded a charge of $21.2 million to increase our 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.

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 political and social factors wherever we operate or do business. These factors include urbanization, resource constraints, climate change, workforce dynamics, indoor environmental quality and digital connectedness. As part of our long‑term sustainability strategy, we innovate to provide solutions for our customers to address the impacts of these factors. 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 our 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. In addition, we believe our order rates are indicative of future revenue and thus are a key measure of anticipated performance.

Current economic conditions have shown improvement but remain mixed across our end markets. The COVID-19 global pandemic continues to impact both the global Heating, Ventilation and Air Conditioning (HVAC) and Transport end markets as industry-wide supply chain and resource constraints exist. As vaccine distribution and administration expands, we expect market conditions to continue improving across the geographies where we serve our customers.

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

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Results of Operations

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020 - Consolidated Results

Dollar amounts in millions			2021						2020						Period Change						2021 % of revenues						2020 % of revenues
Net revenues			$	3,719.8					$	3,495.5					$	224.3
Cost of goods sold			(2,515.6)						(2,360.8)						(154.8)						67.6		%				67.5		%
Gross profit			1,204.2						1,134.7						69.5						32.4		%				32.5		%
Selling and administrative expenses			(620.8)						(567.8)						(53.0)						16.7		%				16.3		%
Operating income			583.4						566.9						16.5						15.7		%				16.2		%
Interest expense			(57.7)						(62.4)						4.7
Other income/(expense), net			(6.9)						(4.5)						(2.4)
Earnings before income taxes			518.8						500.0						18.8
Benefit (provision) for income taxes			(96.8)						(89.9)						(6.9)
Earnings from continuing operations			422.0						410.1						11.9
Discontinued operations, net of tax			(13.3)						(5.5)						(7.8)
Net earnings			$	408.7					$	404.6					$	4.1

Net Revenues

Net revenues for the three months ended September 30, 2021 increased by 6.4%, or $224.3 million, compared with the same period in 2020, which resulted from the following:

Pricing			4.3		%
Acquisitions			1.5		%
Currency translation			0.6		%
Volume			—		%
Total			6.4		%

The increase in Net revenues was primarily driven by favorable pricing and the completion of three channel acquisitions during the fourth quarter of 2020 and in the first quarter of 2021, two of which were completed in the Americas segment and the third which was completed within the EMEA segment. 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 September 30, 2021 decreased 10 basis points to 32.4% compared to 32.5% for the same period of 2020 primarily due to increased direct material and other inflation, partially offset by price realization and productivity benefits.

Selling and Administrative Expenses

Selling and administrative expenses for the three months ended September 30, 2021 increased by 9.3%, or $53.0 million compared with the same period of 2020. The increase in Selling and administrative expenses was primarily driven by higher compensation and employee benefits due to prior year merit increases being delayed until the fourth quarter of 2020 and the completion of three channel acquisitions, partially offset by the realization of benefits from transformation savings. As a result, Selling and administrative expenses as a percentage of Net revenues for the three months ended September 30, 2021 increased 40 basis points from 16.3% to 16.7% compared to the same period of 2020.

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Interest Expense

Interest expense for the three months ended September 30, 2021 decreased by 7.5%, or $4.7 million compared with the same period of 2020 primarily due to the repayments of $125.0 million of 9.000% Debentures in August 2021 and $300.0 million of 2.900% Senior notes in February 2021.

Other Income/(Expense), Net

The components of Other income/(expense), net for the three months ended September 30 were as follows:

In millions			2021						2020
Interest income/(loss)			$	0.8					$	1.9
Foreign currency exchange loss			(2.2)						(2.5)
Other components of net periodic benefit credit/(cost)			1.2						(3.9)
Other activity, net			(6.7)						—
Other income/(expense), net			$	(6.9)					$	(4.5)

Other income/(expense), net includes the results from activities other than normal 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, we include the components of net periodic benefit credit/(cost) for pension and post retirement obligations other than the service cost component. Other activity, net primarily includes a charge of $7.2 million to increase our Funding Agreement liability from asbestos-related activities of Murray.

Provision for Income Taxes

For the three months ended September 30, 2021, our effective tax rate was 18.7% which was lower than the U.S. statutory rate of 21% primarily due to excess tax benefits from employee share-based payments, the recognition of a claim for refund related to previously paid interest 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. For the three months ended September 30, 2020 our effective tax rate was 18.0% which was lower than the U.S. statutory rate of 21% primarily due to a $24.5 million reduction in valuation allowances on deferred taxes associated with net operating losses partially offset by a related $12.4 million expense resulting from revised income projections of a planned restructuring in a non-U.S. tax jurisdiction. In addition, excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate, provided tax rate benefits. These amounts were partially offset by U.S. state and local taxes and certain non-deductible employee expenses. The reduction of the valuation allowances and related expense decreased the effective tax rate by 2.4%.

Discontinued Operations

The components of Discontinued operations, net of tax for the three months ended September 30 were as follows:

In millions						2021						2020
Net revenues						$	—					$	—
Pre-tax earnings (loss) from discontinued operations						(19.0)						(7.7)
Tax benefit (expense)						5.7						2.2
Discontinued operations, net of tax						$	(13.3)					$	(5.5)

Discontinued operations are retained obligations from previously sold businesses, including amounts related to Ingersoll Rand Industrial as part of the completion of the Transaction and asbestos-related activities of Aldrich. During the three months ended September 30, 2021, we recorded a charge of $14.0 million to increase our Funding Agreement liability from asbestos-related activities of Aldrich. The three months ended September 30, 2020 includes pre-tax Ingersoll Rand Industrial separation costs primarily related to legal, consulting and advisory fees of $2.3 million.

The components of Discontinued operations, net of tax for the three months ended September 30 were as follows:

In millions			2021						2020
Ingersoll Rand Industrial, net of tax			$	0.3					$	(0.5)
Other discontinued operations, net of tax			(13.6)						(5.0)
Discontinued operations, net of tax			$	(13.3)					$	(5.5)

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Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020 - Consolidated Results

Dollar amounts in millions			2021						2020						Period Change						2021 % of revenues						2020 % of revenues
Net revenues			$	10,567.1					$	9,275.6					$	1,291.5
Cost of goods sold			(7,139.0)						(6,420.1)						(718.9)						67.6		%				69.2		%
Gross profit			3,428.1						2,855.5						572.6						32.4		%				30.8		%
Selling and administrative expenses			(1,840.5)						(1,710.7)						(129.8)						17.4		%				18.5		%
Operating income			1,587.6						1,144.8						442.8						15.0		%				12.3		%
Interest expense			(177.7)						(186.8)						9.1
Other income/(expense), net			(13.8)						7.6						(21.4)
Earnings before income taxes			1,396.1						965.6						430.5
Benefit (provision) for income taxes			(268.0)						(224.4)						(43.6)
Earnings from continuing operations			1,128.1						741.2						386.9
Discontinued operations, net of tax			(12.6)						(120.4)						107.8
Net earnings			$	1,115.5					$	620.8					$	494.7

Net Revenues

Net revenues for the nine months ended September 30, 2021 increased by 13.9%, or $1,291.5 million, compared with the same period in 2020, which resulted from the following:

Volume			8.0		%
Pricing			3.0		%
Acquisitions			1.6		%
Currency translation			1.3		%
Total			13.9		%

We were negatively impacted by the COVID-19 global pandemic in each of our segments during the nine months ended September 30, 2020, resulting in lower Net revenues in the comparable period. In addition, the increase in Net revenues was primarily driven by increased end customer demand within all of our segments, favorable pricing and a favorable impact from foreign currency translation. Also during the fourth quarter of 2020 and in the first quarter of 2021, we completed three channel acquisitions, two of which were completed in the Americas segment and the third which was completed within the EMEA segment, further driving an increase in Net revenues as compared to the prior year. Refer to the “Results by Segment” below for a discussion of Net revenues by segment.

Gross Profit Margin

Gross profit margin for the nine months ended September 30, 2021 increased by 160 basis points to 32.4% compared to 30.8% for the same period of 2020 primarily due to price realization, productivity benefits and a favorable shift in product mix to higher margin products, partially offset by increased direct material and other inflation.

Selling and Administrative Expenses

Selling and administrative expenses for the nine months ended September 30, 2021 increased by 7.6%, or $129.8 million, compared with the same period of 2020. The increase in Selling and administrative expenses was primarily driven by higher compensation and employee benefits due to prior year delays in merit increases and employee furloughs in certain regions and the completion of three channel acquisitions, partially offset by the realization of benefits from prior restructuring programs and transformation savings, cost containment actions and lower spending on restructuring and transformation initiatives. However, Selling and administrative expenses as a percentage of Net revenues for the nine months ended September 30, 2021 decreased 110 basis points from 18.5% to 17.4% primarily due to higher revenues during the period.

Interest Expense

Interest expense for the nine months ended September 30, 2021 decreased by 4.9% or $9.1 million compared with the same period of 2020 primarily due to the repayments of $125.0 million of 9.000% Debentures in August 2021, $300.0 million of 2.900% Senior notes in February 2021 and $300.0 million of 2.625% Senior notes in April 2020.

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Other Income/(Expense), Net

The components of Other income/(expense), net for the nine months ended September 30 are as follows:

In millions			2021						2020
Interest income/(loss)			$	3.0					$	3.6
Foreign currency exchange loss			(8.9)						(8.5)
Other components of net periodic benefit credit/(cost)			(3.3)						(9.0)
Other activity, net			(4.6)						21.5
Other income/(expense), net			$	(13.8)					$	7.6

Other income/(expense), net includes the results from activities other than normal 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, we include the components of net periodic benefit credit/(cost) for pension and post retirement obligations other than the service cost component. During the nine months ended September 30, 2021, other activity, net primarily includes a charge of $7.2 million to increase our Funding Agreement liability from asbestos-related activities of Murray. During the nine months ended September 30, 2020, we recorded a $17.4 million adjustment to correct an overstatement of a legacy legal liability that originated in prior years and a gain of $0.9 million related to the deconsolidation of Murray and its wholly-owned subsidiary ClimateLabs within other activity, net.

Provision for Income Taxes

For the nine months ended September 30, 2021, our effective tax rate was 19.2% which was lower than the U.S. statutory rate of 21% 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. The effective tax rate for the nine months ended September 30, 2020 was 23.2% which was higher than the U.S. statutory rate of 21% due to a $37.0 million non-cash charge to establish valuation allowances on net deferred tax assets, primarily net operating losses in certain tax jurisdictions as a result of the completion of the Transaction, U.S. state and local taxes and certain non-deductible employee expenses. These amounts were partially offset by excess tax benefits from employee share-based payments, a $3.9 million benefit primarily related to a reduction in valuation allowances on deferred taxes related to net operating losses as a result of a planned restructuring in a non-U.S. tax jurisdiction and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate. The impact of the changes in the valuation allowances increased the effective tax rate by 3.4%.

Discontinued Operations

The components of Discontinued operations, net of tax for the nine months ended September 30 were as follows:

In millions						2021						2020
Net revenues						$	—					$	469.8
Pre-tax earnings (loss) from discontinued operations						(32.4)						(131.1)
Tax benefit (expense)						19.8						10.7
Discontinued operations, net of tax						$	(12.6)					$	(120.4)

Discontinued operations are retained obligations from previously sold businesses, including amounts related to Ingersoll Rand Industrial as part of the completion of the Transaction and asbestos-related activities of Aldrich. During the nine months ended September 30, 2021, we recorded a charge of $14.0 million to increase our Funding Agreement liability from asbestos-related activities of Aldrich. The nine months ended September 30, 2020 includes pre-tax Ingersoll Rand Industrial separation costs primarily related to legal, consulting and advisory fees of $113.9 million and a loss of $23.6 million related to the deconsolidation of Aldrich and its wholly-owned subsidiary 200 Park.

The components of Discontinued operations, net of tax for the nine months ended September 30 were as follows:

In millions			2021						2020
Ingersoll Rand Industrial, net of tax			$	4.2					$	(82.1)
Other discontinued operations, net of tax			(16.8)						(38.3)
Discontinued operations, net of tax			$	(12.6)					$	(120.4)

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Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020 - Segment Results

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

• 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.

• 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.

• 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.

Management measures operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, unallocated corporate expenses and discontinued operations (Segment Adjusted EBITDA). Segment Adjusted EBITDA is not defined under accounting principles generally accepted 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 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 from operations sufficient to pay taxes, to service debt and to undertake capital expenditures because it eliminates non-cash charges such as depreciation and amortization expense.

The following discussion compares our results for each of our three reportable segments for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

In millions			2021						2020						% change
Americas
Net revenues			$	2,910.3					$	2,745.8					6.0		%
Segment Adjusted EBITDA			566.9						555.0						2.1		%
Segment Adjusted EBITDA as a percentage of net revenues			19.5		%				20.2		%
EMEA
Net revenues			$	495.0					$	445.2					11.2		%
Segment Adjusted EBITDA			99.4						87.6						13.5		%
Segment Adjusted EBITDA as a percentage of net revenues			20.1		%				19.7		%
Asia Pacific
Net revenues			$	314.5					$	304.5					3.3		%
Segment Adjusted EBITDA			57.3						58.5						(2.1)		%
Segment Adjusted EBITDA as a percentage of net revenues			18.2		%				19.2		%
Total Net revenues			$	3,719.8					$	3,495.5					6.4		%
Total Segment Adjusted EBITDA			723.6						701.1						3.2		%

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Americas

Net revenues for the three months ended September 30, 2021 increased by 6.0% or $164.5 million, compared with the same period of 2020. The components of the period change were as follows:

Pricing			5.1		%
Acquisitions			1.7		%
Currency translation			0.1		%
Volume			(0.9)		%
Total			6.0		%

The increase in Net revenues was driven by favorable pricing in all of our businesses as well as the completion of two channel acquisitions during the fourth quarter of 2020, partially offset by lower volumes due to supply chain constraints.

Segment Adjusted EBITDA margin for the three months ended September 30, 2021 decreased by 70 basis points to 19.5% compared to 20.2% for the same period in 2020 primarily due to increased direct material and other inflation coupled with increased logistics costs linked to supply chain constraints and inefficiencies, partially offset by price realization and productivity benefits.

EMEA

Net revenues for the three months ended September 30, 2021 increased by 11.2% or $49.8 million, compared with the same period of 2020. The components of the period change were as follows:

Volume			6.5		%
Acquisitions			1.7		%
Pricing			1.3		%
Currency translation			1.2		%
Transfer of sales from Asia Pacific segment			0.5		%
Total			11.2		%

The increase in Net revenues was driven by increased end customer demand, favorable pricing and favorable impact from foreign currency translation, partially offset by supply chain constraints. Also, during the first quarter of 2021, we completed a channel acquisition, which is managed in our EMEA segment, and includes sales formerly reported under our Asia Pacific segment, further driving an increase in Net revenues as compared to the prior year.

Segment Adjusted EBITDA margin for the three months ended September 30, 2021 increased by 40 basis points to 20.1% compared to 19.7% for the same period of 2020, primarily due to price realization, favorable product mix, productivity benefits and higher volumes despite supply chain constraints, which outpaced direct material and other inflation increases as compared to the prior period.

Asia Pacific

Net revenues for the three months ended September 30, 2021 increased by 3.3% or $10.0 million, compared with the same period of 2020. The components of the period change were as follows:

Currency translation			3.3		%
Pricing			2.1		%
Volume			(1.4)		%
Transfer of sales to EMEA segment			(0.7)		%
Total			3.3		%

The increase in Net revenues was driven by favorable impact from foreign currency translation and favorable pricing, partially offset by lower volumes driven primarily by supply chain constraints and the transfer of sales to the EMEA segment related to the channel acquisition.

Segment Adjusted EBITDA margin for the three months ended September 30, 2021 decreased by 100 basis points to 18.2% compared to 19.2% for the same period of 2020 primarily due to increased direct material and other inflation and lower volumes, partially offset by productivity benefits and price realization.

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Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020 - Segment Results

The following discussion compares our results for each of our three reportable segments for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

In millions			2021						2020						% change
Americas
Net revenues			$	8,207.6					$	7,300.0					12.4		%
Segment Adjusted EBITDA			1,571.7						1,287.6						22.1		%
Segment Adjusted EBITDA as a percentage of net revenues			19.1		%				17.6		%
EMEA
Net revenues			$	1,462.1					$	1,182.7					23.6		%
Segment Adjusted EBITDA			283.4						190.1						49.1		%
Segment Adjusted EBITDA as a percentage of net revenues			19.4		%				16.1		%
Asia Pacific
Net revenues			$	897.4					$	792.9					13.2		%
Segment Adjusted EBITDA			163.8						129.2						26.8		%
Segment Adjusted EBITDA as a percentage of net revenues			18.3		%				16.3		%
Total net revenues			$	10,567.1					$	9,275.6					13.9		%
Total Segment Adjusted EBITDA			2,018.9						1,606.9						25.6		%

Americas

Net revenues for the nine months ended September 30, 2021 increased by 12.4% or $907.6 million, compared with the same period of 2020. The components of the period change were as follows:

Volume			6.9		%
Pricing			3.5		%
Acquisitions			1.8		%
Currency translation			0.2		%
Total			12.4		%

The Americas segment was negatively impacted by the COVID-19 global pandemic during the nine months ended September 30, 2020, resulting in lower Net revenues in the comparable period. In addition, the increase in Net revenues was primarily driven by increased end customer demand in all of our businesses, favorable pricing and the completion of two channel acquisitions during the fourth quarter of 2020.

Segment Adjusted EBITDA margin for the nine months ended September 30, 2021 increased by 150 basis points to 19.1% compared to 17.6% for the same period of 2020 primarily due to price realization, strong execution, productivity benefits, higher volumes and favorable product mix, which outpaced direct material and other inflation increases as compared to the prior period.

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EMEA

Net revenues for the nine months ended September 30, 2021 increased by 23.6% or $279.4 million, compared with the same period of 2020. The components of the period change were as follows:

Volume			14.7		%
Currency translation			5.9		%
Acquisitions			1.6		%
Pricing			0.8		%
Transfer of sales from Asia Pacific segment			0.6		%
Total			23.6		%

The EMEA segment was negatively impacted by the COVID-19 global pandemic during the nine months ended September 30, 2020, resulting in lower Net revenues in the comparable period. In addition, the increase in Net revenues was primarily driven by increased end customer demand within both our businesses as well as favorable impact from foreign currency translation. Also, during the first quarter of 2021, we completed a channel acquisition, which is managed in our EMEA segment, and includes sales formerly reported under our Asia Pacific segment, further driving an increase in Net revenues as compared to the prior year.

Segment Adjusted EBITDA margin for the nine months ended September 30, 2021 increased by 330 basis points to 19.4% compared to 16.1% for the same period of 2020 primarily due to higher volumes, strong execution, productivity benefits, favorable product mix and price realization, which outpaced direct material and other inflation increases as compared to the prior period.

Asia Pacific

Net revenues for the nine months ended September 30, 2021 increased by 13.2% or $104.5 million, compared with the same period of 2020. The components of the period change were as follows:

Volume			7.4		%
Currency translation			5.1		%
Pricing			1.6		%
Transfer of sales to EMEA segment			(0.9)		%
Total			13.2		%

The Asia Pacific segment was negatively impacted by the COVID-19 global pandemic during the nine months ended September 30, 2020, resulting in lower Net revenues in the comparable period. In addition, the increase in Net revenues was primarily driven by increased end customer demand as a result of improved economic conditions as it relates to the COVID-19 global pandemic within China, partially offset by mixed results in the rest of Asia. Net revenues also increased from favorable foreign currency translation and favorable pricing, partially offset by the transfer of sales to the EMEA segment related to the channel acquisition.

Segment Adjusted EBITDA margin for the nine months ended September 30, 2021 increased by 200 basis points to 18.3% compared to 16.3% for the same period of 2020. The increase was primarily driven by strong execution, productivity benefits, price realization and higher volumes as a result of increased customer demand from improved economic conditions as compared to prior year driven by the COVID-19 global pandemic, partially offset by increased direct material and other inflation, unfavorable product mix and business reinvestment.

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Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and income tax payments. Our cash requirements primarily consist of the following:

• Funding of working capital

• Funding of capital expenditures

• Dividend payments

• Debt service requirements

Our primary sources of liquidity include cash balances on hand, cash flow from operations, proceeds from debt offerings, commercial paper, and borrowing availability under our existing credit facilities. We earn a significant amount of our operating income in jurisdictions where it is deemed to be permanently reinvested. Our most prominent jurisdiction of operation is the U.S. We expect existing cash and cash equivalents available to the U.S. operations, the cash generated by our U.S. operations, our committed credit lines as well as our expected ability to access the capital and debt markets will be sufficient to fund our U.S. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future. In addition, we expect existing non-U.S. cash and cash equivalents and the cash generated by our non-U.S. operations will be sufficient to fund our non-U.S. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future. 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, of which the company had no outstanding balance as of September 30, 2021.

As of September 30, 2021, we had $2,738.8 million of cash and cash equivalents on hand, of which $1,866.7 million was held by non-U.S. subsidiaries. Cash and cash equivalents held by our non-U.S. subsidiaries are generally available for use in our U.S. operations via intercompany loans, equity infusions or via distributions from direct or indirectly owned non-U.S. subsidiaries for which we do not assert permanent reinvestment. As a result of the Tax Cuts and Jobs Act in 2017, additional repatriation opportunities to access cash and cash equivalents held by non-U.S. subsidiaries have been created. In general, repatriation of cash to the U.S. can be completed with no significant incremental U.S. tax. However, to the extent that we repatriate funds from non-U.S. subsidiaries for which we assert permanent reinvestment to fund our U.S. operations, we would be required to accrue and pay applicable non-U.S. taxes. As of September 30, 2021, we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.

Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. In October 2018, our Board of Directors authorized the repurchase of up to $1.5 billion of our ordinary shares under a share repurchase program (2018 Authorization). In February 2021, our Board of Directors authorized the repurchase of up to $2.0 billion of our ordinary shares under a new share repurchase program (2021 Authorization) upon completion of the 2018 Authorization. During the nine months ended September 30, 2021, we repurchased and canceled $600.2 million of our ordinary shares thus completing the 2018 Authorization and initiating repurchases under the 2021 Authorization of $100.2 million of our ordinary shares leaving approximately $1.9 billion remaining under the 2021 Authorization.

We expect to pay a competitive and growing dividend. In February 2021, we announced an 11% increase in our quarterly share dividend from $0.53 to $0.59 per ordinary share, or $2.36 per share annualized. The first, second and third quarter 2021 dividend was paid during the nine months ended September 30, 2021 and the fourth quarter 2021 dividend was declared in October 2021.

We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our customers. We achieve this partly through engaging in research and development and sustaining activities and partly through acquisitions. Each year, we make a significant investment in new product development and new technology innovation as they are key factors in achieving our strategic objectives as a leader in the climate sector. We also focus on partnering with our suppliers and technology providers to align their investment decisions with our technical requirements. 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. Combined, these costs account for approximately two percent of annual Net revenues.

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In pursuing our business strategy, we routinely conduct discussions, evaluate targets and enter into agreements regarding possible acquisitions, divestitures, joint ventures and equity investments. Since 2019, we acquired several businesses, entered into joint ventures and invested in companies that complement existing products and services further enhancing our product portfolio. Through November 3, 2021, we deployed capital of approximately $340 million attributable to acquisitions and related investments. In addition, during 2020 we completed a Reverse Morris Trust transaction with Ingersoll Rand whereby we separated Ingersoll Rand Industrial from our business portfolio, transforming the Company into a global climate innovator. We recognized separation-related costs of $114.2 million during the year ended December 31, 2020. These expenditures were incurred in order to facilitate the Transaction and are included within Discontinued operations, net of tax.

We incur ongoing costs associated with restructuring initiatives intended to result in improved operating performance, profitability and working capital levels. Actions associated with these initiatives may include workforce reductions, improving manufacturing productivity, realignment of management structures and rationalizing certain assets. Post separation, we committed to reduce costs by $190 million through 2021 and an additional $110 million by 2023 for a total of $300 million in total annual savings under our transformation initiatives. We believe that our existing cash flow, committed credit lines and access to the capital markets will be sufficient to fund share repurchases, dividends, research and development, sustaining activities, business portfolio changes and ongoing restructuring actions.

Certain of our subsidiaries entered into funding agreements with Aldrich and Murray 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 the Bankruptcy Code, to the extent that the other assets of Aldrich and Murray are insufficient to provide the requisite trust funding. During the third quarter of 2021, Aldrich and Murray filed a motion with the Bankruptcy Court to create a $270 million QSF Trust. The funds held in the QSF Trust would be available to provide funding for the Section 524(g) Trust upon effectiveness of the Plan. If approved by the Bankruptcy Court and other conditions are satisfied, the QSF Trust is expected to be funded prior to January 31, 2022. At this point in the Chapter 11 cases of Aldrich and Murray, it is not possible to predict 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.

As the COVID-19 global pandemic impacts both the broader economy and our operations, we will continue to assess our liquidity needs and our ability to access capital markets. A continued worldwide disruption could materially affect economies and financial markets worldwide, resulting in an economic downturn that could affect demand for our products, our ability to obtain financing on favorable terms and otherwise adversely impact our business, financial condition and results of operations. See Part I, Item 1A – Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for more information.

Liquidity

The following table contains several key measures of our financial condition and liquidity at the period ended:

In millions			September 30, 2021						December 31, 2020
Cash and cash equivalents			$	2,738.8					$	3,289.9
Short-term borrowings and current maturities of long-term debt (1)			350.4						775.6
Long-term debt			4,490.7						4,496.5
Total debt			4,841.1						5,272.1
Total Trane Technologies plc shareholders’ equity			6,475.1						6,407.7
Total equity			6,487.7						6,427.1
Debt-to-total capital ratio			42.7		%				45.1		%

(1) The $300.0 million of 2.900% Senior notes were repaid in February 2021. The $125.0 million of 9.000% Debentures were repaid in August 2021.

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Debt and Credit Facilities

Our short-term obligations primarily consist of current maturities of long-term debt. In addition, we have outstanding $342.9 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. We also maintain a commercial paper program which is used for general corporate purposes. Under the program, the maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, is $2.0 billion. We had no outstanding balance under our commercial paper program as of September 30, 2021 and December 31, 2020. See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding the terms of our short-term obligations.

Our long-term obligations primarily consist of long-term debt with final maturity dates ranging between 2023 and 2049. In addition, we maintain two $1.0 billion senior unsecured revolving credit facilities, one of which matures in April 2023 and the other which matures in June 2026. The facilities provide support for our commercial paper program and can be used for working capital and other general corporate purposes. Total commitments of $2.0 billion were unused at September 30, 2021 and December 31, 2020. See Note 7 to the Condensed Consolidated Financial Statements and further below in Supplemental Guarantor Financial Information for additional information regarding the terms of our long-term obligations and their related guarantees.

Cash Flows

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

In millions			2021						2020
Net cash provided by (used in) continuing operating activities			$	1,162.6					$	1,132.9
Net cash provided by (used in) continuing investing activities			(208.8)						(101.1)
Net cash provided by (used in) continuing financing activities			(1,465.0)						1,230.9

Operating Activities

Net cash provided by continuing operating activities for the nine months ended September 30, 2021 was $1,162.6 million, of which Net earnings provided $1,421.5 million after adjusting for non-cash transactions. Changes in assets and liabilities, net used $258.9 million. Net cash provided by continuing operating activities for the nine months ended September 30, 2020 was $1,132.9 million, of which Net earnings provided $1,083.5 million after adjusting for non-cash transactions. Changes in assets and liabilities, net provided $49.4 million. The year-over-year increase in net cash provided by continuing operating activities was primarily driven by higher net earnings, partially offset by higher working capital balances in the current year.

Investing Activities

Cash flows from investing activities represent inflows and outflows regarding the purchase and sale of assets. Primary activities associated with these items include capital expenditures, proceeds from the sale of property, plant and equipment, acquisitions, investments in joint ventures and complementary businesses and divestitures. During the nine months ended September 30, 2021, net cash used in investing activities from continuing operations was $208.8 million. The primary drivers of the usage was attributable to capital expenditures of $121.6 million and other investing activities of $69.2 million primarily related to investment in companies that complement existing products and services further enhancing our product portfolio. During the nine months ended September 30, 2020 net cash used in investing activities from continuing operations was $101.1 million. The primary driver of the usage was attributable to capital expenditures, which totaled $89.1 million. In addition, as a result of the deconsolidation of Murray and its wholly-owned subsidiary ClimateLabs under the Chapter 11 bankruptcy filing, the assets and liabilities of these entities were derecognized, which resulted in a cash outflow of $10.8 million.

Financing Activities

Cash flows from financing activities represent inflows and outflows that account for external activities affecting equity and debt. Primary activities associated with these actions include paying dividends to shareholders, repurchasing our own shares, issuing our own stock and debt transactions. During the nine months ended September 30, 2021, net cash used in financing activities from continuing operations was $1,465.0 million. The primary drivers of the outflow related to the repurchase of $600.2 million in ordinary shares, the repayment of long term debt of $432.5 million and dividends paid to ordinary shareholders of $421.9 million. During the nine months ended September 30, 2020, net cash provided by financing activities from continuing operations was $1,230.9 million. The primary driver of the inflow related to the receipt of a special cash payment of $1,900.0 million pursuant to completion of the Transaction. This amount was partially offset by dividends paid to ordinary shareholders of $380.3 million and the repayment of long term debt of $307.5 million.

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Free Cash Flow

Free cash flow is a non-GAAP measure and defined as Net cash provided by (used in) continuing operating activities, less capital expenditures, plus cash payments for restructuring and transformation costs. This measure is useful to management and investors because it is consistent with management's assessment of our operating cash flow performance. The most comparable GAAP measure to free cash flow is Net cash provided by (used in) continuing operating activities. Free cash flow may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for Net cash provided by (used in) continuing operating activities in accordance with GAAP.

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

In millions			2021						2020
Net cash provided by (used in) continuing operating activities			$	1,162.6					$	1,132.9
Capital expenditures			(121.6)						(89.1)
Cash payments for restructuring			27.1						62.3
Transformation costs paid			13.5						22.4
Free cash flow (1)			$	1,081.6					$	1,128.5

(1) Represents a non-GAAP measure.

Pensions

Our investment objective in managing defined benefit plan assets is to ensure that all present and future benefit obligations are met as they come due. We seek to achieve this goal while trying to mitigate volatility in plan funded status, contribution and expense by better matching the characteristics of the plan assets to that of the plan liabilities. We use a dynamic approach to asset allocation whereby a plan's allocation to fixed income assets increases as the plan's funded status improves. We monitor plan funded status and asset allocation regularly in addition to investment manager performance.

We monitor the impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans have experienced a significant impact on their liquidity due to the volatility in the markets. The Company currently projects that it will contribute a total of approximately $57 million to our enterprise plans worldwide in 2021. For further details on pension plan activity, see Note 10 to the Condensed Consolidated Financial Statements.

Supplemental Guarantor Financial Information

Trane Technologies plc (Plc or Parent Company) and certain of its 100% directly or indirectly owned subsidiaries provide guarantees of public debt issued by other 100% directly or indirectly owned subsidiaries of Plc. The following table shows our guarantor relationships as of September 30, 2021:

Parent, issuer or guarantors			Notes issued			Notes guaranteed
Trane Technologies plc (Plc)			None			All registered notes and debentures
Trane Technologies Irish Holdings Unlimited Company (TT Holdings)			None			All notes issued by TTFL and TTC HoldCo
Trane Technologies Lux International Holding Company S.à.r.l. (TT International)			None			All notes issued by TTFL and TTC HoldCo
Trane Technologies Global Holding Company Limited (TT Global)			None			All notes issued by TTFL and TTC HoldCo
Trane Technologies Financing Limited (TTFL)(1)			3.550% Senior notes due 2024 3.500% Senior notes due 2026 3.800% Senior notes due 2029 4.650% Senior notes due 2044 4.500% Senior notes due 2049			All notes and debentures issued by TTC HoldCo and TTC
Trane Technologies HoldCo Inc. (TTC HoldCo)			4.250% Senior notes due 2023 3.750% Senior notes due 2028 5.750% Senior notes due 2043 4.300% Senior notes due 2048			All notes issued by TTFL
Trane Technologies Company LLC (TTC)			7.200% Debentures due 2022-2025 6.480% Debentures due 2025 Puttable debentures due 2027-2028			All notes issued by TTFL and TTC HoldCo

(1) On April 30, 2021, Trane Technologies Luxembourg Finance S.A. (TT Lux) merged into TTFL, an Irish private limited company, and TTFL became the successor issuer of certain notes and assumed the guarantees and other obligations previously held by TT Lux.

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Each subsidiary debt issuer and guarantor is owned 100% directly or indirectly by the Parent Company. Each guarantee is full and unconditional, and provided on a joint and several basis. There are no significant restrictions of the Parent Company, or any guarantor, to obtain funds from its subsidiaries, such as provisions in debt agreements that prohibit dividend payments, loans or advances to the Parent Company by a subsidiary. The following tables present summarized financial information for the Parent Company and subsidiary debt issuers and guarantors on a combined basis (together, "obligor group") after elimination of intercompany transactions and balances based on the Company’s legal entity ownerships and guarantees outstanding at September 30, 2021. Our obligor groups as of September 30, 2021 were as follows: obligor group 1 consists of Plc, TT Holdings, TT International, TT Global, TTFL, TTC HoldCo and TTC; obligor group 2 consists of Plc, TTFL and TTC.

Summarized Statements of Income (Loss)

			Nine months ended September 30, 2021
In millions			Obligor group 1						Obligor group 2
Net revenues			$	—					$	—
Gross profit (loss)			—						—
Intercompany interest and fees			(13.8)						170.2
Earnings (loss) from continuing operations			(242.4)						(75.9)
Discontinued operations, net of tax			(12.8)						(13.7)
Net earnings (loss)			(255.2)						(89.6)
Less: Net earnings attributable to noncontrolling interests			—						—
Net earnings (loss) attributable to Trane Technologies plc			$	(255.2)					$	(89.6)

Summarized Balance Sheets

			September 30, 2021
In millions			Obligor group 1						Obligor group 2
ASSETS
Intercompany receivables			$	116.5					$	505.5
Current assets			1,681.2						2,044.4
Intercompany notes receivable			1,831.9						5,531.6
Noncurrent assets			2,654.9						6,126.6
LIABILITIES & EQUITY
Intercompany payables			4,866.7						3,374.5
Current liabilities			5,676.3						4,153.3
Intercompany notes payable			2,400.4						2,400.4
Noncurrent liabilities			7,875.2						5,825.1

			December 31, 2020
In millions			Obligor group 1						Obligor group 2
ASSETS
Intercompany receivables			$	458.4					$	1,254.7
Current assets			1,523.7						2,200.5
Intercompany notes receivable			1,331.9						1,331.9
Noncurrent assets			2,195.0						1,967.2
LIABILITIES & EQUITY
Intercompany payables			5,572.2						3,599.6
Current liabilities			6,880.3						4,539.1
Intercompany notes payable			2,249.7						—
Noncurrent liabilities			7,729.6						3,430.5

For a further discussion of Liquidity and Capital Resources, refer to the discussion under that heading herein and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in our Annual Report on Form 10-K for the period ended December 31, 2020.

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Commitments and Contingencies

We are involved in various litigation, claims and administrative proceedings, including those related to the bankruptcy proceedings for Aldrich and Murray and environmental and product liability matters. 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 Note 20 to the Condensed Consolidated Financial Statements, management believes that the liability which may result from these legal matters would not have a material adverse effect on our financial condition, results of operations, liquidity or cash flows.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with those accounting principles requires management to use judgments in making estimates and assumptions based on the relevant information available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets and liabilities, revenue and expenses, as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make estimates and assumptions on matters that are inherently uncertain. Actual results may differ from estimates.

Management believes there have been no significant policy changes during the nine months ended September 30, 2021, to the items that we disclosed as our critical accounting policies in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements

See Note 3 to the Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Safe Harbor Statement

Certain statements in this report, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements.

Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, share or debt repurchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance including our future performance during the COVID-19 global pandemic; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. You are advised to review any further disclosures we make on related subjects in materials we file with or furnish to the SEC. Forward-looking statements speak only as of the date they are made and are not guarantees of future performance. They are subject to future events, risks and uncertainties - many of which are beyond our control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from our expectations and projections. We do not undertake to update any forward-looking statements.

Factors that might affect our forward-looking statements include, among other things:

• impacts of the COVID-19 global pandemic on our business operations, financial results and financial position and on the world economy;

• overall economic, political and business conditions in the markets in which we operate;

• trade protection measures such as import or export restrictions and requirements, the imposition of tariffs and quotas or revocation or material modification of trade agreements;

• competitive factors in the industries in which we compete;

• our ability to develop new products and services and the acceptance of these products in the markets we serve;

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• other capital market conditions, including availability of funding sources, interest rates fluctuations and other changes in borrowing costs;

• currency exchange rate fluctuations, exchange controls and currency devaluations;

• the outcome of any litigation, governmental investigations or proceedings;

• the outcome of Chapter 11 proceedings for our deconsolidated subsidiaries Aldrich and Murray;

• the impact of potential information technology, system failures, data security breaches or other cybersecurity issues;

• evolving data privacy and protection laws;

• intellectual property infringement claims and the inability to protect our intellectual property rights;

• changes in laws and regulations;

• health epidemics or pandemics or other contagious outbreaks;

• climate change, changes in weather patterns, natural disasters and seasonal fluctuations;

• availability of and fluctuations in the prices of key commodities;

• supply chain risks;

• the outcome of any income tax audits or settlements;

• the strategic acquisition of businesses, product lines and joint ventures;

• impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets;

• changes in tax laws and requirements (including tax rate changes, new tax laws, new and/or revised tax law interpretations and any legislation that may limit or eliminate potential tax benefits resulting from our incorporation in a non-U.S. jurisdiction, such as Ireland); and

• work stoppages, union negotiations, labor disputes and similar issues

Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described more fully in the “Risk Factors” section in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There may also be other factors that have not been anticipated or that are not described in our periodic filings with the SEC, generally because we did not believe them to be significant at the time, which could cause results to differ materially from our expectations.

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 regarding the Company 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.

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