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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to          
Commission File No. 001-34400
TRANE TECHNOLOGIES PLC
(Exact name of registrant as specified in its charter)
 
Ireland 98-0626632
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
170/175 Lakeview Dr.
Airside Business Park
Swords Co. Dublin
Ireland
(Address of principal executive offices)
Registrant’s telephone number, including area code: +(353) (0) 18707400
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Ordinary Shares, Par Value $1.00 per ShareTTNew York Stock Exchange
5.250% Senior Notes due 2033TT33New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes    No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filerxAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes x No 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   No x

The aggregate market value of ordinary shares held by nonaffiliates on June 30, 20202023 was approximately $21.2$43.6 billion based on the closing price of such stock on the New York Stock Exchange.
The number of ordinary shares outstanding of Trane Technologies plc as of February 1, 20212, 2024 was 238,428,700.227,072,224.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement to be filed within 120 days of the close of the registrant’s fiscal year in connection with the registrant’s Annual General Meeting of Shareholders to be held June 3, 20216, 2024 are incorporated by reference into Part II and Part III of this Form 10-K.



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TRANE TECHNOLOGIES PLC

Form 10-K
For the Fiscal Year Ended December 31, 20202023
TABLE OF CONTENTS
 
   Page
Part IItem 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Part IIItem 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Part IIIItem 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IVItem 15.
Item 16.


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CAUTIONARY STATEMENT FOR FORWARD LOOKING STATEMENTS
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,” “potential,” “predict,” “target,” “may,” “might,” “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 statements related to the continued impact of the COVID-19 Coronavirus Disease 2019 (COVID-19)global pandemic; any statements regarding our sustainability commitments; 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 Securities and Exchange Commission. 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:
overall economic, political and business conditions in the markets in which we operate including recessions, economic downturns, price instability, slow economic growth and social and political instability;
impacts of global health crises, including the COVID-19 global pandemic, and other epidemics, pandemics, or other contagious outbreaks on our business operations, financial results and financial position and on the world economy;
overall economic, politicalcommodity and business conditions inraw material shortages, supply chain risks and price increases;
national and international conflict, including war, civil disturbances and terrorist acts, including the markets in which we operate;Russia-Ukraine conflict and other geopolitical hostilities;
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 industriesmarkets in which we compete;
our ability to developthe development, commercialization and acceptance of new and enhanced products and servicesservices;
attracting and the acceptance of these products in the markets that we serve;retaining talent;
work stoppages, union negotiations, labor disputes and similar issues;
other capital market conditions, including availability of funding sources, interest rate fluctuations and other changes in borrowing costs;
currency exchange rate fluctuations, exchange controls and currency devaluations;
the outcome of any litigation, governmental investigations, claims or proceedings;
risks and uncertainties associated with the outcome of Chapter 11 proceedingsasbestos-related bankruptcy for our deconsolidated subsidiaries Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray);LLC;
the impact of potential information technology system failures, vulnerabilities, 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;
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availability ofnational, regional and fluctuations ininternational regulations and policies associated with climate change and the prices of key commodities;environment;
the outcome of any tax audits or settlements;
the strategic acquisition or divestiture of businesses, product lines and joint ventures;
impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets; and
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 Part I, Item 1A “Risk Factors.” You should read that information in conjunction with
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“Management's “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this report and our Consolidated Financial Statements and related notes in Part II, Item 8 “Financial Statements and Supplementary Data”Statements" of this report. We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995.
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PART I
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, us, our, the Company) is a global climate innovator that bringsinnovator. We bring sustainable and efficient and sustainable climate solutions to buildings, homes and transportation driven bythrough our strategic brands, Trane® and Thermo King®, and anour environmentally responsible portfolio of products, services and services.connected intelligent controls. We generate revenue and cash primarily through the design, manufacture, salesales and service of a diverse portfolio of climate control products and servicessolutions for Heating, Ventilation and Air Conditioning (HVAC), transport refrigeration, and transportcustom refrigeration solutions.
To achieve As an industry leader with an extensive global install base, our mission of being a world leader in creating comfortable, sustainable and efficient environments, we continue to focus on growth by increasing ourstrategy includes expanding recurring revenue stream from parts,through services controls, used equipment and rentals;rental options. Our unique business operating system, uplifting culture and to continuously improve efficiencies and capabilities of our operations and products and services for our customers. Wehighly engaged team around the world are also continuecentral to focus on operational excellence strategies as a central theme to improving our earnings and cash flow.flow growth.
Separation of Industrial Segment Businesses
On February 29, 2020 (Distribution Date)Through our sustainability-focused strategy and purpose to boldly challenge what’s possible for a sustainable world, we completedmeet critical needs and growing global demand for innovation that reduces greenhouse gas emissions while enabling healthier, efficient indoor environments and safe, reliable delivery of essential temperature-controlled cargo. We have announced certain defined sustainability commitments with a goal of achieving these commitments by 2030 (2030 Sustainability Commitments). Trane Technologies’ bold 2030 Sustainability Commitments have been verified by the Science Based Targets initiative (SBTi) and include our Reverse Morris Trust transaction (the Transaction) with Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name‘Gigaton Challenge’ to Ingersoll Rand Inc. after the Transaction) whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which containedreduce customer greenhouse gas emissions by a billion metric tons, ‘Leading by Example’ through carbon-neutral operations across our former Industrial segment (Ingersoll Rand Industrial), throughown footprint, and ‘Opportunity for All’ by building a pro rata distribution (the Distribution) todiverse workforce reflective of 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.communities.
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 createdWe operate under 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.America. The Americas segment encompasses commercial heating, cooling and coolingventilation systems, building controls and solutions, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions. This segment had 20202023 net revenues of $9.7 billion.$13,832.0 million.
Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and coolingventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions. This segment had 20202023 net revenues of $1.6 billion.$2,401.2 million.
Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and coolingventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions. This segment had 20202023 net revenues of $1.1 billion.$1,444.4 million.
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 suppliesHybrid-powered trailer refrigeration
Air conditionersIce energy storage solutionsMulti-pipe HVAC systems
Air exchangersPackage heating and cooling systems
Air handlersPackaged rooftop units
Airside and terminal devicesParts and supplies (aftermarket and OEM)
Air-sourced heat pumpsRail refrigeration systems
Asset management systemsRate chambers
Auxiliary power units (electric and diesel)Refrigerant reclamation
Building management systemsRenewable energy projects
Bus air purification systemsRepair and maintenance services
Bus and rail HVAC systemsRental services
ChillersResidential air filters
Coils and condensersResidential air filtration system
Container refrigeration systems and gensetsResidential hybrid heating solutions
Control systemsSelf-powered truck refrigeration systems
Cryogenic refrigeration systemsService agreements
Decarbonization programsTelematics solutions
DehumidifiersTemporary heating and cooling systems
Ductless systemsThermal energy storage
Energy efficiency programsThermostats/controls & associated digital solutions
Energy infrastructure programsTrailer refrigeration systems (diesel, electric and hybrid)
Energy management servicesTransport heater products
FurnacesTruck refrigeration systems (diesel, electric and hybrid)
Geothermal systemsUltra-low temperature freezers
Home automationUnitary systems (light and large)
HumidifiersVariable refrigerant flow systems
HVAC Performance-monitoring applicationsVehicle-powered truck refrigeration systems
Indoor air quality assessments and related products for HVAC and Transport solutionsVentilation
Air handlersIndustrial refrigeration
Airside and terminal devicesInstallation contracting
Auxiliary power unitsLarge commercial unitary
Building management systemsLight commercial unitary
Bus and rail HVAC systemsMotor replacements
ChillersMulti-pipe HVAC systems
Coils and condensersPackage heating and cooling systems
Container refrigeration systems and gensetsPerformance contracting
Control systemsRail refrigeration systems
Cryogenic refrigeration systemsRefrigerant reclamation
Diesel-powered refrigeration systemsRepair and maintenance services
Ductless systemsRental services
Electric-powered trailer refrigeration systemsSelf-powered truck refrigeration systems
Electric-powered truck refrigeration systemsService agreements
Energy management servicesTemporary heating and cooling systems
Facility management servicesThermostats/controls
FurnacesTrailer refrigeration systems
Geothermal systemsTransport heater products
Heat pumpsUnitary systems (light and large)
Home automationVariable Refrigerant Flow
HumidifiersVehicle-powered truck refrigeration systems
Hybrid and non-diesel transport refrigeration solutionsWater source heat pumps
Installation contracting
These products are sold primarily under our name and under our tradenames including Trane®, and 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.products and services.
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 20202023 were derived outside the U.S. and we sold products in more thanapproximately 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, 20192023, 2022 or 2018.2021. 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 both manufacture and procure many of the components included in our products, which requires usproducts. For components we manufacture, we are required to employsource a wide variety of commodities. Principal commodities such as steel, copper, and aluminum,aluminum. These principal commodities 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
For many components we procure, we have been no commodityan effective supply chain resiliency plan and multiple capable sources to ensure sufficient supply, however there are certain categories of components that could occasionally see limited availability or shortages which have had a material adverse effect on our businesses.in line with industry trends.
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 negativelypositively or positivelynegatively 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. In 2023, we spent $252.3 million on research and development, focused on product and system sustainability improvements such as increasing energy efficiency, developing products that allow for use of lower global warming potential refrigerants, reducing material content in products, and designing products for circularity. New product development (NPD) programs complete a Design for Sustainability module within our NPD process to ensure that programs have a positive impact on sustainability.
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 the 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.
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Backlog
Our approximate backlog of orders, believed to be firm, at December 31, was as follows:
In millionsIn millions20202019In millions20232022
AmericasAmericas$1,788.0 $1,592.4 
EMEAEMEA426.2 336.9 
Asia PacificAsia Pacific680.6 584.0 
TotalTotal$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 residential products are built in advance of order and either shipped or assembled from stock. As a result, weWe expect to ship a majority of the December 31, 20202023 backlog during 2021.2024. However, orders for specialized machinery or specific customer applicationapplications are submitted with extensiveextended 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 or there are resource constraints, 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.
It is our policy to establish environmental reserves for investigation and remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. Estimated liabilities are determined based upon existing remediation laws and technologies. Inherent uncertainties exist in such evaluations due to unknown environmental conditions, changes in government laws and regulations, and changes in cleanup technologies. The environmental reserves are updated on a routine basis as remediation efforts progress and new information becomes available.
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 and international 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, inIn most instances at multi-party sites, our involvementshare of the liability is minimal.not material.
In estimating our liability at multi-party sites, 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 2220 "Commitments and Contingencies" to the Consolidated Financial Statements.
Asbestos-Related Matters
OnWe are involved in a number of asbestos-related lawsuits, claims and legal proceedings. In 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. In addition, at the request of Aldrich and Murray, the Bankruptcy Court has entered an order temporarily staying all asbestos-related claims against the Trane Companies that relate to claims against Aldrich or Murray (except for asbestos-related claims for which the exclusive remedy is provided under workers' compensation statutes or similar laws).
The goal of these Chapter 11 filings is an efficientto resolve equitably and permanent resolution ofpermanently all current and future asbestosasbestos-related claims in a manner beneficial to claimants, Aldrich and Murray through court approval of a plan of reorganization whichthat would establish, in accordance withcreate a trust pursuant to section 524(g) of the Bankruptcy Code, a trust to payestablish claims resolution procedures for all asbestos claims. Such a resolution, if achieved, would likely include a channeling injunction to enjoin asbestoscurrent and future asbestos-related 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.
PriorAldrich and Murray and channel such claims to the Petition Date, certaintrust for resolution in accordance with those procedures.
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For detailed information on the bankruptcy cases of Aldrich 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 exposureMurray, see:
Part I, Item 1A, "Risk Factors - Risks Related 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.Litigation,"
See also the discussion under Part I, Item 3, "Legal Proceedings,"
Part II, Item 7, "Management's Discussion and in Note 22 to theAnalysis of Financial Condition and Results of Operations - Significant Events," and
Part II, Item 8, Consolidated Financial Statements.Statements, Note 1, "Description of Company," and Note 20, "Commitments and Contingencies."
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.success.
As of December 31, 2020,2023, we employed approximately 35,00040,000 people in nearlyapproximately 60 countries including approximately 12,500over 15,000 outside of the U.S.United States. As of December 31, 2020, 25.3%2023, 25.9% of our global employees were women and 35.5%37.2% of our employees in the United States were racially and ethnically diverse. In 2020, 31.2%2023, 30.9% of our new hires globally were women and 47.9%53.0% of new hires in the United States were racially and ethnically diverse. Approximately 21.7%25.2% of leadership and management positions were held by women as of December 31, 2020.2023. The diversity percentages included in this section exclude current year business acquisitions.
As a result of maintaining a consistent focus on an uplifting culture, our key talent (employees with the highest potential rating) retention rate excluding retirements in 2023 was 96.4%. Our company‑wide (all employees) voluntary retention rate excluding retirements was 90.4%.
Culture and Purpose
In 2020, as Trane Technologies,2023, we refined and reaffirmed dimensions of our culture as a climate innovator dedicatedcontinued to drive our purpose of to boldly challengingchallenge what’s possible for a sustainable world. through our strategic priorities and 2030 Sustainability Commitments. We engaged thousandsuse our Leadership Principles to guide our actions each day and enable our uplifting, engaging and inclusive culture. As part of employees in surveysour commitment to people and online focus groupsculture, we strive to definecreate a work environment where our people uplift each other, make a positive impact on the core Leadership Behaviors for all employees to live our new purpose.
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planet and thrive at work and at home.
Since its launch in 2006, our annual employee engagement survey has enabled employees to share their experiences and perceptions of our Company. Employees providedprovide ratings and written comments for continuous improvement. In 2020, 90%2023, 87% of our workforce participated in our annual engagement survey, and our overall employee engagement score positions us well intoremains high. While our work on culture is never done, these scores indicate that we’re continuing to raise the top quartile of all companies globally.bar to increase pride, energy and optimism across the company and create the best employee experience.
Diversity and Inclusion
Our commitment to Diversity and Inclusion is core to our purpose and our 2030 sustainability commitments.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 millionclosing the opportunity gap for Black Americanstalent and others in the next ten years to achieve economic mobility)America). In addition, our CEO iswe are a 20182017 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 ConnectionsCEO Day of Understanding – a safe forum created to allow our employees and leaders to speak from the heart about a varietytheir personal experiences and commitment to becoming allies and change agents. The spirit of topics without fear of retribution.
Unity Squads – site-based committees of employees that foster diversitythis conversation is extended throughout our 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.Inclusion programming.
Employee Resources Groups (ERGs) – Trane Technologies sponsorswe sponsor eight ERGs (the Women's Employee Network, the Black Employee Network, the Veterans Employee Resource Group,ERG, the Asian Employee Resource Group,ERG, the Global Organization of Latinos, the LGBTA Employee Resource Group,Lesbian, Gay, Bisexual, Transgender, Queer and Allies (LGBTQ+ Pride) ERG, the InterGenerational Employee Network, and Visibility)VisAbility). All ERGs are voluntary, open and inclusive organizations that offer employees a sense of belonging, networking and learning opportunities.
In 2023, the Inclusive Leader Learning Experience was promoted to people leaders detailing three stages of inclusive leadership: Becoming Aware, Becoming an Ally and Upstander, and Becoming a Change Agent. Our focus this year was on allyship, which was required for all global, salaried people leaders. In addition, we also launched a diversity, equity, and inclusion course through our compliance training for our North America salaried population.
In 2023, the Global Diversity & Inclusion summit continued its focus on development of the inclusive leader behaviors; highlighting our focus this year of allyship.
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Additionally, our corporate citizenship strategy, Sustainable Futures, which was launched in 2021, aims at providing access to science, technology, engineering, and mathematics (STEM) education and career opportunities specifically for people under-represented in our industry, including ethnic minorities and women. This strategy supports our efforts to create opportunity for all by providing underrepresented students with a range of resources, from classroom curriculum that introduces them to careers at a climate innovation company, to soft-skill development for landing a STEM job.
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-weekA seven-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.to their teams.
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 year2.5-year program, while experiencingcompleting 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 aroundDevelopment - We invest in custom, key transition leadership development programs for our high potential talent. We partner with best-in-class external leadership development experts such as INSEAD, Center for Creative Leadership, and the worldNeuroLeadership Institute to gain individual insightsdeliver these programs globally each year. Additionally, we offer our Trane Technologies people leaders learning programs to develop their skills in leading their teams, such as building diverse and skills through mentoringinclusive teams, increasing engagement, 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.coaching skills.
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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Dependent Scholarships - To support learning in our employees' families, we offer $2,500 scholarships to support their dependent children's pursuits beyond high school, whether for a traditional degree, or a trade certification.
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 SexualWorkplace Harassment and Human Trafficking Prevention.Expense Management. All salaried employees globally complete our annual compliance curriculum.
Women’s Leadership Development Programs
The Women in Action Leadership Program is a virtual, self-paced cohort program that provides women with access to content that promotes their leadership development skills.
The Women on the Rise (WOR) program is designed over eight-weeks to help empower, develop, connect and support emerging women leaders.
The Women’s Leadership Program (WLP) is a cohort program for high potential talent that provides an opportunity to network with other senior women leaders, gain individual insights through an executive mentoring partnership and build leadership skills and confidence through a variety of learning components, speakers, experiences and assessments.
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Employee Volunteerism
In 2020, due2023, our employees continued to participate in a variety of volunteer activities. Our global teams made meaningful contributions to their local communities through the restrictionsTrane Technologies Foundation’s existing non-profit relationships, as well as through business and personal affiliations. In Charlotte, NC, some of our Trane Commercial technicians spent days volunteering in the Urban League’s HVAC training class to help equip future technicians with first-hand insights that will get them off to a strong start on their future jobs. In Minneapolis, MN, employees used sustainability lesson plans we developed to teach middle-schoolers about concepts like food loss, green buildings, decarbonization and supply chain logistics to lead thought-provoking in-class lessons. Employees in China took a two-day trek into extremely rural Guizhou province to spend a day introducing STEM educational concepts to under-resourced classrooms. And in Monterrey, MX, teams upfitted a local school with new equipment, paint, and furnishing for their first information technology (IT) lab.
Behind these and other local efforts is a network of 55 Purple Teams comprised of more than 100 local champions who cultivate the spirit of volunteerism and ensure alignment with our strategy. These colleagues span each of our businesses and all of the COVID-19markets where we operate, providing local guidance and inspiration to drive meaningful engagement with communities around the world.
Employee Well-being
Trane Technologies believes employees that can thrive at work, at home and in their communities are our greatest asset. We integrate well-being into our culture through core global pandemic manyresources that support physical, social, emotional, and financial well-being. Several elements of our employees sought out virtual volunteering opportunities, and more than 15,000holistic well-being actions include:
Giving 100% of our people contributed more than 20,000 volunteer hours in supportteam members access to company-sponsored wellness offerings, including a global Employee Assistance Program and a global wellness platform covering an array of building sustainable futures in our communities. Our support for those in need also included our own colleagues support for one another. Due totopics like mindfulness, resiliency, and nutrition.
Offering financial relief through the impacts of the pandemic, we accelerated our employee fundraising efforts and employees donated $1.4 million to our Helping Hand Fund (ourprogram, an employee crisis relief program). These funds provided approximately 1,100funded program created to help associates facing financial hardship immediately after a qualified disaster or an unforeseen personal hardship.
Providing flex time and flex place policies and resources as well as supporting flexible work arrangements, and other approaches to support evolving employee needs.
We recognize the pervasiveness of mental health challenges facing employees with emergency relief grants for themselves and their families. We also developedcontinue efforts to overcome mental health stigmas and promote a new Global Volunteer Timeculture that encourages and supports open discussion about mental health issues. We implemented a global mental health training program providingtargeted towards people leaders and available to all salaried employees a full work day (8 hours) per calendar year to volunteer with non-profit organizations.employees. This program will be piloted for hourly employees at select locations around the world in 2021, with an expected full global implementation in 2022.highlights how to recognize and react to mental health concerns and leverage support resources.
Health, Safety andOur enterprise Mental 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 Hub provides streamlined access to at least one company-sponsored wellness activity.
Accelerating the rollout ofmental health resources and guidance for supporting others. It also leverages 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 receivedprovide frequent communications on resources, targeted to crisis concerns such as mental health, stress & burnout, relationships, 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
OurTrane Technologies’ compensation programs and policies are based on a strong connectiondesigned to align the compensation of our strategy,employees with the Company’s performance and strategy: to attract and retain a talented workforce and to meet the needs of employees globally. We are committed to providing competitive and equitable wages and benefits and equal pay for equal work, regardless of background. We have rigorous pay practices to ensure we compensatethat will allow our employees fairly, equitablyto thrive at work and competitively.at home. In addition, the structure of our incentive compensation programs arebalance incentive earnings for both long-term and short-term performance with our annual incentive plan closely tied to our 2030 Commitments. Beginning in 2021, management incentive compensation will includesustainability commitments, which includes environmental sustainability and workforce diversity goals,and inclusion efforts, in addition to financial goals.
Trane Technologies’ benefit programs and policies are designed to support the well-being of employees and their families. Purpose-driven and locally relevant benefit programs are provided globally. In addition to core and competitive medical, welfare and retirement programs, we offer programs to support work-life balance and deliver benefits access and opportunity to all. Key actions taken in 2023 illustrate this commitment, including:
Introduction of fertility treatment benefits and extension of coverage to domestic partners and their qualified dependents within the Company-sponsored U.S. medical and other benefit plans;
Enhanced family support programs through expanded adoption and surrogacy benefit support as well as inclusive child and elder back-up care programs; and
Introduction of Roth and student debt support features in 401(k) plans to support meaningful retirement saving and overall financial wellbeing.
Our proxy statement provides more detail on the competitive compensation and benefit programs we offer.
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Employee Safety
In 2023, we continued our multi-year, world class safety record with a Lost-time Incident Rate of 0.09 and Recordable Rate below 0.81. We continue to revise and update our safety programs in response to the most meaningful and impactful activities for all global employees. In 2023, this included a global campaign on hand safety which reduced our overall hand injuries within our manufacturing locations and field operations.
We also continue to maintain all our locations globally as tobacco free workplaces.
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 toregarding the COVID-19 global pandemicCompany and/or material non-public information. We encourage investors, the media, and others interested in our Company to review the information it makeswe make public in these locations on itsour 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 havehas 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, 2021.8, 2024.
Name and Age  Date of
Service as
an Executive
Officer
Principal Occupation and
Other Information for Past Five Years
Michael W. Lamach (57)David S. Regnery (61)8/5/20172/16/2004ChairmanChair of the Board (since June 2010) andJanuary 2022); Chief Executive Officer and Director (since February 2010)July 2021); President and Chief Operating Officer (January 2020 to June 2021); Executive Vice President (September 2017 to December 2019)
Christopher J. Kuehn (48)(51)6/1/2015  Executive Vice President and Chief Financial Officer (since July 2021); Senior Vice President and Chief Financial Officer (since March 2020)(March 2020 to June 2021); Vice President and Chief Accounting Officer (June 2015 to February 2020)
David S. Regnery (58)8/5/2017President 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)2/7/2007Executive 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)(62)8/1/2011Executive Vice President, Chief Technology Officer and Sustainability Officer (since January 2024); Executive Vice President and Chief Technology and Strategy Officer (since(January 2020 to January 1, 2020)2024); Senior Vice President, Innovation and Chief Technology Officer (August 2011 to December 2019)
  
Raymond D. Pittard (58)7/1/2021Executive Vice President, Chief Integrated Supply Chain Officer (since January 2024); Executive Vice President, Supply Chain, Engineering and Information Technology (July 2021 to January 2024); Transformation Office Leader (December 2019 to June 2021); Vice President, SBU President of Transport Solutions North America and EMEA (December 2013 to December 2019)
Evan M. Turtz (52)(55)4/3/2019Senior 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)
(54)
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)
Mairéad A. Magner (46)1/6/2022Senior Vice President, Chief Human Resources Officer (since January 2022); Vice President, Global ProcurementTalent and Organization Capability (January 20152018 to October 2015)January 2022)
Donald E. Simmons (52)1/4/2024Group President, Americas (since January 2024); Americas Segment Leader and CHVAC Americas President (January 2022 to December 2023); President, CHVAC Americas (January 2020 to December 2021);Vice President, SBU President of CHVAC North America and EMEA (September 2017 to December 2019)
Heather R. Howlett (43)Mark A. Majocha (52)
3/12/1/20202022
Vice President and Chief Accounting Officer (since March 2020)December 2022); Vice President, and Corporate Controller (August 2019 to February 2020)Finance CHVAC Americas (April 2020-November 2022); Vice President, and Corporate Controller, Catalent, Inc. (2015 to August 2019)Development (July 2018 - April 2020)
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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Item 1A.    RISK FACTORS
Our business, financial condition, results of operations, and cash flows are subject to a number of risks that could cause the actual results and conditions to differ materially from those projected in forward-looking statements contained in this Annual Report on Form 10-K. The risks set forth below are those we consider most significant. We face other risks, however, that we do not currently perceive to be material which could cause actual results and conditions to differ materially from our expectations. You should evaluate all risks before you invest in our securities. If any of the risks actually occur, our business, financial condition, results of operations or cash flows could be adversely impacted. In that case, the trading price of our ordinary shares could decline, and you may lose all or part of your investment.
Risks Related to Economic Conditions
The COVID-19 global pandemic and resulting adverse economic conditions have already adversely impacted our business and could have a more material adverse impact on our business, financial condition and results of operations.
We continue to closely monitor the impact of the COVID-19 global pandemic on all aspects of our business and geographies, including how it has and will impact our customers, team members, suppliers, vendors, business partners and distribution channels. The COVID-19 global pandemic has created significant volatility, uncertainty and economic disruption, which may continue to affect our business operations and may materially and adversely affect our results of operations, cash flows and financial position.
While our business is largely categorized as “essential” by the U.S. Department of Homeland Security, the COVID-19 global pandemic has caused certain disruptions to and shutdowns of our business and operations and could cause material disruptions to and shutdowns of our business and operations in the future as a result of, among other things, quarantines, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions. Our business and operations have been impacted globally, resulting in lower revenue, supply chain delays and unfavorable foreign currency exchange rate movements. The COVID-19 global pandemic has also adversely impacted, and may continue to adversely impact, our suppliers and their manufacturers and our customers. Some of our purchases are from sole or limited source suppliers for reasons of cost effectiveness, uniqueness of design, or product quality. The effects of the COVID-19 global pandemic may exacerbate supply chain issues with these suppliers. Any delay in receiving critical supplies could have a material adverse effect on our results of operations, financial condition and cash flows.
As a result of the effects of the COVID-19 global pandemic, our costs have increased (including the costs to address the health and safety of our employees), our ability to obtain products or services from suppliers has been and may be adversely impacted, and our ability to operate at certain impacted locations has been and may be impacted, and, as a result, our business, financial condition and results of operations have been adversely impacted and could be materially adversely affected if the current outbreak and spread of the COVID-19 global pandemic continues.
The COVID-19 global pandemic also resulted in severe disruptions and volatility in financial markets which had a material adverse impact on some of our customers and suppliers. A recurrence in volatility due to a resurgence in the COVID-19 global pandemic could impact our access to capital and credit markets. Notwithstanding the recent introduction of vaccines to combat the COVID-19 global pandemic and measures taken by governments to provide economic stimulus, the severity of the pandemic’s impact on economies in the United States and around the world, the potential length of the economic recovery and the longer term economic impacts are uncertain. The current and potential further outbreaks and spread of the COVID-19 global pandemic or other future pandemics could cause a delayed recovery, a prolonged recession or future economic disruptions, which could have a further adverse impact on our financial condition and operations.
The impact of the COVID-19 global pandemic may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us. This situation is continuing to evolve rapidly and additional impacts may arise that we are not aware of currently.
Our global operations subject us to economic risks.
Our global operations are dependent upon products manufactured, purchased and sold in the U.S. and internationally. These activities are subject to risks that are inherent in operating globally, including:
changes in local laws and regulations orincluding potential imposition of currency restrictions, new or changing tax laws, variations in monetary policies, and other restraints;
limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to repatriate earnings;
sovereign debt crises and currency instability in developed and developing countries;
trade protection measures such as import or export restrictions and requirements, the imposition of burdensome tariffs and quotas or revocation or material modification of trade agreements;
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difficulty in staffing and managing global operations;operations including supply chain disruptions which may be exacerbated by pandemics or other public health crises, natural disasters, or other events affecting the supply of labor, materials and components;
difficulty of enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems;
national and international conflict, including war, civil disturbances and terrorist acts; and
recessions, economic downturns, price instability, slowing economic growth and social and political instability.
These risks could increase our cost of doing business internationally, increase our counterparty risk, disrupt our operations, disrupt the ability of suppliers and customers to fulfill their obligations, limit our ability to sell products in certain markets and have a material adverse impact on our results of operations, financial condition, and cash flows.
Commodity and raw material shortages, supply chain risks and price increases could adversely affect our financial results.
We rely on suppliers to secure commodities, particularly steel and non-ferrous metals, and third-party parts and components required for the manufacture of our products. A disruption in deliveries from our suppliers or decreased availability of commodities and third-party parts and components could have an adverse effect on our ability to meet our commitments to customers, increase our operating costs, or impact timing and delivery of products and services. Disruptions have occurred due to the COVID-19 pandemic, geopolitical events, electronic parts shortages, supplier capacity constraints, labor shortages, port congestion, logistical problems, political unrest, and other issues. Some of these disruptions have resulted in supply chain constraints affecting our business including our ability to timely produce and ship our products. The unavailability of some commodities and third-party parts and components could have a material adverse impact on our results of operations and cash flows.
Volatility in the prices of commodities and third-party parts and components or the impact of inflationary increases could increase the costs of our products and services. We may not be able to pass on these costs to our customers and this could have a material adverse impact on our results of operations and cash flows. Conversely, in the event there is deflation, we may experience pressure from our customers to reduce prices. There can be no assurance that we would be able to reduce our costs (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact results of operations and cash flows. While we use financial derivatives or supplier price locks to partially hedge against this volatility, by using these instruments we may potentially forego the benefits that might result from favorable fluctuations in prices and could experience lower margins in periods of declining commodity prices. In addition, while hedging activity may minimize near-term volatility of the commodity prices, it would not protect us from long-term commodity price increases.
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Some of our purchases are from sole or limited source suppliers for reasons of cost effectiveness, uniqueness of design, or product quality. If these suppliers encounter financial or operating difficulties, we might not be able to quickly establish or qualify replacement sources of supply.
We face significant competition in the markets that we serve.
The markets that we serve are highly competitive. We compete worldwide with a number of other manufacturers and distributors that produce and sell similar products. There has been consolidation and new entrants (including non-traditional competitors) within our industries and there may be future consolidation and new entrants which could result in increased competition and significantly alter the dynamics of the competitive landscape in which we operate. Due to our global footprint we are competing worldwide with large companies and with smaller, local operators who may have customer, regulatory or economic advantages in the geographies in which they are located. In addition, some of our competitors may employ pricing and other strategies that are not traditional. While we understand our markets and competitive landscape, there is always the risk of disruptive technologies coming from companies that are not traditionally manufacturers or service providers of our products. As we integrate acquisitions into our portfolio of solutions, we may face new competitors in our target markets. We must continually innovate new or enhanced products and services to maintain and expand our brand recognition and market leadership position to effectively compete in the markets that we serve. A failure or inability to effectively address market trends and compete in our market may adversely affect demand for our products and services, which may cause a material adverse effect on our financial condition.
Our growth is dependent, in part, on the timely development, commercialization and acceptance of new and enhanced products and services.
We must efficiently and effectively innovate, develop and commercialize new and enhanced products and services in a rapidly changing technological and business environment in order to remain competitive in our current and future markets and in order to continue to grow our business. The timely development and commercialization of new products and services requireand the enhancement of existing products and services is required to meet our customer demands, market trends, and regulatory requirements. The ongoing refreshment of our product and service offerings portfolio requires strategic choices of a significant investment of resources, and an anticipation of the impactopportunity and risks of new technologies, and the ability to compete with others who may have superior resources in specific technology domains. We cannot provide any assurance that any new or enhanced product or service will be successfully commercialized in a timely manner, if ever, or, if commercialized, will result in returns greater than our investment. Investment in a product or service could divert our attention and resources from other projects that become more commercially viable in the market. We also cannot provide any assurance that any new or enhanced product or service will be accepted by our current and future markets. Failure to timely and accurately predict customer needs and preferences, anticipate regulatory conditions affecting current and future products, mitigate supply chain disruptions on new products, or our failure to develop new and enhanced products and services that are accepted by these markets could have a material adverse impact on our competitive position, results of operations, financial condition, and cash flows.
Some of the markets in which we operate are cyclicalCapital and seasonal and demand for our products and servicescredit market conditions could be adversely affected by downturns in these industries.
Demand for most of our products and services depends on the level of new capital investment and planned maintenance expenditures by our customers. The level of capital expenditures by our customers fluctuates based on planned expansions, new builds, repairs, commodity prices, general economic conditions, availability of credit, inflation, interest rates, market forecasts, tax and regulatory developments, trade policies, fiscal spending and sociopolitcal factors among others.
Our commercial and residential HVAC businesses provide products and services to a wide range of markets, including significant sales to the commercial and residential construction markets. Weakness in either or both of these construction markets may negatively impact the demand for our products and services.
Demand for our commercial and residential HVAC business is also 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, in the U.S. and other northern hemisphere markets, spring and summer are the peak seasons for sales of air conditioning systems and services. The 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 our business operations, investments, and impact overall results of operations.
Decrease in the demand for our products and services could have a material adverse impact on our results of operations and cash flow.
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The capital and credit markets are important to our business.financial performance.
Instability in U.S. and global capital and credit markets, including market disruptions, limited liquidity and interest rate volatility, or reductions in the credit ratings assigned to us by independent rating agencies could reduce our access to capital markets or increase the cost of funding our short and long term credit requirements. In particular, if we are unable to access capital and credit markets, or access them on terms that are acceptable to us, we may not be able to make certain investments or fully execute our business plans and strategies. If we were to raise funding through the issuance of equity securities, our shareholders would experience dilution of their existing ownership interest. If we were to raise significant additional funds by issuing debt, we could be subject to limitations on our operations due to restrictive covenants or rating agencies could downgrade our credit ratings or put them on negative watch.
Our suppliers and customers are also dependent upon the capital and credit markets. Limitations on the ability of customers, suppliers or financial counterparties to access credit at interest rates and on terms that are acceptable to them could lead to insolvencies of key suppliers and customers, limit or prevent customers from obtaining credit to finance purchases of our products and services and cause delays in the delivery of key products from suppliers.
In addition, changes in regulatory standards or industry practices, such asThe performance of the transition away from LIBOR as a benchmark for short-termfinancial markets and interest rates could create incremental uncertaintycan also impact the value of our defined benefit pension plans and other post-retirement benefit programs. Significant decreases in obtaining financingdiscount rate or investment losses on plan assets may increase the costour funding obligations, which may adversely affect our financial results. See Note 11 – “Pensions and Postretirement Benefits Other Than Pensions.”
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Currency exchange rate fluctuations and other related risks may adversely affect our results.
We are exposed to a variety of market risks, including the effects of changes in currency exchange rates. See Part II Item 7A, "Quantitative“Quantitative and Qualitative Disclosure About Market Risk."
We have operations throughout the world that manufacture and sell products in various international markets. As a result, we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other currencies throughout the world.
Many of our non-U.S. operations have a functional currency other than the U.S. dollar, and their results are translated into U.S. dollars for reporting purposes. Therefore, our reported results will be higher or lower depending on the weakening or strengthening of the U.S. dollar against the respective foreign currency. Decreased strength of the U.S. dollar could also adversely affect the cost of raw materials, products, or services that we purchase from non-U.S. suppliers.
We use derivative instruments to partially hedge those material exposures that cannot be naturally offset. The instruments utilized are viewed as risk management tools and are not used for trading or speculative purposes. To minimize the risk of counter partycounterparty non-performance, derivative instrument agreements are made only through major financial institutions with significant experience in such derivative instruments.
We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation.
Changes in U.S. or foreign trade policies and other factors beyond our control may adversely impact our business and operating results
Changes in governmental policies on foreign trade, geopolitical tensions and trade disputes can disrupt supply chains and increase the cost of our products. This could cause our products to be more expensive for customers, which could reduce the demand for or attractiveness of such products. In addition, a geopolitical conflict in a region where we operate could disrupt our ability to conduct business operations in that region. Beyond tariffs and sanctions, countries also could adopt other measures, such as controls on imports or exports of goods, technology, or data, which could adversely affect our operations and supply chain and limit our ability to offer our products and services as intended. These kinds of restrictions could be adopted with little to no advanced notice, and we may not be able to effectively mitigate the adverse impacts from such measures. Political uncertainty surrounding trade or other international disputes also could have a negative impact on customer confidence and willingness to spend money, which could impair our future growth.
World geopolitical conflict, including the Russia Ukraine conflict, has created a humanitarian crisis, materially impacted economic activities, and may materially impact our global and regional operations.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Governments including the U.S., United Kingdom, and those of the European Union have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia which has triggered retaliatory sanctions by the Russian government and its allies. The outcome and future impacts of the conflict remain highly uncertain, continue to evolve and may grow more severe the longer the military action and sanctions remain in effect. Risks associated with the Russian-Ukrainian conflict, as well as other world geopolitical conflicts that have arisen or could arise in the future, include, but are not limited to, adverse effects on political developments and on general economic conditions, including inflation and consumer spending; disruptions to our supply chains; disruptions to our information systems, including through network failures, malicious or disruptive software, or cyberattacks; trade disruptions; energy shortages or rationing that may adversely impact our manufacturing facilities and consumer spending, particularly in Europe; rising fuel and/or rising costs of producing, procuring and shipping our products; our exposure to foreign currency exchange rate fluctuations; and constraints, volatility or disruption in the financial markets.
When Russia invaded Ukraine in February 2022, we immediately halted new orders and shipments into and out of Russia and Belarus. As of December 31, 2022, we had exited all business activity within these markets. To date, the Russia-Ukraine war has not had a material adverse effect on our business or financial performance.
We have no way to predict the progress or outcome of the situation in Ukraine. Until there is a peaceful resolution, the conflict could have a material adverse effect on our operations, results of operations, financial condition, liquidity, growth prospects and business outlook.
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The full extent to which a resurgence of COVID-19, a new pandemic, or spread of new infectious diseases or other public health crises will affect us will depend on future developments that are highly uncertain and cannot be accurately predicted.
The COVID-19 pandemic has had widespread, rapidly evolving and unpredictable impacts on global society, economics, financial markets and business practices. Government efforts to contain COVID-19 have included travel bans and restrictions, quarantines, shelter in place orders and shutdowns. Our business and global operations have been impacted by supply chain delays, higher material costs and product prices, lower revenues for some quarters, and unfavorable foreign currency exchange rates. The COVID-19 pandemic has also at times affected our ability to obtain needed products and services, operate in certain locations, maintain our distribution channels, and attract and retain talent. We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it has and will impact our customers, team members, suppliers, vendors, business partners and distribution channels.
The extent to which COVID-19 or other widespread outbreaks of infectious disease or other public health crises may impact our business going forward will depend on factors such as the duration and scope of infections; governmental, business, and individuals' actions in response to the health crisis; travel and other restrictions; and the impact on economic activity including the possibility of financial market instability or recession. How a resurgence of COVID-19 or other public health crises will affect us will depend on future developments that are highly uncertain and cannot be accurately predicted. Such events may also exacerbate other risks discussed herein, any of which could have a material adverse effect on us.
Risks Related to Litigation
Material adverse legal judgments, fines, penalties or settlements could adversely affect our results of operations or financial condition.
We and certain of our subsidiaries are currently and may in the future become involved in legal and regulatory proceedings and disputes incidental to the operation of our business or the business operations of previously-owned entities. Our business may be adversely affected by the outcome of these proceedings and other contingencies (including, without limitation, contract claims or other commercial disputes, product liability, product defects, environmental matters, and asbestos-related matters) that cannot be predicted with certainty. Moreover, any insurance or indemnification rights that we may have may be insufficient or unavailable to protect us against the total aggregate amount of losses sustained as a result of such proceedings and contingencies. As required by generally accepted accounting principles in the United States, we establish reserves based on our assessment of contingencies. Subsequent developments in legal proceedings and other events could affect our assessment and estimates of the loss contingency recorded as a reserve and we may be required to make additional material payments, which could have a material adverse impact on our liquidity, results of operations, financial condition, and cash flows. See also Part I, Item 3, “Legal Proceedings,” and Part II, Item 8, Consolidated Financial Statements Note 20, “Commitments and Contingencies.”
The Aldrich and Murray Chapter 11 cases involve various risks and uncertainties that could have a material effect on us.
On June 18, 2020, ourOur indirect wholly-owned subsidiaries Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray)have each filed a voluntary petition for reorganization under Chapter 11 of Title 11 the United StatesBankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Western District of North Carolina in Charlotte (the Bankruptcy Court).Court. The goal of these Chapter 11 filings is an efficientto resolve equitably and permanent resolution ofpermanently all current and future asbestosasbestos-related claims in a manner beneficial to claimants, Aldrich and Murray through court approval of a plan of reorganization whichthat would establish, in accordance withcreate a trust pursuant to section 524(g) of the Bankruptcy Code, aestablish claims resolution procedures for all current and future asbestos-related claims against Aldrich and Murray and channel such claims to the trust to pay all asbestos claims.for resolution in accordance with those procedures. 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.
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Certain of our subsidiaries have entered into funding agreements with Aldrich and Murray (collectively the Funding Agreements), pursuant to which those subsidiaries are obligated, among other things, to fund 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.February 8, 2024.
There are a number of risks and uncertainties associated with these Chapter 11 cases, including, among others, those related to:
the ultimate determinationability to consummate the agreement in principle reached with the court appointed legal representative of thefuture asbestos liability of Aldrich and Murray to be satisfied under a Chapter 11 plan;claimants (the FCR);
the outcome of negotiations with the committee ofrepresenting current asbestos personal injury claimants appointed in the Chapter 11 cases, the future claimants' representative appointed in the Chapter 11 cases(ACC) and other participants in the Chapter 11 cases, including insurers, concerning among other things,the terms of a plan of reorganization, including the size and structure of a potential section 524(g) trust to pay the asbestos liability of Aldrich and Murray and the means for funding that trust;trust, and the risk that the ACC will object to, and the risk that insurers will not support, a plan of reorganization having terms acceptable to Aldrich and Murray;
the actions of representatives of the asbestos claimants, including opposition to the extensionACCs pursuit of certain causes of action against us, following the Bankruptcy Courts grant of the Bankruptcy Court order temporarily staying asbestos-related claims against usACCs motion seeking standing to investigate and pursue certain causes of action at a hearing held on January 27, 2022, and other potential actions by the ACC in
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opposition to, or otherwise inconsistent with, the efforts by Aldrich and Murray to diligently prosecute the Chapter 11 cases and ultimately seek Bankruptcy Court approval of a plan of reorganization;
the decisions of the Bankruptcy Court relating to numerous substantive and procedural aspects of the Chapter 11 case,cases, including in connection with regarda proceeding by Aldrich and Murray to the extension ofestimate their aggregate liability for asbestos claims, following the Bankruptcy Court order temporarily staying asbestos-related claims against uss grant of their motion seeking such a proceeding, and other efforts by Aldrich and Murray to diligently prosecute the Chapter 11 cases and ultimately seek Bankruptcy Court approval of a plan of reorganization, whether such decisions are in response to actions of representatives of the asbestos claimants or otherwise;
the ultimate determination of the asbestos liability of Aldrich and Murray to be satisfied under a plan of reorganization pursuant to the court-approved estimation proceeding;
the ability of Aldrich and Murray to obtain the necessary approvals of the Bankruptcy Court or the United States District Court for the Western District of North Carolina (the District Court) of a plan of reorganization;
the decisions of the appellate courts regarding approvalany orders of the Bankruptcy Court or the District Court that may be appealed, including the Bankruptcy Court's order dated December 28, 2023 denying the motions to dismiss the Chapter 11 cases brought by the ACC and certain individual claimants and any orders of the Bankruptcy Court or District Court approving a plan of reorganization;
any orders approving a plan of reorganization and issuing the channeling injunction not becoming final and non-appealable;
the terms and conditions of any plan of reorganization that is ultimately confirmed in the Chapter 11 cases;
delays in the confirmation or effective date of a plan of reorganization or relatingdue to ordersfactors beyond the Company’s control; and
the risk that the ultimate amount required under any final plan of reorganization may exceed the Bankruptcy Court that may be appealed.amounts agreed to with the FCR in the Plan.
The ability of Aldrich and Murray to successfully reorganize and resolve their asbestos liabilities will depend on various factors, including their ability to reach agreements with representatives of the asbestos claimants on the terms of a plan of reorganization that satisfies all applicable legal requirements and to obtain the requisite court approvals of such plan, and remains subject to the risks and uncertainties described above. We cannot ensure that Aldrich and Murray can successfully reorganize, nor can we give any assurances as to the amount of the ultimate obligations under the Funding Agreements or any plan of reorganization, or the resulting impact on our financial condition, results of operations or future prospects. We also are also unable to predict the timing of any of the foregoing matters or the timing for a resolution of the Chapter 11 cases, all of which could have an impact on us.
It also is possible that, in the Chapter 11 cases, various parties will seek to bringbe successful in bringing claims against us and other related parties, including by successfully challenging the 2020 corporate restructuring, consolidating entities and/or raising allegations that we are liable for the asbestos-related liabilities of Aldrich and Murray.Murray as set forth in certain pleadings filed by the ACC in the Chapter 11 cases. Although we believe we have no such responsibility for liabilities of Aldrich and Murray, except indirectly through our obligation to provide funding to Aldrich and Murray under the terms of the Funding Agreements, we cannot provide assurances that such claims will not be pursued.successful.
In sum, the outcome of the Chapter 11 cases is uncertain and there is uncertainty as to what extent we may have to contribute to a section 524(g) trust under the Funding Agreements.
For detailed information on the bankruptcy cases of Aldrich and Murray, see Part I, Item 1, “Business - Asbestos-Related Matters,” Part I, Item 3, “Legal Proceedings,” Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations - Significant Events,” and Part II, Item 8, Consolidated Financial Statements, Note 1, “Description of Company,” and Note 20, “Commitments and Contingencies.”
Risks Related to Cybersecurity and Technology
We are subject to risks relating to our information technology systems.
We rely extensively on information technology systems, some of which are supported by third party vendors including cloud services,cloud-based systems and managed service providers, to manage and operate our business. We invest in new information technology systems designed to improve our operations. We have hadThese information technology systems can be damaged, disrupted or shut down due to cyberattacks, computer viruses, ransomware, human error or malfeasance (including by employees), power outages,
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hardware failures, of these systems in the past and may havetelecommunication or utility failures, of these systems in the future.catastrophes or other unforeseen events. If these systems cease to function properly, if these systems experience security breaches or disruptions or if these systems do not provide the anticipated benefits or if we are unable to commit sufficient resources to maintain and enhance our information technology infrastructure to keep pace with continuous development in information processing technology, our ability to manage our operations could be impaired, which could have a material adverse impact on our results of operations, financial condition, and cash flows.
Security breaches or disruptions of the technology systems, infrastructure or products of the Company or our vendors could negatively impact our business and financial results.
Our information technology systems, networks and infrastructure and technology embedded in certain of our control products have been and may be subjectare at risk to cyber attacks and unauthorized security intrusions. It is possible for suchFrom time to time, vulnerabilities in our products are discovered and updates are made available, but customers are at risk until those updates are applied or other mitigating actions are taken by customers to remain undetected for an extended period.protect their systems and networks. Like other large companies, certain of our information technology systems and the systems of our vendors have been subject to computer viruses, malicious code, unauthorized access, phishing attempts, denial-of-service attacks and other cyber attacks and we expect that we and our vendors will be subject to similar attacks in the future.
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our third-party suppliers have experienced cyber-based attacks, and, due to the evolving threat landscape, may continue to experience attacks, potentially with more frequency and severity. We continue to make investments and adopt measures designed to enhance our protection, detection, response, and recovery capabilities, and to mitigate potential risks to our technology, products, services and operations from potential cyber-attacks.
The methods used to obtain unauthorized access, disable or degrade service, or sabotage information technology systems are constantly changing and evolving. Despite having instituted security policies and business continuity plans, and implementing and regularly reviewing and updating processes and procedures to protect against unauthorized access and requiring similar protections from our vendors, the ever-evolving threats mean we mustare continually evaluateevaluating and adaptadapting our systems and processes and ask our vendors to do the same, and there is no guarantee that such stepssystems and processes will be adequate to safeguard against all data security breaches or misuses of data. Hardware, software or applications we develop or obtain from third parties maysometimes contain defects in design or deployment or other problems that could unexpectedly result in security breaches or disruptions. Open source software components embedded into certain software that we use has in the past contained vulnerabilities and others may be discovered in the future. Such vulnerabilities can expose our systems to malware or allow third party access to data. While these issues are not specific to our Company, we are required to take action when such vulnerabilities are identified including patching and modification to certain of our products and enterprise systems. To date, there has been no material business impact from such vulnerabilities, but we continue to monitor these issues and our responses are ongoing. Our systems, networks and certain of our control products and those of our vendors may also be vulnerableare at risk to system damage, malicious attacks from hackers, employee errors or misconduct, viruses, power and utility outages, and other catastrophic events. Any of these incidents could cause significant harm to our business by negatively impacting our business operations, compromising the security of our proprietary information or the personally identifiable information of our customers, employees and business partners exposingwhich may be subject to privacy and security laws, regulations and other controls. These events potentially expose us to litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities. Such events could have a material adverse impact on our results of operations, financial condition and cash flows and could damage our reputation which could adversely affect our business. Our insurance coverage may not be adequate to cover all the costs related to a cybersecurity attack or disruptions resulting from such attacks. Customers are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our products, and we may incur additional costs to comply with such demands.
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Data privacy and protection laws are evolving and present increasing compliance challenges.
The regulatory environment surrounding data privacy and protection is increasingly demanding, with the frequent imposition of new and changing requirements across businesses and geographic areas. We are required to comply with complex regulations when collecting, transferring and using personal data, which increases our costs, affects our competitiveness and can expose us to substantial fines or other penalties.
Intellectual property infringement claims of others and the inability to protect our intellectual property rights could harm our competitive position.
Our intellectual property (IP) 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 patents and/or licenses.
Nonetheless, this intellectual property may be subject to challenge, infringement, invalidation or circumvention by third parties. Despite extensive security measures, our intellectual property may be subject to misappropriation through unauthorized access of our information technology systems, employee theft, or theft by private parties or foreign actors, including those affiliated with or controlled by state actors. Our business and competitive position could be harmed by such events. Our ability to protect our intellectual property rights by legal recourse or otherwise may be limited, particularly in countries where laws or enforcement practices are inadequate or undeveloped. Our inability to enforce our IP rights under any of these circumstances could have an impact on our competitive position and business.
Risks Related to Regulatory Matters
Our reputation, ability to do business and results of operations could be impaired by improper conduct by any of our employees, agents or business partners.
We are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and policies, including laws related to anti-corruption, anti-human trafficking, anti-bribery, export and import compliance, anti-trust, cybersecurity, data privacy, and money laundering, due to our global operations. We cannot provide assurance our internal controls will always protect us from the improper conduct of our employees, agents and business partners. Any violations of law or improper conduct could damage our reputation and, depending on the circumstances, subject us to, among other things, civil and criminal penalties, material fines, equitable remedies (including profit disgorgement and injunctions on future conduct), securities litigation and a general loss of investor confidence, any one of which could have a material adverse impact on our business prospects, financial condition, results of operations, cash flows, and the market value of our stock.
Our operations are subject to regulatory risks.
Our U.S. and non-U.S. operations are subject to a number of laws and regulations, including among others, laws related to the environment, commercial trade, and health and safety. We have made, and will be required to continue to make, significant expenditures to comply with these laws and regulations. Any violations of applicable laws and regulations could lead to significant penalties, fines or other sanctions. Changes in current laws and regulations could require us to increase our compliance expenditures, cause us to
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significantly alter or discontinue offering existing products and services or cause us to develop new products and services. Altering current products and services or developing new products and services to comply with changes in the applicable laws and regulations could require significant research and development investments, increase the cost of providing the products and services and adversely affect the demand for our products and services. The U.S. federal government and various states and municipalities have enacted or may enact legislation intended to deny government contracts to U.S. companies that reincorporate outside of the U.S. or have reincorporated outside of the U.S or may take other actions negatively impacting such companies. If we are unable to effectively respond to changes to applicable laws and regulations, interpretations of applicable laws and regulations, or comply with existing and future laws and regulations, our competitive position, results of operations, financial condition and cash flows could be materially adversely impacted.
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Global climate change and related regulations could negatively affect our business.
Climate change presents immediate and long-term risks to our Company and to our customers, with the risks expected to increase over time, including, among others, acute physical risks (such as flooding, hurricanes, or wildfires) or chronic physical risks (such as droughts, heat waves, or sea level changes). Our products and operations are subject to and affected by environmental regulation by federal, state and local authorities in the U.S. and regulatory authorities with jurisdiction over our international operations, including with respect to the use, storage, and dependence upon refrigerants which are considered greenhouse gases. Refrigerants are essential to many of our products and there is concern regarding the global warming potential of such materials. As such, national, regional and international regulations and policies are being implemented to curtail their use.the use of certain refrigerants. Some of these regulations could have a negative competitive impact on our company by requiring us to make costly changes to our products. As regulations reduce the use and potential availability of the current class of widely used refrigerants, we are developing and selling our next generation solutions are being adopted globally, with sales in more than 30 countries to date. Our climate commitment requires us to offer a full line of next generation,products that utilize lower global warming potential products by 2030 without compromising safety or energy efficiency. Additionally, while we met our commitment to reduce energy consumption and the greenhouse gas footprint of our operations by 35 percent by 2020, on a normalized basis, our 2030 commitment requires a much more stringent absolute energy use reduction by 10 percent. While we are committed to pursuing these sustainability objectives, theresolutions. There can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposedclimate change or environmental regulation or deregulation will not have a negative competitive impact on our ability to sell our products or that economic returns will match the investment that we are making in new product development.
Concerns regarding global We face increasing complexity related to product design, the availability and use of regulated materials, the associated energy consumption and efficiency related to the use of products, the transportation and shipping of products, climate change have resulted inregulations, and the Kigali amendmentreuse, recycling and/or disposal of products and their components at end-of-use or useful life as we adjust to the Montreal Protocol, pursuantnew and future requirements relating to which countries have agreedour transition to a scheduled phase down of certain high global warming potential refrigerants. Countries may pass regulations that are even more restrictive than this international accord. Some countries, including the U.S., have not yet ratified the amendment, lowering customer demand for next generation products in these countries.circular economy. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Such regulatory uncertainty extends to future incentives for energy efficient buildings and vehicles and costs of compliance, which may impact the demand for our products, obsolescence of our products and our results of operations.
Our climate commitment requires us to offer a full line of next generation products by 2030 without compromising safety or energy efficiency. Additionally, in 2019, we announced our 2030 commitment which targets reducing one gigaton – one billion metric tons – of carbon emissions (CO2e) from our customers’ footprint by 2030. While we are committed to pursuing these sustainability objectives, there can be no assurance that we will successfully achieve our commitments. Failure to meet these commitments could result in reputational and other harm to our company. Changes regarding climate risk management and practices may result in higher regulatory, compliance risks and costs.
Risks Related to Our Business Operations
Commodity shortages and price increases could adversely affect our financial results.
We rely on suppliers to secure commodities, particularly steel and non-ferrous metals, required for the manufacture of our products. A disruption in deliveries from our suppliers or decreased availability of commodities could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. We believe that available sources of supply will generally be sufficient for our needs for the foreseeable future. Nonetheless, the unavailability of some commodities could have a material adverse impact on our results of operations and cash flows.
Volatility in the prices of these commodities or the impact of inflationary increases could increase the costs of our products and services. We may not be able to pass on these costs to our customers and this could have a material adverse impact on our results of operations and cash flows. Conversely, in the event there is deflation, we may experience pressure from our customers to reduce prices. There can be no assurance that we would be able to reduce our costs (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact results of operations and cash flows. While we may use financial derivatives or supplier price locks to hedge against this volatility, by using these instruments we may potentially forego the benefits that might result from favorable fluctuations in prices and could experience lower margins in periods of declining commodity prices. In addition, while hedging activity may minimize near-term volatility of the commodity prices, it would not protect us from long-term commodity price increases.
Some of our purchases are from sole or limited source suppliers for reasons of cost effectiveness, uniqueness of design, or product quality. If these suppliers encounter financial or operating difficulties, we might not be able to quickly establish or qualify replacement sources of supply.
Our business strategy includes acquiring companies, businesses, product lines, technologies and capabilities, plants and other assets, entering into joint ventures and making investments that complement our existing businesses. We also occasionally divest businesses that we own. We may not identify acquisition or joint venture candidates or investment opportunities at the same rate as the past. Acquisitions, dispositions, joint ventures and investments that we identify could be unsuccessful or consume significant resources, which could adversely affect our operating results.
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We continue to analyze and evaluate the acquisition and divestiture of strategic businesses and product lines, technologies and capabilities, plants and other assets, joint ventures and investments with the potential to, among other things, strengthen our industry position, to enhance our existing set of product and services offerings, to increase productivity and efficiencies, to grow revenues, earnings and cash flow, to help us stay competitive or to reduce costs. There can be no assurance that we will identify or successfully complete transactions with suitable candidates in the future, that we will consummate these transactions at rates similar to the past or that completed transactions will be successful. Strategic transactions may involve significant cash expenditures, debt incurrence, operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows. Such transactions involve numerous other risks, including:
diversion of management time and attention from daily operations;
difficulties integrating acquired businesses, technologies and personnel into our business, including doing so without high costs;
difficulties in obtaining and verifying the financial statements and other business and other due diligence information of acquired businesses;
inability to obtain required regulatory approvals and/or required financing on favorable terms;
potential loss of key employees, key contractual relationships or key customers of either acquired businesses or our business;
assumption of the liabilities and exposure to unforeseen or undisclosed liabilities of acquired businesses and exposure to regulatory sanctions;
inheriting internal control deficiencies;
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dilution of interests of holders of our common shares through the issuance of equity securities or equity-linked securities; and
in the case of joint ventures and other investments, interests that diverge from those of our partners without the ability to direct the management and operations of the joint venture or investment in the manner we believe most appropriate to achieve the expected value.
Any acquisitions, divestitures, joint ventures or investments may ultimately harm our business, financial condition, results of operations and cash flows. There are additional risks related to our Reverse Morris Trust transaction, see page 15 under "RisksPart IA, Item 1A, Risk Factors - Risks Related to the Transactions"Transactions for more information.
We may be required to recognize impairment charges for our goodwill and other indefinite-lived intangible assets.
At December 31, 2020, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled $5.3 billion and $2.6 billion, respectively. In accordance with generally accepted accounting principles, we assess these assets annually during the fourth quarter for impairment or when there is a significant change in events or circumstances that indicate that the fair value of an asset is more likely than not less than the carrying amount of the asset. Significant negative industry or economic trends, disruptions to our business, unexpected significant changes or planned changes in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact on our results of operations in the periods recognized.
Natural disasters, epidemics or other unexpected events may disrupt our operations, adversely affect our results of operations and financial condition, and may not be fully covered by insurance.
The occurrence of one or more unexpectedcatastrophic events including hurricanes, fires, earthquakes, floods and other forms of severe weather, health epidemics or pandemics or other contagious outbreaks or other unexpectedcatastrophic events, including wars, conflicts, or terrorism in the U.S. or in other countries in which we operate or are located could adversely affect our operations and financial performance. Natural disasters, power outages, health epidemics or pandemics or other contagious outbreaks or other unexpected events, including wars, conflicts, or acts of terrorism, could result in physical damage to and complete or partial closure of one or more of our plants, temporary or long-term disruption of our operations by causing business interruptions, material scarcity, price volatility or by impacting the availabilitysupply chain disruptions. Climate change is a risk multiplier with respect to these physical disasters in both frequency and cost of materials needed for manufacturing.severity and may affect our global business operations as a result. Existing insurance arrangements may not provide full protection for the costs that may arise from such events, particularly if such events are catastrophic in nature or occur in combination. The occurrence of any of these events could increase our insurance and other operating costs or harm our sales in affected areas.
Our business success depends on attracting, developing, and retaining highly qualified talent.
The skills, experience, and industry knowledge of our employees significantly benefit our operations and performance. The market for employees and leaders with certain skills and experiences is very competitive, and difficulty attracting, developing, and retaining members of our management team and key employees could have a negative effect on our business, operating results, and financial condition. Maintaining a positive and inclusive culture and work environment, offering attractive compensation, benefits, and development opportunities, and effectively implementing processes and technology that enable our employees to work effectively and efficiently are important to our ability to attract and retain employees.
Our business may be adversely affected by temporary work stoppages, union negotiations, labor disputes and other matters associated with our labor force.
Certain of our employees are covered by collective bargaining agreements or works councils. We experience from time to timetime-to-time temporary work stoppages, union negotiations, labor disputes and other matters associated with our labor force and some of these events
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could result in significant increases in our cost of labor, impact our productivity or damage our reputation. Additionally, a work stoppage at one of our suppliers could materially and adversely affect our operations if an alternative source of supply were not readily available. Stoppages by employees of our customers could also result in reduced demand for our products.
Risks Relating to Tax Matters
Changes in tax or other laws, regulations or treaties, changes in our status under U.S. or non-U.S. laws or adverse determinations by taxing or other governmental authorities could increase our tax burden or otherwise affect our financial condition or operating results, as well as subject our shareholders to additional taxes.
The realization of any tax benefit related totaxes associated with our operations and corporate structure could be impacted by changes in tax or other laws, treaties or regulations or the interpretation or enforcement thereof by the U.S. or non-U.S. tax or other governmental authorities. Enacted comprehensiveEven after legislation is enacted, further guidance, regulations and technical corrections pertaining to the legislation continue to be issued by the tax reform legislationauthorities, some of which may have retroactive application. We continue to monitor and review new guidance and regulations as they are issued, as any changes could have a material adverse effect on our financial statements. In addition, governmental authorities are actively engaged in December 2017 known as the Tax Cuts and Jobs Act (the Act) made broad and complexformulating new legislative proposals. Any future legislative changes to the U.S. tax code. As partlaws and judicial or regulatory interpretation thereof, the geographic mix of the migration from a worldwide system of taxation to a modified territorial system for corporations, the Act imposed a transition tax on certain unrepatriated earnings, of non-U.S. subsidiarieschanges in overall profitability, and an additional annual U.S. tax on the earnings of certain non-U.S. subsidiaries. The Actother factors could also imposed new and substantial limitations on, and/or the elimination of, certain tax deductions (including interest) and credits (including foreign tax credits) that could adverselymaterially impact our effective tax rate or operating cash flows.rate.
Notwithstanding this change in U.S. tax law, we
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We continue to monitor for other tax changes, U.S. (including state and local) and non-U.S. related, which can also adversely impact our overall tax burden. From time to time, proposals have been made and/or legislation has been introduced to change the tax laws, regulations or interpretations thereof of various jurisdictions or limit tax treaty benefits that if enacted or implemented could materially increase our tax burden and/or effective tax rate and could have a material adverse impact on our financial condition and results of operations. Moreover, the Organisation for Economic Co-operation and Development (OECD) has released proposals to create an agreed set of international rules for fighting base erosion and profit shifting, including Pillar One and Pillar Two, such that tax laws in countries in which we do business could change on a prospective or retroactive basis, and any such changes could adversely impact us. Finally,On December 12, 2022, the European Union (EU) Member States agreed in principle on the introduction of a global minimum tax rate (proposed 15% minimum tax rate). On December 18, 2023, Ireland enacted laws related to this minimum tax, effective January 1, 2024. We are continuing to evaluate the potential impacts of proposed and enacted legislative changes, in Ireland and elsewhere. We anticipate an increase to our global effective tax rate related to these changes.
In addition to the above, the European Commission has been very active in investigating whether various tax regimes or private tax rulings provided by a country to particular taxpayers may constitute State Aid. We cannot predict the outcome of any of these potential changes or investigations in any of the jurisdictions, but if any of the above occurs and impacts us, this could materially increase our tax burden and/or effective tax rate and could have a material adverse impact on our financial condition and results of operations.
While we monitor proposals and other developments that would materially impact our tax burden and/or effective tax rate and investigate our options, we could still be subject to increased taxation on a going forwardprospective basis no matter what action we undertake if certain legislative proposals or regulatory changes are enacted, certain tax treaties are amended and/or our interpretation of applicable tax or other laws is challenged and determined to be incorrect. In particular, any changes and/or differing interpretations of applicable tax law that have the effect of disregarding the shareholders' decision to reorganize in Ireland, limiting our ability to take advantage of tax treaties between jurisdictions, modifying or eliminating the deductibility of various currently deductible payments, or increasing the tax burden of operating or being resident in a particular country could subject us to increased taxation.
In addition, tax authorities periodically review tax returns filed by us and can raise issues regarding our filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which we operate. These examinations on their own, or any subsequent litigation related to the examinations, may result in additional taxes or penalties against us. If the ultimate result of these audits differdiffers from our original or adjusted estimates, they could have a material impact on our tax provision.
Risks Related to our Reverse Morris Trust Transaction
On February 29, 2020 (the Distribution(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, 2020.2020 (Spin-off Shareholders). Ingersoll Rand Industrial then merged with a wholly-owned subsidiary of Gardner Denver.Ingersoll Rand. Upon close of the Transaction, our existing shareholdersthe Spin-off Shareholders received approximately 50.1% of the shares of Gardner DenverIngersoll Rand common stock on a fully-diluted basis and Gardner Denver stockholdersshareholders retained approximately 49.9% of the shares of Gardner DenverIngersoll Rand on a fully diluted basis. As a result, our shareholdersSpin-off Shareholders received 0.8824 shares of Gardner DenverIngersoll Rand common stock with respect to each share of our stock 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 amountwe received a special cash payment of $1.9 billion under a senior secured first lien term loan facility (the Term Loan), the proceeds of which were transferred to one of our wholly-owned subsidiaries. The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the Transaction is a wholly-owned subsidiary of Ingersoll
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Rand Inc. Following the Transaction, our Company was renamed Trane Technologies plc and trades under the symbol “TT” on the NYSE.billion.
If the Distribution as part of our Reverse Morris Trust Transaction is determined to be taxable for Irish tax purposes, significant Irish tax liabilities may arise for our shareholders.the Spin-off Shareholders.
We received an opinion from Irish Revenue regarding certain tax matters associated with the Distribution, as well as a legal opinion from our Irish counsel Arthur Cox LLP, regarding certain Irish tax consequences for shareholders of the Distribution.Distribution for the Spin-off Shareholders. For our shareholders thatthe Spin-off Shareholders who are not resident or ordinarily resident in Ireland for Irish tax purposes and thatwho do not hold their shares in connection with a trade or business carried on by such shareholdersSpin-off Shareholders through an Irish branch or agency, we consider, based on both opinions taken together, that no adverse Irish tax consequences for such shareholdersSpin-off Shareholders should have arisen. These opinions relied on certain facts and assumptions and certain representations. Notwithstanding the opinion from Irish Revenue, Irish Revenue could ultimately determine on audit that the Distribution is taxable for Irish tax purposes, for example, if it determines that any of these facts, assumptions or representations are not correct or have been violated. A legal opinion represents the tax adviser’s best legal judgment and is not binding on Irish Revenue or the courts and Irish Revenue or the courts may not agree with the legal opinion. In addition, the legal opinion is based on current law and cannot be relied upon if current law changes with retroactive effect. If the Distribution ultimately is determined to be taxable for Irish tax purposes, certain of our shareholderswe and wethe Spin-off Shareholders could have significant Irish tax liabilities as a result of the
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Distribution, and there could be a material adverse impact on our business, financial condition, results of operations and cash flows in future reporting periods.
If the Distribution together with certain related transactions do not qualify as tax-free under Sections 355 and 368(a) of the Internal Revenue Code, including as a result of subsequent acquisitions of stock of the Company or Ingersoll Rand, Inc., then the Company and our shareholdersthe Spin-off Shareholders may be required to pay substantial U.S. federal income taxes, and Ingersoll Rand Inc. may be obligated to indemnify the Company for such taxes imposed on the Company.
WeAt the time of the Distribution, we received an opinion from our U.S. tax counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss) substantially to the effect that, for U.S. federal income tax purposes, the Distribution together with certain related transactions undertaken in anticipation of the Distribution and taking into account the merger of Ingersoll Rand Industrial with the wholly-owned subsidiary of Gardner DenverIngersoll Rand will qualify as a tax-free transaction under Sections 368(a), 361 and 355 of the Internal Revenue Code (the Code), with the result that we and our shareholdersthe Spin-off Shareholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the spin-off. The opinion of our counsel was based on, among other things, certain representations and assumptions as to factual matters made by Gardner Denver,Ingersoll Rand, Ingersoll Rand Industrial and the Company. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the opinion of counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the Internal Revenue Service (IRS) or the courts, and the IRS or the courts may not agree with the opinion. In addition, thean opinion will be based on current law, and cannot be relied upon if current law changes with retroactive effect. If the Distribution, and/or related internal transactions in anticipation of the Distribution ultimately are determined to be taxable, we could incur significant U.S. federal income tax liabilities, which could cause a material adverse impact on our business, financial condition, results of operations and cash flows in future reporting periods, although if this determination resulted from certain actions taken by Ingersoll Rand Industrial or Ingersoll Rand, Inc., Ingersoll Rand Inc. would be required to bear the cost of any resultant tax liability pursuant to the terms of the Tax Matters Agreement.Agreement dated February 29, 2020, among Ingersoll-Rand Plc, Ingersoll-Rand Lux International Holding Company S.à r.l, Ingersoll-Rand Services Company, Ingersoll-Rand U.S. HoldCo, Inc., and Gardner Denver Holdings, Inc. (Tax Matters Agreement).
The Distribution will be taxable to the Company pursuant to Section 355(e) of the Code if there is a 50% or greater change in ownership of either the Company or Ingersoll Rand Industrial, directly or indirectly (including through such a change in ownership of Ingersoll Rand Inc.)Rand), as part of a plan or series of related transactions that include the Distribution. A Section 355(e) change of ownership would not make the Distribution taxable to our shareholders,the Spin-off Shareholders, but instead may result in corporate-level taxable gain to certain of our subsidiaries. Because our shareholdersthe Spin-off Shareholders will collectively be treated as owning more than 50% of the Ingersoll Rand Inc. common stock following the merger, the merger alone should not cause the Distribution to be taxable to our subsidiaries under Section 355(e). However, Section 355(e) might apply if other acquisitions of stock of the Company before or after the merger, or of Ingersoll Rand Inc. before or after the merger, are considered to be part of a plan or series of related transactions that include the Distribution together with certain related transactions. If Section 355(e) applied, certain of our subsidiaries might recognize a very substantial amount of taxable gain, although if this applied as a result of certain actions taken by Ingersoll Rand Industrial, Ingersoll Rand Inc. or certain specified Ingersoll Rand Inc. stockholders, Ingersoll Rand Inc. would be required to bear the cost of any resultant tax liability under Section 355(e) pursuant to the terms of the Tax Matters Agreement.
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If the merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, our shareholdersthe Spin-off Shareholders may be required to pay substantial U.S. federal income taxes.
WeOn the Distribution Date, we have received an opinion from Paul Weiss, and Ingersoll Rand Inc. has received an opinion from their counsel Simpson Thacher & Bartlett LLP, substantially to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code with the result that U.S. holders of Ingersoll Rand Industrial common stock who received Gardner DenverIngersoll Rand common stock in the merger will not recognize any gain or loss for U.S. federal income tax purposes (except with respect to cash received in lieu of fractional shares of Gardner DenverIngersoll Rand common stock). These opinions were based upon, among other things, certain representations and assumptions as to factual matters made by Ingersoll Rand, Inc., the Company, Ingersoll Rand Industrial and the merger subsidiary used by Ingersoll Rand Inc.Rand. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the opinions. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinions will beare based on current law, and cannot be relied upon if current law changes with retroactive effect. If the merger were taxable, U.S. holders of the common stock of Ingersoll Rand Industrial would be considered to have made a taxable sale of their Ingersoll Rand Industrial common stock to Ingersoll Rand, Inc., and such U.S. holders of Ingersoll Rand Industrial would generally recognize taxable gain or loss on their receipt of Ingersoll Rand Inc. common stock in the merger.
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Risks Related to Our Irish Domicile
Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.
The United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As such, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on U.S. federal or state civil liability laws, including the civil liability provisions of the U.S. federal or state securities laws, or hear actions against us or those persons based on those laws.
As an Irish company, we are governed by the Irish Companies Act, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions, indemnification of directors and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States. In addition, Irish law does not allow for any form of legal proceedings directly equivalent to the class action available in the United States.
Irish law allows shareholders to authorize share capital which then can be issued by a board of directors without shareholder approval. Also, subject to specified exceptions, Irish law grants statutory pre-emptive rights to existing shareholders to subscribe for new issuances of shares for cash but allows shareholders to authorize the waiver of the statutory pre-emptive rights with respect to any particular allotment of shares. Under Irish law, we must have authority from our shareholders to issue any shares, including shares that are part of the Company’s authorized but unissued share capital. In addition, unless otherwise authorized by its shareholders, when an Irish company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing shareholders on a pro-rata basis. If we are unable to obtain these authorizations from our shareholders or are otherwise limited by the terms of our authorizations, our ability to issue shares or otherwise raise capital could be adversely affected.
Dividends received by our shareholders may be subject to Irish dividend withholding tax.
In certain circumstances, we are required to deduct Irish dividend withholding tax (currently at the rate of 25%) from dividends paid to our shareholders. In the majority of cases, shareholders resident in the United States will not be subject to Irish withholding tax, and shareholders resident in a number of other countries will not be subject to Irish withholding tax provided that they complete certain Irish dividend withholding tax forms. However, some shareholders may be subject to withholding tax, which could have an adverse impact on the price of our shares.
Dividends received by our shareholders could be subject to Irish income tax.
Dividends paid in respect of our shares will generally not be subject to Irish income tax where the beneficial owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Trane Technologies plc.
Our shareholders who receive their dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on the dividends unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Trane Technologies plc.
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Item 1B.    UNRESOLVED STAFF COMMENTS
None.
Item 1C.CYBERSECURITY
We maintain a cybersecurity risk assessment program and framework as set forth in our cybersecurity policies and standards. The foundation of our cybersecurity program is based on the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, which includes a set of controls to prevent, detect, and respond to cybersecurity threats and incidents. These controls include constant monitoring, log collection and analysis, threat hunting and intelligence surveillance, and regular vulnerability scans/penetration tests. Additionally, in furtherance of assessing, identifying and managing material cybersecurity risks, we:
Leverage technology solutions, including proactive detection tools, to protect our assets and detect threats in our environment;
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Perform regular internal assessments of our cybersecurity program against the NIST Cybersecurity Framework. The results of these assessments are then reviewed and, based on such findings, action plans are developed and progress tracked through completion;
Analyze both internal and external cybersecurity incidents and related threat intelligence to determine applicability to our environment and industry. Findings from such analyses are then reviewed and utilized to create action plans where applicable and relevant to our environment and industry;
Maintain an enterprise-wide disaster recovery governance program, which includes cybersecurity-related disaster recovery standards and compliance procedures related thereto;
Regularly perform cybersecurity-related disaster recovery testing to ensure that the Company’s mission-critical systems are recoverable, in support of the business continuity needs of our various business lines; and
Integrate each of our business and corporate groups with our internal cybersecurity team to ensure cybersecurity requirements are embedded into operating environments as appropriate, which drives business strategies, budgeting, and similar processes. In addition, senior and executive management, as well as our Board of Directors, regularly review our financial planning processes for these areas, inclusive of our cybersecurity programs.
Any changes or additions to our cybersecurity risk assessment program and related practices and procedures described above in response to cybersecurity needs are reviewed by our executive management, Board of Directors and Audit Committee.
We regularly engage independent third-parties and auditors to assess our cybersecurity program and practices and assist in the mitigation of risk. The effectiveness of our cybersecurity environment is regularly tested by internal personnel and these third-parties. These assessments are performed in connection with standards and requirements under the Payment Card Industry (PCI) data security standard, Sarbanes-Oxley Act (SOX), and the U.S. Department of Defense, cybersecurity capability maturity benchmarking and voluntary certifications by us, such as the Service Organization Control Type 2 (SOC 2). The results of these audits and assessments are promptly reviewed and enhancements are made to our cybersecurity program and practices based on such findings as appropriate. We also maintain a cybersecurity third party risk management program which evaluates systems and applications hosted by external parties for cybersecurity risks and assesses the security posture and features of those services. The program includes initial review, ongoing monitoring and contractual agreements with cybersecurity requirements to ensure third party services meet our standards for such providers, and the cybersecurity risks associated with the use of these services is acceptable.
Like other comparable-sized companies, our information technology systems, networks and infrastructure and technology embedded in certain of our control products have been and may continue to be vulnerable to cyber-attacks and unauthorized security intrusions. These types of attacks may include computer viruses, malicious code, unauthorized access, phishing attempts, denial-of-service attacks, among others. For more information about these and other cybersecurity risks faced by us, see Part IA, Item 1A, “Risk Factors - Risks Related to Cybersecurity and Technology.”
Our Board of Directors has ultimate oversight for risks relating to our cybersecurity program and practices and receives regular updates from our internal cybersecurity team on cybersecurity risks and threats. In addition, our Audit Committee provides Board-level oversight for management’s actions with respect to practices, procedures and controls used to identify, assess and manage our key cybersecurity programs and risks. We also maintain an Enterprise Risk Intelligence Committee (ERIC), a management-level cross-functional group designed to monitor and mitigate risks, including cybersecurity risks, that pose a threat to our strategic objectives. The ERIC is charged with providing guidance and direction for integrating enterprise risk intelligence with important business processes, such as strategic planning, business forecasting, operational management, and investment allocation to ensure consistent consideration of risks in decision making. Finally, we maintain an Enterprise Cybersecurity Governance Committee that presents updates on cybersecurity initiatives, known and emerging issues and risks, and program updates to a cross-section of our senior management.
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Item 2.    PROPERTIES
As of December 31, 2020,2023, we owned or leased a total of approximately 2629 million square feet of space worldwide. Manufacturing and assembly operations are conducted in 3539 plants across the world. We also maintain various warehouses, offices, technology centers, and repair centers throughout the world. The majority of our plant facilities are owned by us with the remainder under long-term lease arrangements. We believe that our plants have been well maintained, are generally in good condition and are suitable for conducting our business.
The locations by segment of our principal plant facilities at December 31, 20202023 were as follows:
AmericasEMEAAsia Pacific
Arecibo, Puerto RicoBarcelona, SpainBangkok, Thailand
Brampton, OntarioBari, ItalyTaicang, China
Charlotte, North CarolinaCharmes, FranceBari, ItalyWujiang,Taicang, China
Clarksville, TennesseeEssen, GermanyCharmes, FranceZhongshan,Wujiang, China
Columbia, South CarolinaConselve, ItalyZhongshan, China
Fort Smith, ArkansasEssen, Germany
Fremont, OhioGalway, Ireland
Curitiba, BrazilGrand Rapids, MichiganGolbey, France
Fairlawn, New JerseyGreenville, South CarolinaJettingen-Scheppach, Germany
Hastings, NebraskaKing Abdullah Economic City, Saudi Arabia
Fort Smith, ArkansasKolin, Czech Republic
Fremont, Ohio
Grand Rapids, Michigan
Hastings, Nebraska
La Crosse, Wisconsin
Lexington, KentuckyKolin, Czech Republic
Lynn Haven, FloridaTribano, Italy
Marietta, OhioWittenberg, Germany
Monterrey, Mexico
Newberry, South Carolina
Noblesville, Indiana
Pueblo, Colorado
Rushville, Indiana
St. Paul, Minnesota
Trenton, New Jersey
Tyler, Texas
Vidalia, Georgia
Waco, Texas
Item 3. LEGAL PROCEEDINGS
In the normal course of business, we are involved in a variety of lawsuits, claims and legal proceedings, including commercial and contract disputes, employment matters, product liability and product defect claims, asbestos-related claims, environmental liabilities, intellectual property disputes, and tax-related matters. In our opinion, pending legal matters are not expected to have a material adverse impact on our results of operations, financial condition, liquidity or cash flows.
Asbestos-Related Matters
OnThe most significant litigation facing the Petition Date,Company is the asbestos-related bankruptcy cases of Aldrich and Murray. For detailed information on the bankruptcy cases of Aldrich and Murray, each filed a voluntary petition for reorganization under Chapter 11see Part I, Item 1, "Business - Asbestos-Related Matters," Part I, Item 1A, "Risk Factors - Risks Related to Litigation," Part II, Item 7, "Management's Discussion and Analysis of the Bankruptcy Code. As a resultFinancial Condition and Results of the Chapter 11 filings, all asbestos-related lawsuits against AldrichOperations - Significant Events," 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, Murray's wholly-owned subsidiary, ClimateLabs, Trane Technologies plc nor 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
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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 virtually all of the suits, 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 in Note 22 to thePart II, Item 8, Consolidated Financial Statements.Statements, Note 1, "Description of Company," and Note 20, "Commitments and Contingencies."
Item 4. MINE SAFETY DISCLOSURES
None.
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None.
PART II
 
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Information regarding the principal market for our ordinary shares and related shareholder matters is as follows:
Our ordinary shares are traded on the New York Stock Exchange under the symbol TT. As of February 1, 2021,2, 2024, the approximate number of record holders of ordinary shares was 2,656.2,315.
Issuer Purchases of Equity Securities
The following table provides information with respect to purchases by us of our ordinary shares during the quarter ended December 31, 2020:2023:
PeriodPeriodTotal number of shares purchased (000's) (a) (b)Average price paid per share (a) (b)Total number of shares purchased as part of program (000's) (a)Approximate dollar value of shares still available to be purchased under the program ($000's) (a)PeriodTotal number of shares purchased (000's) (a) (b)Average price paid per share (a) (b)Total number of shares purchased as part of program (000's) (a)Approximate dollar value of shares still available to be purchased under the program ($000's) (a)
October 1 - October 31October 1 - October 316.9 $122.56 — $749,959 
November 1 - November 30November 1 - November 30832.2 143.05 832.2 $630,910 
December 1 - December 31December 1 - December 31922.9 142.06 921.9 $499,956 
TotalTotal1,762.0 $142.45 1,754.1 
(a) Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 under the Exchange Act. In October 2018,February 2022, our Board of Directors authorized the repurchase of up to $1.5$3.0 billion of our ordinary shares under a share repurchase program (2018(2022 Authorization) upon completion of the prior authorized share repurchase program.. During the fourth quarter of 2020,2023, we repurchased and canceled approximately $250$209 million of our ordinary shares, consistent with our capital allocation strategy, leaving approximately $500 million$2.5 billion remaining under the 2018 Authorization.2022 Authorization as of December 31, 2023.
(b) We may also reacquire shares outside of the repurchase program from time to time in connection with the surrender of shares to cover taxes on vesting of share basedshare-based awards. We reacquired 6,925335 shares in October and 1,045320 shares in December in transactions outside the repurchase programs.

Securities Trading Plans of Directors and Executive Officers

Our director compensation program, which consists of an annual cash retainer and grant of restricted stock units (RSUs), is designed to compensate non-employee directors fairly for work required for a company of our size and scope and to align their interests with the long-term interests of our shareholders. Similarly, a portion of the compensation of our executive officers is delivered in the form of our Long-Term Incentive Program (LTI), which is comprised of stock options, RSUs and performance share units (PSUs). We believe compensating our directors and executive officers with a mix of equity-based awards effectively links compensation to long-term shareholder value creation, Environmental, Social, and Governance (ESG), and financial results.
Subject to the satisfaction of our share ownership requirements, our directors and executive officers may, from time to time, engage in transactions to sell some of the shares granted to them as part of our director and executive compensation programs after such shares vest following the expiration of any time-based restrictions or achievement of certain pre-established performance goals. In addition, our directors and executive officers may also, from time to time, engage in other transactions involving our securities, which may entail the purchase or sale of our common stock outside of these compensation programs on an open-market basis.
All transactions in our securities by our directors and executive officers must occur in accordance with our Insider Trading Policy, which, among other things, requires that such transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 of the Securities Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our insider trading policy permits our directors and executive officers to enter trading plans designed to prearrange transactions in our securities in accordance with Rule 10b5-1.
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The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our directors and executive officers during the fourth quarter of 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans:


Name and Title


Action


Date of Action
Scheduled Expiration Date(1)
Aggregate Number of Securities to be Purchased or Sold(2)
David S. Regnery
Chair and Chief Executive Officer
Adopt11/14/20235/13/2024
Sale of up to 19,772(3) shares of common stock
Christopher J. Kuehn
Executive Vice President and Chief Financial Officer
Adopt11/14/20235/13/2024
Sale of up to 10,699(4) shares of common stock
(1) In each case a trading plan may also expire prior to the scheduled expiration date if all transactions under the trading plan are completed before the scheduled expiration date.
(2) Aggregate number of shares in this column includes shares that may be forfeited or withheld to satisfy exercise price and tax obligations at the time of vesting.
(3) This figure includes a grant of 8,727 unvested PSUs that are expected to vest during the term of the Rule 10b5-1 trading plans, which are assumed to vest at 100% of the target award amount. The actual number of PSUs that may vest can vary between 0% - 200% of the target award amount, subject to the achievement of certain performance conditions as set forth in the PSU award agreement.
(4) This figure includes a grant of 6,713 unvested PSUs that are expected to vest during the term of the Rule 10b5-1 trading plans, which are assumed to vest at 100% of the target award amount. The actual number of PSUs that may vest can vary between 0% - 200% of the target award amount, subject to the achievement of certain performance conditions as set forth in the PSU award agreement.
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Performance Graph
The following graph compares the cumulative total shareholder return on our ordinary shares with the cumulative total return on (i) the Standard & Poor’s 500 Stock Index and (ii) the Standard & Poor’s 500 Industrial Index for the five years ended December 31, 2020.2023. The graph assumes an investment of $100 in our ordinary shares, (adjusted for the Transaction), the Standard & Poor’s 500 Stock Index and the Standard & Poor’s 500 Industrial Index on December 31, 20152018 and assumes the reinvestment of dividends.
tt-20201231_g1.jpg2085
Company/IndexCompany/Index201520162017201820192020Company/Index201820192020202120222023
Trane TechnologiesTrane Technologies100139168175260373Trane Technologies100148213300254374
S&P 500S&P 500100112136130171203S&P 500100131156200164207
S&P 500 Industrials IndexS&P 500 Industrials Index100119144125161179S&P 500 Industrials Index100129144174164194
Item 6.   [Reserved]

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Item 6.SELECTED FINANCIAL DATA
In connection with the completion of the Transaction, we do not beneficially own any Ingersoll Rand Industrial shares of common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. As a result, the following Selected Financial Data presents the results of Ingersoll Rand Industrial as a discontinued operation for periods prior to the Distribution date.
In millions, except per share amounts:
At and for the years ended December 31,20202019201820172016
Net revenues$12,454.7 $13,075.9 $12,343.8 $11,167.5 $10,545.0 
Net earnings (loss) attributable to Trane Technologies plc ordinary shareholders:
Continuing operations977.2 1,145.1 1,007.8 1,072.8 1,222.2 
Discontinued operations(122.3)265.8 329.8 229.8 254.0 
Total assets18,156.7 20,492.3 17,914.9 18,173.3 17,397.4 
Total debt5,272.1 5,573.2 4,091.2 4,064.0 4,070.1 
Total Trane Technologies plc shareholders’ equity6,407.7 7,267.6 7,022.7 7,140.3 6,643.8 
Earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations$4.07 $4.74 $4.08 $4.21 $4.72 
Discontinued operations(0.51)1.10 1.33 0.90 0.98 
Diluted:
Continuing operations$4.02 $4.69 $4.03 $4.16 $4.67 
Discontinued operations(0.50)1.08 1.32 0.89 0.98 
Dividends declared per ordinary share$2.12 $2.12 $1.96 $1.70 $1.36 
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Item 7. 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 Item 1A. Risk Factors in this Annual Report on Form 10-K. 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 Annual Report.
This section discusses 20202023 and 20192022 significant items affecting our consolidated operating results, financial condition and liquidity and provides a year-to-year comparison between 2023 and 2022. Discussions of 2021 significant items and year-to-year comparisons between 20202022 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 20182021 have been excluded in this Form 10-K and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for year ended December 31, 2019.2022.
Overview
Organizational
Trane Technologies plc is a global climate innovator. We bring efficientsustainable and sustainable climateefficient solutions to buildings, homes and transportation driven bythrough our strategic brands, Trane®and Thermo King®, and anour environmentally responsible portfolio of products, services and connected intelligent controls.
2030 Sustainability Commitments
Our commitment to sustainability extends to the environmental and social impacts of our people, operations, products and services. PriorWe have announced ambitious 2030 Sustainability Commitments, including our Gigaton Challenge to reduce customers' carbon emissions by a billion metric tons. We are one of a handful of companies whose emissions reductions targets have been validated three times by the SBTi, and one of the very few companies worldwide and first in our industry whose net-zero targets have also been validated. Our emissions reduction commitments align with the Paris Climate Accord net-zero targets, consistent with limiting global temperature rise to no more than 1.5 °C. Our 2030 Sustainability Commitments for scopes 1, 2, and 3 will guide our emissions reduction efforts through 2030, with an emphasis on reducing our largest source: the emissions generated from customer use of our products. We are Leading by Example as we make progress toward carbon-neutral operations and zero waste-to-landfill across our global footprint and net positive water use in water-stressed locations. Our Opportunity for All commitment focuses on gender parity in leadership, workforce diversity reflective of our communities, and a citizenship strategy that helps underserved communities through enhanced learning environments and pathways to green and Science, Technology, Engineering and Math (STEM) careers.
Recent Acquisitions
On May 2, 2023, we completed the acquisition of MTA S.p.A (MTA), a leading industrial process cooling technology business, which brings complementary, high-performing solutions to the separationcomprehensive Commercial HVAC product and services portfolio. The results of our Industrial segment on February 29, 2020,the acquisition are reported within the EMEA and Americas segments.
On May 12, 2023, we announcedcompleted the acquisition of Helmer Scientific Inc (Helmer), 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 customersprecision temperature cooling company in the North America and Latin America regions.life sciences vertical. The results of the acquisition are reported within 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 regions. 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.
This model is designed to create deep customer focus and relevance in markets around the world. All prior period comparative segment information has been recast to reflect the current reportable segments.
Separation of Industrial Segment Businesssegment.
On February 29, 2020 (Distribution Date),November 2, 2023, 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.acquisition of Nuvolo Technologies Corporation (Nuvolo), 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 closeglobal leader in modern, cloud-based enterprise asset management and connected workplace software and solutions. The results of the Transaction, our existing shareholders received approximately 50.1% ofacquisition are reported within 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.
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Americas segment.
Significant Events
COVID-19 Global Pandemic
In March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a newly discovered coronavirus, known now as COVID-19, as a global pandemic and recommended containment and mitigation measures worldwide. Beginning in the first quarter of 2020, many countries responded by implementing measures to combat the outbreak which impacted global business operations and resulted in our decision to temporarily close or limit our workforce to essential crews within many facilities throughout the world in order to ensure employee safety. In addition, our non-essential employees were instructed to work from home in compliance with global government stay-in-place protocols.
We have been adversely impacted by the COVID-19 global pandemic. Temporary facility closures beginning in the first quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations in the Americas and EMEA in the months thereafter. During the second quarter of 2020, we began to reopen facilities while maintaining appropriate health and safety precautions. However, the challenges in connection with the pandemic continued as we experienced lower volume, which negatively impacted revenue, and certain supply chain delays. In response, we proactively initiated cost cutting actions in an effort to mitigate the impact of the pandemic on our business. This included reducing discretionary spending, restricting travel, delaying merit-based salary increases and implementing employee furloughs in certain markets.
We continue to navigate the new realities brought about by the COVID-19 global pandemic as well as any impact on our liquidity needs and ability to access capital markets. Despite these challenges, all production facilities remain open and we continue to sell, install and service our products. During the second half of 2020, we did not experience any major delays in our supply chain and continued to focus on health and safety precautions to protect our employees and customers. In addition, during the fourth quarter of 2020 we completed several restorative actions including the reinstatement of annual merit-based salary increases and resuming all aspects of our balanced capital allocation strategy which included acquisitions and share repurchases. Operationally, our financial reporting systems, internal control over financial reporting and disclosure controls and procedures continue to operate effectively despite a remote workforce of non-essential front-line employees. We will continue to monitor the ongoing situation as it evolves globally and will assess any potential impacts to our business and financial position.
The preparation of financial statements 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 contingencies because they may arise from matters that are inherently uncertain. The financial statements reflect our best estimates as of December 31, 2020 (including as it relates to the actual and potential future impacts of the COVID-19 global pandemic) with respect to the recoverability of our assets, including our receivables and long-lived assets such as goodwill and intangibles. However, due to significant uncertainty surrounding the COVID-19 global pandemic, management's judgment regarding this could change in the future. In addition, while our results of operations, cash flows and financial condition could be negatively impacted, the extent of the impact cannot be estimated with certainty at this time.
As part of the response to COVID-19 global pandemic, many countries implemented emergency economic relief plans as a way of minimizing the economic impact of this health crisis. We are evaluating the potential benefits from certain of these measures and will continue to monitor the plans as they are finalized and implemented. In the United States, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 providing numerous tax provisions and other stimulus measures. We are currently applying the CARES Act to our operations, which includes the deferral of employer social security payroll tax payments under the CARES Act through January 1, 2021, with 50 percent owed on December 31, 2021 and the other half owed on December 31, 2022.
Reorganization of Aldrich and Murray
On the Petition Date,June 18, 2020 (Petition Date), our indirect wholly-owned subsidiaries, Aldrich and Murray each filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.Code. 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, Murray's wholly-owned subsidiary, ClimateLabs, Trane Technologies plc nor the Trane Companies are part of the Chapter 11 filings.
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The goal of these Chapter 11 filings is an efficientto resolve equitably and permanent resolution ofpermanently all current and future asbestosasbestos-related claims in a manner beneficial to claimants, Aldrich and Murray through court approval of a plan of reorganization whichthat would establish, in accordance withcreate a trust pursuant to section 524(g) of the Bankruptcy Code, a trust to payestablish claims resolution procedures for all asbestos claims. Such a resolution, if achieved, would likely include a channeling injunction to enjoin asbestoscurrent and future asbestos-related 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.
From an accounting perspective, we no longer have control over Aldrich and Murray as ofand channel such claims to thePetition Date as their activities are subject to review and oversight by the Bankruptcy Court. Therefore, trust for resolution in accordance with those procedures.
Aldrich and its wholly-owned subsidiary 200 Park and
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Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date and their respective assets and liabilities were derecognized from our Consolidated Financial Statements. As
In 2021, Aldrich and Murray reached an agreement in principle with the court-appointed legal representative of future asbestos claimants (the FCR) and filed a result, we recorded an equity investment for an aggregate of $53.6motion to create a $270.0 million trust intended to constitute a "qualified settlement fund" within Other noncurrent assets in the Consolidated Balance Sheet. Simultaneously, we recognized a liability of $248.8 million within Other noncurrent liabilities in the Consolidated Balance Sheet related to our obligation under the Funding Agreements. The liability recorded may be subject to change based on the facts and circumstancesmeaning of the Chapter 11 proceedings.
As a resultTreasury Regulations under Section 468B of these actions, we recognized an aggregate loss of $24.9 million in our Consolidated Statements of Comprehensive Income. A gain of $0.9 million relatedthe Internal Revenue Code (QSF). On January 27, 2022, the Bankruptcy Court granted the request to Murray and its wholly-owned subsidiary ClimateLabsfund the QSF, which was recorded within Other income/ (expense), net and a loss of $25.8 million related to Aldrich and its wholly-owned subsidiary 200 Park was recorded within Discontinued operations, net of tax. Additionally, the deconsolidation resultedfunded on March 2, 2022, resulting in an investingoperating cash outflow of $41.7$270.0 million reported in our Consolidated Statements of Cash Flows, of which $10.8$91.8 million was recorded withinallocated to continuing operations.operations and $178.2 million was allocated to discontinued operations for the year ended December 31, 2022.
IssuanceOn April 6, 2023, certain individual claimants filed a motion to dismiss the Chapter 11 cases. Subsequently, on May 15, 2023, the committee representing current asbestos claimants (the ACC) filed its own motion to dismiss the Chapter 11 cases. Aldrich, Murray and the FCR filed responses in opposition to each of Senior Notesthese motions, and the Company filed papers joining in Aldrich and Murray's opposition. A hearing on the motions to dismiss was held on July 14, 2023. On December 28, 2023, the Bankruptcy Court entered an order denying the motions to dismiss the Chapter 11 cases. On January 11, 2024, the ACC and the individual claimants filed motions seeking leave to appeal the order denying the motions to dismiss and to certify the appeals directly to the Court of Appeals for the Fourth Circuit. Aldrich and Murray filed responses in opposition to these motions on January 31, 2024. It is not possible to predict how the Bankruptcy Court will rule on these pending motions, whether an appellate court will affirm or reverse the Bankruptcy Court order denying the motions to dismiss, whether the Bankruptcy Court will approve the terms of the Plan, what the extent of the asbestos liability will be or how long the Chapter 11 cases will last. The Chapter 11 cases remain pending as of February 8, 2024.
In March 2019, we issued $1.5 billion principal amountFor detailed information on the bankruptcy cases of senior notes in three tranches through Trane Technologies Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consistAldrich and Murray, see Part I, Item 1, "Business - Asbestos-Related Matters," Part I, Item 1A, "Risk Factors - Risks Related to Litigation," Part I, Item 3, "Legal Proceedings," and Part II, Item 8, Consolidated Financial Statements, Note 1, "Description of $400 million aggregate principal amount of 3.500% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior notes due 2029Company," and $350 million aggregate principal amount of 4.500% senior notes due 2049.Note 20, "Commitments and Contingencies."
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. 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.the Company. We monitor key competitors and customers in order to gauge relative performance and the outlook for the future. We regularly perform detailed evaluations of the different market segments we are serving to proactively detect trends and to adapt our strategies accordingly.accordingly, including potential triggers and actions to be taken under recessionary scenarios. In addition, we believe our backlog and order rateslevels are indicative of future revenue and thus are a key measure of anticipated performance.
Current economic conditions are uncertain as a result of the COVID-19 global pandemic, impacting both the global Heating, Ventilation and Air Conditioning (HVAC) and Transport end-markets as well as limiting visibility in the factors used to predict the outlook for our company. Entering 2021,We expect market conditions are expected to improve as vaccine distribution expandsremain mixed across theour end markets and geographies where we serve customers. Overall Commercial HVAC markets remain strong due to demand for our customers.differentiated customer driven solutions and the benefits of installing energy efficient products and decarbonizing the built environment, aided by supportive policies and regulations especially in the United States and Europe. Transport refrigeration markets are experiencing lower demand as customers adjust to lower freight rates. Residential markets have been normalizing as lead times return to normal and distributors adjust inventory levels.
We continue to see material, wage and energy inflation impact our cost structure. However, disruptions in the global supply chain and resource constraints have improved throughout the year. Our performance may be impacted by future developments that are uncertain. Geopolitical risks and macroeconomic events could cause disruptions to operations, supply chains and end markets, tightening credit conditions, higher interest rates, global banking uncertainty and the possibility of deteriorating overall economic conditions which could negatively impact our business.
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We believe we have a solid foundation of global brands that are highly differentiated in all of our major product lines. Our geographic mix and productthe diversity of our portfolio, coupled with our large installed product base, provides growth opportunities from replacement demand and within our service parts and replacement revenue streams.stream. In addition, we are investing substantial resources to innovate and develop new products and services which we expect willto drive our future growth.
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Results of Operations
Non-GAAP Financial Measures
In connectionOrganic Revenue
We define organic revenue as net revenues adjusted for the impact of currency, acquisitions and divestitures. Organic revenue is not defined under generally accepted accounting principles in the United States of America (GAAP) and may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for revenue as determined in accordance with GAAP.Selected references are made to revenue growth on an organic basis so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and with the completionimpacts of acquisitions, thereby providing comparisons of operation performance from period to period of the Transaction,business that we do not beneficially own any Ingersoll Rand Industrial shares of common stock and no longer consolidate Ingersoll Rand Industrialhave owned during both periods presented. We believe organic revenue growth provides investors with useful supplemental information about our revenues in our financial statements. As a result, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations presents the results of Ingersoll Rand Industrial as a discontinued operation forboth periods prior to the Distribution date. In addition, the assets and liabilities of Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019.presented.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019 - Consolidated Results
Dollar amounts in millions20202019Period Change2020
% of Revenues
2019
% of Revenues
Net revenues$12,454.7 $13,075.9 $(621.2)
Cost of goods sold(8,651.3)(9,085.5)434.2 69.5%69.5%
Gross profit3,803.4 3,990.4 (187.0)30.5%30.5%
Selling and administrative expenses(2,270.6)(2,320.3)49.7 18.2%17.7%
Operating income1,532.8 1,670.1 (137.3)12.3%12.8%
Interest expense(248.7)(242.8)(5.9)
Other income/(expense), net4.1 (28.4)32.5   
Earnings before income taxes1,288.2 1,398.9 (110.7)
Benefit (provision) for income taxes(296.8)(238.6)(58.2)  
Earnings from continuing operations991.4 1,160.3 (168.9)
Discontinued operations, net of tax(121.4)268.2 (389.6)  
Net earnings$870.0 $1,428.5 $(558.5)
Net Revenues
Net revenues for the year ended December 31, 2020 decreased by 4.8%, or $621.2 million, compared with the same period of 2019. The components of the period change are as follows:
Volume(5.5)%
Pricing0.8 %
Currency translation(0.1)%
Total(4.8)%
During 2020, we were impacted by the economic environment resulting from the COVID-19 global pandemic; however, strong operational results during the second half of the year mitigated a challenging first half. The decrease in Net revenues is primarily related to lower volumes across each of our segments. Temporary facility closures beginning in the first quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations in the Americas and EMEA in the months thereafter. Unfavorable foreign currency exchange rate movements further contributed to the year-over-year decrease, partially offset by improved pricing. Refer to the “Results by Segment” below for a discussion of Net Revenues by segment.
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Gross Profit Margin
Gross profit margin for the year ended December 31, 2020 remained flat at 30.5% compared to the same period of 2019. Gross profit margin was favorably impacted by improved pricing, cost containment initiatives and deflation. However, these favorable impacts were offset by unfavorable product mix due to lower volumes on higher margin products and the under absorption of fixed production overhead costs.
Selling and Administrative Expenses
Selling and administrative expenses for the year ended December 31, 2020 decreased by 2.1%, or $49.7 million, compared with the same period of 2019. Due to the COVID-19 global pandemic, we initiated cost containment actions in order to mitigate its impacts on our business including reduced discretionary spending, employee furloughs in certain regions and a six-month delay to annual merit-based salary increases. These amounts were partially offset by higher spending on restructuring and transformation initiatives associated with the completion of the Transaction. However, selling and administrative expenses as a percentage of net revenues for the year ended December 31, 2020 increased 50 basis points from 17.7% to 18.2% primarily due to lower comparable revenue year-over-year.
Interest Expense
Interest expense for the year ended December 31, 2020 increased by $5.9 million compared with the same period of 2019 due to the $1.5 billion issuance of Senior notes during the first quarter of 2019. The increase was partially offset by the redemption of 2.625% Senior notes in April 2020 of $300.0 million and repayment of commercial paper of $179.0 million during the third quarter of 2019.
Other Income/(Expense), Net
The components of Other income/(expense), net, for the years ended December 31 are as follows:
In millions20202019
Interest income/(loss)$4.5 $0.6 
Foreign currency exchange gain (loss)(10.0)(9.5)
Other components of net periodic benefit cost(14.7)(34.9)
Other activity, net24.3 15.4 
Other income/(expense), net$4.1 $(28.4)
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 cost for pension and post retirement obligations other than the service cost component. Other activity, net includes items associated with certain legal matters as well as asbestos-related activities through the Petition Date. During the year ended December 31, 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
The 2020 effective tax rate was 23.0% which was higher than the U.S. Statutory rate of 21% due to a $36.5 million non-cash charge related to the establishment of valuation allowances on net deferred tax assets, primarily net operating losses in certain tax jurisdictions and the write-off of a carryforward tax attribute 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 $14.0 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 foreign tax credits as a result of revised projections of future foreign source income 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 and the write-off of the carryforward tax attribute increased the effective tax rate by 1.7%. Revenues from non-U.S. jurisdictions accounted for approximately 28% of our total 2020 revenues, such that a material portion of our pretax income was earned and taxed outside the U.S. at rates ranging from 0% to 38%. When comparing the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability in our overall effective tax rate.
The 2019 effective tax rate was 17.1% which is lower than the U.S. Statutory rate of 21% primarily due to a reduction in deferred tax asset valuation allowances for certain non-U.S. net deferred tax assets and excess tax benefits from employee share-based payments. These amounts were partially offset by U.S. state and local taxes, an increase in a deferred tax asset valuation allowance for certain state net deferred tax assets and certain non-deductible expenses. In addition, the reduction was
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also driven by earnings in non-U.S. jurisdictions, which in aggregate, have a lower effective tax rate. Revenues from non-U.S. jurisdictions accounted for approximately 31% of our total 2019 revenues, such that a material portion of our pretax income was earned and taxed outside the U.S. at rates ranging from 0% to 38%. When comparing the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability in our overall effective tax rate.
Discontinued Operations
The components of Discontinued operations, net of tax for the years ended December 31 are as follows:
In millions20202019
Net revenues$469.8 $3,523.0 
Pre-tax earnings (loss) from discontinued operations(136.3)397.5 
Tax benefit (expense)14.9 (129.3)
Discontinued operations, net of tax$(121.4)$268.2 
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 through the Petition Date. In addition, the year ended December 31, 2020 includes pre-tax Ingersoll Rand Industrial separation costs primarily related to legal, consulting and advisory fees of $114.2 million and a loss of $25.8 million related to the deconsolidation of Aldrich and its wholly-owned subsidiary 200 Park. The year ended December 31, 2019 includes $94.6 million of pre-tax Ingersoll Rand Industrial separation costs.
The components of Discontinued operations, net of tax for the years ended December 31 are as follows:
In millions20202019
Ingersoll Rand Industrial, net of tax$(84.9)$227.6 
Other discontinued operations, net of tax(36.5)40.6 
Discontinued operations, net of tax$(121.4)$268.2 
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019 - 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.Adjusted EBITDA
Management measures segment operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, non-cash adjustment for contingent consideration, insurance settlements on property claims, merger and acquisition related costs, impairment of an equity investment, 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)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.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 - Consolidated Results
Dollar amounts in millions20232022Period Change2023
 % of revenues
2022
 % of revenues
Net revenues$17,677.6 $15,991.7 $1,685.9 
Cost of goods sold(11,820.4)(11,026.9)(793.5)66.9%69.0%
Gross profit5,857.2 4,964.8 892.4 33.1%31.0%
Selling and administrative expenses(2,963.2)(2,545.9)(417.3)16.7%15.9%
Operating income2,894.0 2,418.9 475.1 16.4%15.1%
Interest expense(234.5)(223.5)(11.0)
Other income/(expense), net(92.2)(23.3)(68.9)  
Earnings before income taxes2,567.3 2,172.1 395.2 
Provision for income taxes(498.4)(375.9)(122.5)  
Earnings from continuing operations2,068.9 1,796.2 272.7 
Discontinued operations, net of tax(27.2)(21.5)(5.7)  
Net earnings$2,041.7 $1,774.7 $267.0 
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Net Revenues
Net revenues for the year ended December 31, 2023 increased by 10.5%, or $1,685.9 million, compared with the same period of 2022.
The components of the period change were as follows:
Pricing4.4 %
Volume4.3 %
Organic revenue (1)
8.7 %
Acquisitions2.1 %
Currency translation(0.3)%
Total10.5 %
(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."
The increase in Net revenues was primarily driven by realization of inflation-based price increases, higher volumes driven by increased end-customer demand within all our reportable segments and incremental revenue from acquisitions, partially offset by an unfavorable impact from foreign currency translation. Refer to “Results by Segment” below for a discussion of Net revenues by segment.
Gross Profit Margin
Gross profit margin for the year ended December 31, 2023 increased 210 basis points to 33.1% compared to 31.0% for the same period of 2022 primarily due to price realization and gross productivity, partially offset by inflation and business reinvestment.
Selling and Administrative Expenses
Selling and administrative expenses for the year ended December 31, 2023 increased by 16.4%, or $417.3 million, compared with the same period of 2022. The increase in Selling and administrative expenses was primarily driven by an increase in human capital costs related to investing in our people, higher sales commissions and merger and acquisition costs, including additional headcount, amortization of intangibles and transaction driven costs. Selling and administrative expenses as a percentage of Net revenues for the year ended December 31, 2023 increased 80 basis points from 15.9% to 16.7%.
Interest Expense
Interest expense for the year ended December 31, 2023 increased by 4.9% or $11.0 million compared with the same period of 2022 primarily due to the issuance of $700.0 million of 5.250% senior notes due March 2033 and interest costs associated with commercial paper issued during the period, partially offset by the redemption of $700.0 million of 4.250% senior notes due June 2023. We had no commercial paper outstanding as of December 31, 2023.
Provision for Income Taxes
The 2023 effective tax rate was 19.4% which was lower than the U.S. Statutory rate of 21% due to a net $30.3 million reduction in valuation allowances primarily related to deferred tax assets associated with both foreign tax credits and operations of international subsidiaries. Additional items that impact the effective tax rate are excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate offset by an impairment of an equity investment, which is currently nondeductible, and U.S. state and local taxes. Revenues from non-U.S. jurisdictions accounted for approximately 28% of our total 2023 revenues, such that a material portion of our pretax income was earned and taxed outside the U.S. at rates ranging from 0% to 38%. When comparing the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability in our overall effective tax rate.
The 2022 effective tax rate was 17.3% which was lower than the U.S. Statutory rate of 21% due to a $48.2 million reduction in valuation allowances primarily related to certain net state deferred tax assets resulting from U.S. legal entity restructurings and deferred tax assets associated with foreign tax credits as a result of an increase in the current year amount of creditable foreign source income. Additional tax benefits included in the 2022 effective rate are $12.4 million, net related to the effects of a prepayment of an intercompany obligation in 2021, excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate. These amounts were partially offset by U.S. state and local taxes and certain non-deductible employee expenses. Revenues from non-U.S. jurisdictions accounted for approximately 28% of our total 2022 revenues, such that a material portion of our pretax income was earned and taxed outside the U.S. at rates ranging from 0% to 38%.
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On December 18, 2023, Ireland enacted legislation related to the 15% minimum tax element of the OECD’s tax reform initiative, commonly referred to as “Pillar Two," effective January 1, 2024. We are continuing to evaluate the potential impacts of proposed and enacted legislative changes as new guidance becomes available. The legislation does not impact our 2023 effective tax rate; however, we anticipate it will increase our effective tax rate beginning in 2024.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 - Segment Results
We operate under four regional operating segments designed to create deep customer focus and relevance in markets around the world. The Company determined that its two Europe, Middle East and Africa (EMEA) operating segments meet the aggregation criteria based on similar operating and economic characteristics, resulting in one reportable segment. Therefore, the Company has three regional reportable segments, Americas, EMEA and Asia Pacific. In January 2024, we aligned our operating segments with our three regional reportable segments.
Our Americas segment innovates for customers in North America and Latin America. The Americas segment encompasses commercial heating, cooling and ventilation systems, building controls and solutions, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.
Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.
Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.
The following discussion compares our results for each of our three reportable segments for the year ended December 31, 20202023 compared to the year ended December 31, 2019.2022.
Dollar amounts in millions
Dollar amounts in millions
Dollar amounts in millionsDollar amounts in millions20202019% Change20232022% Change
AmericasAmericas
Americas
Americas
Net revenues
Net revenues
Net revenuesNet revenues$9,685.9 $10,059.5 (3.7)%$13,832.0 $$12,640.8 9.4 9.4 %
Segment Adjusted EBITDASegment Adjusted EBITDA1,677.7 1,742.1 (3.7)%Segment Adjusted EBITDA2,669.6 2,326.3 2,326.3 14.8 14.8 %
Segment Adjusted EBITDA as a percentage of net revenuesSegment Adjusted EBITDA as a percentage of net revenues17.3 %17.3 %
EMEAEMEA
EMEA
EMEA
Net revenues
Net revenues
Net revenuesNet revenues$1,648.1 $1,762.6 (6.5)%$2,401.2 $$2,034.5 18.0 18.0 %
Segment Adjusted EBITDASegment Adjusted EBITDA265.7 267.7 (0.7)%Segment Adjusted EBITDA464.7 338.1 338.1 37.4 37.4 %
Segment Adjusted EBITDA as a percentage of net revenuesSegment Adjusted EBITDA as a percentage of net revenues16.1 %15.2 %
Asia PacificAsia Pacific
Asia Pacific
Asia Pacific
Net revenues
Net revenues
Net revenuesNet revenues$1,120.7 $1,253.8 (10.6)%$1,444.4 $$1,316.4 9.7 9.7 %
Segment Adjusted EBITDASegment Adjusted EBITDA188.8 182.8 3.3 %Segment Adjusted EBITDA321.3 248.3 248.3 29.4 29.4 %
Segment Adjusted EBITDA as a percentage of net revenuesSegment Adjusted EBITDA as a percentage of net revenues16.8 %14.6 %
Total Net revenuesTotal Net revenues$12,454.7 $13,075.9 (4.8)%
Total Net revenues
Total Net revenues$17,677.6 $15,991.7 10.5 %
Total Segment Adjusted EBITDATotal Segment Adjusted EBITDA2,132.2 2,192.6 (2.8)%Total Segment Adjusted EBITDA3,455.6 2,912.7 2,912.7 18.6 18.6 %
Total Segment Adjusted EBITDA as a percentage of net revenues
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Americas
Net revenues for the year ended December 31, 2020 decreased2023 increased by 3.7%9.4% or $373.6$1,191.2 million, compared with the same period of 2019. 2022.
The components of the period change arewere as follows:
Pricing4.5 %
Volume(4.4)4.1 %
Organic revenue (1)
8.6 %
PricingAcquisitions1.0 %
Currency translation(0.3)(0.2)%
Total(3.7)9.4 %
During 2020, the Americas region(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."
The increase in organic revenue was impactedprimarily driven by the economic environment resultingrealization of inflation-based price increases and higher volumes led by strong demand for both equipment and services within our Commercial HVAC business, partially offset by the normalization of markets within our Residential business and the softening of transport markets.
The increase in revenue from the COVID-19 global pandemic; however, strong operational results during the second half of the year mitigatedacquisitions includes a challenging first half. The decreaseCommercial HVAC independent dealer acquired in April 2022, MTA and Helmer which were acquired in May 2023, and Nuvolo which was acquired in November 2023. Together these acquisitions increased Net revenues primarily related to lower volumes in each of our businesses during the first half of 2020. In addition, unfavorable foreign currency exchange rate movements further contributedAmericas segment by 1.0% compared to the year-over-year decrease, partially offset by favorable pricing.corresponding prior-year period.
Segment Adjusted EBITDA margin for the year ended December 31, 2020 remained flat at 17.3%2023 increased by 90 basis points to 19.3% compared to 18.4% for the same period of 2019. Improved pricing, cost containment initiatives, deflation2022 primarily due to price realization and lower spending on investments weregross productivity, partially offset by unfavorable product mix, lower volumesinflation and under absorption of fixed production overhead costs.business reinvestment.
EMEA
Net revenues for the year ended December 31, 2020 decreased2023 increased by 6.5%18.0% or $114.5$366.7 million, compared with the same period of 2019. 2022.
The components of the period change arewere as follows:
Pricing5.1 %
Volume(8.0)3.1 %
Organic revenue (1)
8.2 %
PricingAcquisitions0.38.4 %
Currency translation1.21.4 %
Total(6.5)18.0 %
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Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."
During 2020, the EMEA region The increase in organic revenue was heavily impactedprimarily driven by the economic environment resultingrealization of inflation-based price increases and higher volumes led by strong demand for both equipment and services within our Commercial HVAC business.
The increase in revenue from the COVID-19 global pandemic. The decreaseacquisitions includes AL-KO Air Technology (AL-KO) which was acquired in October 2022 and MTA which was acquired in May 2023. Together these acquisitions increased Net revenues primarily relatedin our EMEA segment by 8.4% compared to lower volumes, partially offset by favorable foreign currency exchange rate movements and improved pricing.the corresponding prior-year period.
Segment Adjusted EBITDA margin for the year ended December 31, 20202023 increased by 90280 basis points to 16.1%19.4% compared to 15.2%16.6% for the same period of 2019. The increase was2022 primarily driven by cost containment initiatives, lower spending on investments, favorable foreign currency exchange rate movementsdue to price realization, gross productivity and improved pricing. These amounts werehigher volumes, partially offset by inflation, lower volumes, unfavorable product mixmargin attribution from recent acquisitions, inclusive of integration costs, and under absorptioncontinued business reinvestment.
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Asia Pacific
Net revenues for the year ended December 31, 2020 decreased2023 increased by 10.6%9.7% or $133.1$128.0 million, compared with the same period of 2019. 2022.
The components of the period change arewere as follows:
Pricing2.6 %
Volume(11.5)7.6 %
Organic revenue (1)
10.2 %
PricingAcquisitions0.52.9 %
Currency translation0.4 (3.4)%
Total(10.6)9.7 %
(1) Represents a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."
During 2020,The increase in organic revenue was primarily driven by higher volumes related to increased end-customer demand and the realization of inflation-based price increases for both equipment and services within our Commercial HVAC business.
In October 2022, we acquired AL-KO, which increased Net revenues in our Asia Pacific region was heavily impactedsegment by 2.9% compared to the economic environment resulting from the COVID-19 global pandemic. The decrease in Net revenues primarily related to lower volumes since the beginning of the year, partially offset by improved pricing and favorable foreign currency exchange rate movements.prior-year period.
Segment Adjusted EBITDA margin for the year ended December 31, 20202023 increased by 220330 basis points to 16.8%22.2% compared to 14.6%18.9% for the same period of 2019. The increase was2022 primarily driven by cost containment initiatives, improved pricingdue to price realization, higher volumes and deflation. These amounts weregross productivity, partially offset by lower volumes, unfavorable product mixmargin attribution from the recent acquisition, inclusive of integration costs, and under absorption of fixed production overhead costs.continued business reinvestment.
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
Debt service requirements
Funding of capital expenditures
Dividend payments
Debt service requirementsFunding of acquisitions, joint ventures and equity investments

Share repurchases
Our primary sources of liquidity include cash balances on hand, cash flows 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 we had no outstanding balance as of December 31, 2020.2023.
As of December 31, 2020,2023, we had $3,289.9$1,095.3 million of cash and cash equivalents on hand, of which $2,471.2$949.0 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 December 31, 2020,2023, we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.
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Share repurchases are made from time to time in accordance with management's balanced capital allocation strategy, subject to market conditions and regulatory requirements. In October 2018,February 2022, our Board of Directors authorized the repurchase of up to $1.5
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$3.0 billion of our ordinary shares under a(2022 Authorization) upon the completion of our $2.0 billion ordinary share repurchase program (2018authorized in 2021 (2021 Authorization) upon completion of the prior authorized share repurchase program. No material amounts were repurchased under this program in 2018.. During the year ended December 31, 2019,2023, we repurchased and canceled approximately $750$669 million of ordinary shares, completing the 2021 Authorization and initiating repurchases under the 2022 Authorization of approximately $469 million of our ordinary shares, leaving approximately $750 million$2.5 billion remaining under the 2018 Authorization. During the year ended December 31, 2020, we repurchased and canceled approximately $250 million of our ordinary shares leaving approximately $500 million remaining under the 20182022 Authorization. Additionally, through February 9, 2021,January 31, 2024, we repurchased approximately $100$81 million of our ordinary shares under the 20182022 Authorization.
We expect to pay a competitive and growing dividend. Since the launch of Trane Technologies in March 2020, we have increased our quarterly share dividend by 42%, from $0.53 to $0.75 per ordinary share, or $2.12 to $3.00 per share annualized. All four 2023 quarterly dividends were paid during the year ended December 31, 2023. In February 2021,2024, 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.
In June 2018, we announceddeclared an increase in our quarterly share dividend by 12%, from $0.45$0.75 to $0.53 per ordinary share. This reflected an 18% increase that began with our September 2018 payment and an 83% increase since the beginning of 2016. In February 2021, we announced an 11% increase in our quarterly share dividend from $0.53 to $0.59$0.84 per ordinary share, that will begin with our March 2021 payment.or $3.00 to $3.36 per share annualized starting in the first quarter of 2024.
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. Sustaining activities include costs incurred to reduce production costs, improve existing products, create custom solutions for customers and provide support to our manufacturing facilities. Our research and development and sustaining costs account for approximately two percent of annual Net revenues. Each year, we make a significant investmentinvestments 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 solutionsmake investments in technology and business for customers and provide support to our manufacturing facilities. Combined, these costs account for approximately two percent of net revenues each year.operational sustainability programs.
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 2018,2020, we have acquired several businesses, and entered into a joint ventureventures and invested in companies that complementscomplement existing products and services further enhancing our product portfolio. In addition, we completed a Reverse Morris Trust transaction with Gardner Denver whereby we separated Ingersoll Rand Industrial from our business portfolio, transformingDuring the Company into a global climate innovator. We recognized separation-related costs of $114.2 million during the yearyears ended December 31, 20202023 and $94.6 million during the year ended December 31, 2019. These expenditures were incurred in order2022, we deployed capital of approximately $881 million and $256 million, respectively, attributable to facilitate the transactionacquisitions and are included within Discontinued operations, net of tax.equity investments.
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 intend to reduce costs by $140 million through 2021 and an additional $160 million by 2023 for a totalhave exceeded our goal of $300 million in total annual savings.savings under our transformation initiatives through December 31, 2023. In order to achieve these cost savings, we incurred approximately $134 million of costs cumulatively through December 31, 2023. 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.
As During the COVID-19 global pandemic impacts boththird quarter of 2021, Aldrich and Murray filed a motion with the broader economy and our operations, we will continueBankruptcy Court 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.create a $270.0 million QSF. The COVID-19 global pandemic created substantial volatilityfunds held in the short-term credit markets duringQSF would be available to provide funding for the first halfSection 524(g) Trust upon effectiveness of 2020. A recurrence in volatility duethe Plan. On January 27, 2022, the Bankruptcy Court granted the request to a resurgence infund the COVID-19 global pandemic could impact the cost of our credit facilities, the cost of any borrowing we might make under those facilities or the cost of any commercial paper we may issue, to the extent we were to either drawQSF, which was funded on our facilities or issue commercial paper. See Part I, Item 1A Risk Factors for more information.March 2, 2022.
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Liquidity
The following table contains several key measures of our financial condition and liquidity at the periods ended December 31:
In millions20202019
Cash and cash equivalents$3,289.9 $1,278.6 
Short-term borrowings and current maturities of long-term debt (1)
775.6 650.3 
Long-term debt4,496.5 4,922.9 
Total debt5,272.1 5,573.2 
Total Trane Technologies plc shareholders’ equity6,407.7 7,267.6 
Total equity6,427.1 7,312.4 
Debt-to-total capital ratio45.1 %43.3 %
(1) The $300.0 million of 2.625% Senior notes due in May 2020 were redeemed in April 2020.
In millions20232022
Cash and cash equivalents$1,095.3 $1,220.5 
Short-term borrowings and current maturities of long-term debt801.9 1,048.0 
Long-term debt3,977.9 3,788.3 
Total debt4,779.8 4,836.3 
Total Trane Technologies plc shareholders’ equity6,995.2 6,088.6 
Total equity7,017.0 6,105.2 
Debt-to-total capital ratio40.5 %44.2 %
Debt and Credit Facilities
OurAs of December 31, 2023, our short-term obligations primarily consistsconsist of current maturities of $499.4 million of long-term debt. In addition, we have outstanding $343.0debt that matures in November 2024 and $295.0 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. In November 2023, we paid $45.8 million of principal to holders who elected to exercise their put options. Holders who had the option to exercise puts up to $37.2 million for settlement in February 2024 did not exercise such option. Holders will have the option to exercise puts up to $257.8 million for settlement in November 2024. 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 as of December 31, 2020.2023. We had no commercial paper outstanding at December 31, 20202023 and December 31, 2019.2022. See Note 87, "Debt and Credit Facilities", to the 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 20212025 and 2049. In addition, we maintain two $1.0 billion senior unsecured revolving credit facilities, one of which matures in March 2022June 2026 and the other which matures in April 2023.2027. 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 December 31, 20202023 and December 31, 2019.2022. See Note 87, "Debt and Credit Facilities", to the 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.
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Cash Flows
The following table reflects the major categories of cash flows for the years ended December 31, respectively. For additional details, please see the Consolidated Statements of Cash Flows in the Consolidated Financial Statements.
In millions20202019
Net cash provided by (used in) continuing operating activities$1,766.2 $1,523.7 
Net cash provided by (used in) continuing investing activities(338.5)(281.8)
Net cash provided by (used in) continuing financing activities884.3 272.0 
In millions20232022
Net cash provided by continuing operating activities$2,426.8 $1,698.7 
Net cash used in continuing investing activities(1,172.2)(539.8)
Net cash used in continuing financing activities(1,350.3)(1,852.2)
Operating Activities
Net cash provided by continuing operating activities for the year ended December 31, 20202023 was $1,766.2$2,426.8 million, of which net income provided $1,422.5$2,499.6 million after adjusting for non-cash transactions.Changes in other assets and liabilities, net provided $343.7 million. Net cash provided by continuing operating activities for the year ended December 31, 20192022 was $1,523.7$1,698.7 million, of which net income provided $1,594.0$2,248.8 million after adjusting for non-cash transactions. Changes in other assets and liabilities, net used $70.3 million. The year-over-year increase in net cash provided byfrom continuing operating activities was primarily driven bydue to higher net earnings and improved working capital whereby lower inventorycash conversion cycle. Additionally, during the year ended December 31, 2022, we funded the continuing operations component of the QSF for $91.8 million and higher outstanding accounts payable balances more than offset higher accounts receivable and lower earnings in the current year.made a compensation related payment to a retired executive.
Investing Activities
Cash flows from investing activities represents 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 divestitures. During the year ended December 31, 2020,2023, net cash used in investing activities from continuing operations was $338.5$1,172.2 million. The primary drivers of the usage was attributable to the acquisition of businesses, which totaled $182.8$862.8 million, net of cash acquired, and $146.2 millioncapital expenditures of capital expenditures. 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
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$300.7 million. During the year ended December 31, 2019,2022, net cash used in investing activities from continuing operations was $281.8$539.8 million. The primary drivers of the usage was attributable to $205.4 million of capital expenditures of $291.8 million and the acquisition of several businesses, which totaled $83.4$234.7 million, net of cash acquired.
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 stock and debt transactions. During the year ended December 31, 2020,2023, net cash provided byused in financing activities from continuing operations was $884.3$1,350.3 million. The primary driverdrivers of the inflowoutflow related to the receipt of a special cash payment of $1.9 billion pursuant to the completion of the Transaction. This amount was partially offset by dividends paid to ordinary shareholders of $507.3 million, the repayment of long term debt of $307.5$683.7 million and the repurchase of $250.0$669.3 million in ordinary shares. In addition, we received $699.1 million in proceeds from the issuance of 5.250% senior notes due March 2033 which was offset by the redemption of $700.0 million of senior notes due June 2023. During the year ended December 31, 2019,2022, net cash provided byused in financing activities from continuing operations was $272.0$1,852.2 million. The primary driverdrivers of the inflowoutflow related to the issuance of $1.5 billion of senior notes during the period. This amount was partially offset by the repurchase of $750.1$1,200.2 million in ordinary shares and dividends paid to ordinary shareholders of $510.1$620.2 million.
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Free Cash Flow
Free cash flow is a non-GAAP measure and defined as netNet cash provided by (used in) continuing operating activities less adjusted forcapital expenditures, plus cash payments for restructuring, transformation costs, merger and transformation costs.acquisition (M&A) related costs, thecontinuing operations component of the QSF funding and payout of executive compensation less insurance settlements on property claims. 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 Net cash provided by (used in) continuing operating activities.activities. Free cash flow may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for netNet cash provided by (used in) continuing operating activities in accordance with GAAP.
A reconciliation of netNet cash provided by (used in) continuing operating activities to free cash flow the years ended December 31 is as follows:
In millionsIn millions20202019In millions20232022
Net cash provided by (used in) continuing operating activitiesNet cash provided by (used in) continuing operating activities$1,766.2 $1,523.7 
Capital expendituresCapital expenditures(146.2)(205.4)
Cash payments for restructuringCash payments for restructuring68.9 45.3 
Transformation costs paidTransformation costs paid25.4 4.3 
Acquisition related transaction costs
QSF funding (continuing operations component)
Compensation related payment to a retired executive
Insurance settlements on property claims
Free cash flow (1)
Free cash flow (1)
$1,714.3 $1,367.9 
(1) Represents a non-GAAP measure.
Pension Plans
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. Our approach to asset allocation is to increase fixed income assets as the plan's funded status improves. We monitor plan funded status and asset allocation regularly in addition to investment manager performance. In addition, we monitor the impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans have experienced a significant impact on their liquidity due to market volatility. See Note 1211, "Pension and Postretirement Benefits Other Than Pensions", to the Consolidated Financial Statements for additional information regarding pensions.
Capital Resources
Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the cash generated from our operations, our committed credit lines and our expected ability to access capital markets, including our commercial paper program, will satisfy our working capital needs, capital expenditures, dividends, share repurchases, upcoming debt maturities, and other liquidity requirements associated with our operations for the foreseeable future.
Capital expenditures were $300.7 million, $291.8 million and $223.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Our investments continue to improve manufacturing productivity, reduce costs, provide environmental enhancements, upgrade information technology infrastructure and security and advanced technologies for existing facilities. The capital expenditure program for 2024 is estimated to be approximately 2.5% of revenues, including amounts approved in prior periods. Many of these projects are subject to review and cancellation at our option without incurring substantial charges.
For financial market risk impacting the Company, see Part II, Item 7A, "Quantitative and Qualitative Disclosure About Market Risk."
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Capitalization
Financing rates and conditions associated with future borrowings under our commercial paper program or term debt offerings will be affected by general financing conditions and our credit ratings. On April 4, 2023, Moody's announced that it upgraded our long-term credit rating from Baa2 to Baa1 and put the Company on positive outlook. On August 18, 2023, Standard and Poor's announced that it upgraded our long-term credit rating from BBB to BBB+. As of December 31, 2023, our credit ratings were as follows:
Short-termLong-term
Moody’sP-2Baa1
Standard and Poor’sA-2BBB+
The credit ratings set forth above are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Our public debt does not contain financial covenants and our revolving credit lines have a debt-to-total capital covenant of 65%. As of December 31, 2023, our debt-to-total capital ratio was significantly beneath this limit.
Contractual Obligations
Our contractual cash obligations include required payments of long-term debt principal and interest, purchase obligations and expected obligations under our pension and postretirement benefit plans. In addition, we have required payments of operating leases, income taxes and expected obligations under the Funding agreement, environmental and product liability matters. For additional information regarding leases, income taxes, including unrecognized tax benefits, and contingent liabilities, see Note 10 "Leases", Note 16 "Income Taxes" and Note 20 "Commitments and Contingencies", respectively, to the Consolidated Financial Statements. Our material cash requirements include the following contractual and other obligations.
Debt
At December 31, 2023, we had outstanding aggregate long-term debt principal payments of $4,809.8 million, with $802.5 million payable within 12 months. The amount payable within 12 months includes $295.0 million of debt redeemable at the option of the holder. The scheduled maturities of these bonds range between 2027 and 2028. Future interest payments on long-term debt total $2,324.5 million, with $218.2 million payable within 12 months. See Note 7, "Debt and Credit Facilities", to the Consolidated Financial Statements for additional information regarding debt.
Purchase Obligations
Purchase obligations include commitments under legally enforceable contracts or purchase orders. At December 31, 2023, we had purchase obligations of $1,096.1 million, which are primarily payable within 12 months.
Pensions
It is our objective to contribute to the pension plans to ensure adequate funds are available in the plans to make benefit payments to plan participants and beneficiaries when required. We currently expect that we will contribute approximately $61 million to our enterprise plans worldwide in 2024. The timing and amounts of future contributions are dependent upon the funding status of the plan, which is expected to vary as a result of changes in interest rates, returns on underlying assets, and other factors. See Note 11, "Pensions and Postretirement Benefits Other Than Pensions", to the Consolidated Financial Statements for additional information regarding pensions.
Postretirement Benefits Other than Pensions
We fund postretirement benefit costs principally on a pay-as-you-go basis as medical costs are incurred by covered retiree populations. Benefit payments, which are net of expected plan participant contributions and Medicare Part D subsidy, are expected to be approximately $30 million in 2024. See Note 11, "Pensions and Postretirement Benefits Other Than Pensions", to the Consolidated Financial Statements for additional information regarding postretirement benefits other than pensions.
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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.subsidiaries of Plc. The following table shows our guarantor relationships as of December 31, 2020:2023:
Parent, issuer or guarantors(1)
Notes issuedNotes guaranteed
Trane Technologies plc (Plc)NoneAll registered notes and debentures
Trane Technologies Irish Holdings Unlimited Company (TT Holdings)NoneAll notes issued by TT LuxTTFL and TTC HoldCo
Trane Technologies Lux International Holding Company S.à.r.l. (TT International)(1)
NoneAll notes issued by TT LuxTTFL and TTC HoldCo
Trane Technologies Global Holding II Company (TT Global II) (2)
NoneAll notes issued by TTFL and TTC HoldCo
Trane Technologies Americas Holding Corporation (TT Americas) (3)
NoneAll notes issued by TTFL and TTC HoldCo
Trane Technologies Global Holding CompanyFinancing Limited (TT Global)NoneAll notes issued by TT Lux and TTC HoldCo
Trane Technologies Luxembourg Finance S.A. (TT Lux)
(TTFL)
3.550% Senior notes due 2024
3.500% Senior notes due 2026
3.800% Senior notes due 2029
5.250% Senior notes due 2033

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)2.900% Senior notes due 2021
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 TT LuxTTFL
Trane Technologies Company LLC (TTC)9.000% Debentures due 2021
7.200% Debentures due 2021-2025
2023-2025
6.480% Debentures due 2025
Puttable debentures due 2027-2028
All notes issued by TT LuxTTFL and TTC HoldCo
(1) Plc is formerly known as Ingersoll-Rand plc
TT Holdings is formerly known as Ingersoll-Rand Irish Holdings Unlimited Company
TT International is formerly known as Ingersoll-Rand Lux International Holding Company S.à.r.l
TT Global is formerly known as Ingersoll-RandOn November 20, 2023, Trane Technologies Global Holding Company Limited (TT Global) merged into TT International, an Irish private limited company.
(2) Entity is a newly formed Delaware Corporation and was formed on November 3, 2023.
(3) TT Lux is formerlyAmericas, formally known as Ingersoll-Rand Luxembourg Finance S.A
TTC HoldCo isTrane Grid Services LLC, was renamed and redomiciled as a new entity as of June 30, 2020
TTC is the successor to Ingersoll-Rand CompanyDelaware Corporation.
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 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 December 31, 2020.2023. Our obligor groups areas of December 31, 2023 were as follows: obligorObligor group 1 consists of Plc, TT Holdings, TT International, TT Global II, TT Lux,Americas, TTFL, TTC HoldCo and TTC; obligorObligor group 2 consists of Plc, TT LuxTTFL and TTC.
Summarized Statement of Comprehensive Income (Loss)
Year ended December 31, 2020
In millionsObligor group 1Obligor group 2
Net revenues$— $— 
Gross profit (loss)— — 
Intercompany interest and fees(88.7)48.2 
Earnings (loss) from continuing operations(493.1)(375.2)
Discontinued operations, net of tax(152.2)(113.3)
Net earnings (loss)(645.3)(488.5)
Less: Net earnings attributable to noncontrolling interests— — 
Net earnings (loss) attributable to Trane Technologies plc$(645.3)$(488.5)
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Summarized Statements of Earnings
Year ended December 31, 2023
In millionsObligor group 1Obligor group 2
Net revenues$— $— 
Gross profit (loss)— — 
Intercompany interest and fees63.4 386.9 
Earnings (loss) from continuing operations(164.0)207.8 
Discontinued operations, net of tax(20.6)(25.5)
Net earnings (loss)(184.6)182.3 
Less: Net earnings attributable to noncontrolling interests— — 
Net earnings (loss) attributable to Trane Technologies plc$(184.6)$182.3 
Summarized Balance Sheet
December 31, 2020
In millionsObligor group 1Obligor group 2
ASSETS
Intercompany receivables$458.4 $1,254.7 
Current assets1,523.7 2,200.5 
Intercompany notes receivable1,331.9 1,331.9 
Noncurrent assets2,195.0 1,967.2 
LIABILITIES & EQUITY
Intercompany payables5,572.2 3,599.6 
Current liabilities6,880.3 4,539.1 
Intercompany notes payable2,249.7 — 
Noncurrent liabilities7,729.6 3,430.5 
Capital Resources
Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the cash generated from our operations, our committed credit lines and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures, dividends, share repurchases, upcoming debt maturities, and other liquidity requirements associated with our operations for the foreseeable future.
Capital expenditures were $146.2 million, $205.4 million and $284.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Our investments continue to improve manufacturing productivity, reduce costs, provide environmental enhancements, upgrade information technology infrastructure and security and advanced technologies for existing facilities. The capital expenditure program for 2021 is estimated to be approximately one to two percent of revenues, including amounts approved in prior periods. Many of these projects are subject to review and cancellation at our option without incurring substantial charges.
For financial market risk impacting the Company, see Item 7A. "Quantitative and Qualitative Disclosure About Market Risk."
Capitalization
In addition to cash on hand and operating cash flow, we maintain significant credit availability under our Commercial Paper Program. Our ability to borrow at a cost-effective rate under the Commercial Paper Program is contingent upon maintaining an investment-grade credit rating. As of December 31, 2020, our credit ratings were as follows, remaining unchanged from 2019:
Short-termLong-term
Moody’sP-2Baa2
Standard and Poor’sA-2BBB
The credit ratings set forth above are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Our public debt does not contain financial covenants and our revolving credit lines have a debt-to-total capital covenant of 65%. As of December 31, 2020, our debt-to-total capital ratio was significantly beneath this limit.
Contractual Obligations
The following table summarizes our contractual cash obligations by required payment period:
In millionsLess than
1 year
1 - 3
years
3 - 5
years
More than
5 years
Total
Long-term debt$775.8 (a)$715.8 $665.1 $3,150.0 $5,306.7 
Interest payments on long-term debt231.4 415.1 345.7 1,641.6 2,633.8 
Purchase obligations735.2   — — — 735.2 
Operating leases152.0 192.3 69.6 34.5 448.4 
Total contractual cash obligations$1,894.4   $1,323.2 $1,080.4 $4,826.1 $9,124.1 
(a)Includes $343.0 million of debt redeemable at the option of the holder. The scheduled maturities of these bonds range between 2027 and 2028.
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Future expected obligations under the Funding agreement and our pension and postretirement benefit plans, income taxes, environmental and product liability matters have not been included in the contractual cash obligations table above.
Pensions
At December 31, 2020, we had a net unfunded liability of $548.2 million, which consists of noncurrent pension assets of $72.8 million and current and non-current pension benefit liabilities of $621.0 million. It is our objective to contribute to the pension plans to ensure adequate funds are available in the plans to make benefit payments to plan participants and beneficiaries when required. We currently expect that we will contribute approximately $56 million to our enterprise plans worldwide in 2021. The timing and amounts of future contributions are dependent upon the funding status of the plan, which is expected to vary as a result of changes in interest rates, returns on underlying assets, and other factors. Therefore, pension contributions have been excluded from the preceding table. See Note 12 to the Consolidated Financial Statements for additional information regarding pensions.
Postretirement Benefits Other than Pensions
At December 31, 2020, we had postretirement benefit obligations of $389.1 million. We fund postretirement benefit costs principally on a pay-as-you-go basis as medical costs are incurred by covered retiree populations. Benefit payments, which are net of expected plan participant contributions and Medicare Part D subsidy, are expected to be approximately $37 million in 2021. Because benefit payments are not required to be funded in advance, and the timing and amounts of future payments are dependent on the cost of benefits for retirees covered by the plan, they have been excluded from the preceding table. See Note 12 to the Consolidated Financial Statements for additional information regarding postretirement benefits other than pensions.
Income Taxes
At December 31, 2020, we have total unrecognized tax benefits for uncertain tax positions of $65.4 million and $14.6 million of related accrued interest and penalties, net of tax. The liability has been excluded from the preceding table as we are unable to reasonably estimate the amount and period in which these liabilities might be paid. See Note 18 to the Consolidated Financial Statements for additional information regarding income taxes, including unrecognized tax benefits.
Contingent Liabilities
We are involved in various litigation, claims and administrative proceedings, including those related to the Funding Agreements and environmental and product liability matters. We believe that these liabilities are subject to the uncertainties inherent in estimating future costs for contingent liabilities, and will likely be resolved over an extended period of time. Because the timing and amounts of potential future cash flows are uncertain, they have been excluded from the preceding table. See Note 22 to the Consolidated Financial Statements for additional information regarding contingent liabilities.
December 31, 2023
In millionsObligor group 1Obligor group 2
ASSETS
Intercompany receivables$1,517.3 $3,302.6 
Current assets1,609.1 3,378.3 
Intercompany notes receivable1,837.1 7,687.1 
Noncurrent assets2,522.3 8,263.6 
LIABILITIES
Intercompany payables4,693.4 1,611.6 
Current liabilities5,979.0 2,856.4 
Intercompany notes payable4,000.0 4,000.0 
Noncurrent liabilities8,561.8 7,201.0 
Critical Accounting PoliciesEstimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).U.S. GAAP. The preparation of financial statements in conformity with those accounting principles requires management to use judgment 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 these estimates. If updated information or actual amounts are different from previous estimates, the revisions are included in our results for the period in which they become known.
The following is a summary of certain accounting estimates and assumptions made by management that we consider critical.
Goodwill and indefinite-lived intangible assets – We have significant goodwill and indefinite-lived intangible assets on our balance sheet related to acquisitions. These assets are tested and reviewed annually during the fourth quarter for impairment or when there is a significant change in events or circumstances that indicate that the fair value of an asset is more likely than not less than the carrying amount of the asset. In addition, an interim impairment test is completed upon a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion of a reporting unit.
The determination of estimated fair value requires us to make assumptions about estimated cash flows, including profit margins, long-term forecasts, discount rates and terminal growth rates. We developed these assumptions based on the market and geographic risks unique to each reporting unit. The estimates of fair value are based on the best information available as of the date of the assessment, which primarily incorporates management assumptions about expected future cash flows.
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Annual Goodwill Impairment Test
Impairment of goodwill is assessedtested at the reporting unit level and begins with a qualitative assessment to determine if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test under Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 350, "Intangibles-Goodwill and Other" (ASC 350). For those reporting units that bypass or fail the qualitative assessment, thelevel. The test compares the carrying amount of the reporting unit to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the
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reporting unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss would be recognized for the amount by which the reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit.
As quoted market prices are not available for our reporting units, the calculation of their estimated fair value is determined using three valuation techniques: a discounted cash flow model (an income approach), a market-adjusted multiple of earnings and revenues (a market approach), and a similar transactions method (also a market approach). The discounted cash flow approach relies on our estimates of future cash flows and explicitly addresses factors such as timing, growth and margins, with due consideration given to forecasting risk. The multiple of earnings and revenues approach reflects the market's expectations for future growth and risk, with adjustments to account for differences between the guideline publicly traded companies and the subject reporting units. The similar transactions method considers prices paid in transactions that have recently occurred in our industry or in related industries. These valuation techniques are weighted 50%, 40% and 10%, respectively.
Interim Goodwill Impairment Test
During the first quarter of 2020, we announced a new organizational model and business segment structure. Under the revised structure,income approach, we created three new regional operating segments (which also serve as our reportable segments) previously reported under our former climate segment. In connectionassumed a forecasted cash flow period of five years with the new segment structure, we performed an interim goodwill impairment assessment immediately priordiscount rates ranging from 10.0% to the reorganization becoming effective, the results12.5% and a terminal growth rate of which did not indicate any goodwill impairment. We then reassigned our goodwill among the newly designated reporting units using a relative fair value approach and immediately performed a second goodwill impairment assessment under the new reporting structure. The results did not indicate any goodwill impairment. We relied on3.0%. Under the guideline public company method, specifically a market-adjustedwe used an adjusted multiple ranging from 10.0 to 17.0 of projected earnings before interest, taxes, depreciation and revenues approach, to calculateamortization (EBITDA) based on the market information of comparable companies. Additionally, we compared the estimated aggregate fair value of our reporting units to our overall market capitalization. For all reporting units, the newexcess of the estimated fair value over carrying value (expressed as a percentage of carrying value) exceeded 250%. A significant increase in the discount rate, decrease in the long-term growth rate, or substantial reductions in our end markets and volume assumptions could have a negative impact on the estimated fair value of these reporting units.
Other Indefinite-lived intangible assets
Impairment of otherOther intangible assets with indefinite useful lives is first assessed using a qualitative assessment to determine whether it is more likely than not thatare tested for impairment on an indefinite-lived intangible asset is impaired. This assessment is used as a basis for determining whether it is necessary to calculate theannual basis. The fair value of an indefinite-lived intangible asset. For those indefinite-lived assets where it is required, a fair valuewith indefinite useful lives is determined on a relief from royalty methodology (income approach) which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e., royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value would be recognized as an impairment loss equal to that excess.
In testing our other indefinite-lived intangible assets for impairment, we assumed forecasted revenues for a period of five years with discount rates ranging from 10.0% to 15.0%, terminal growth rates of 3.0%, and royalty rates ranging from 0.5% to 4.5%. For all indefinite-lived intangible assets, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value) exceeded 35%. A significant increase in the discount rate, decrease in the long-term growth rate, decrease in the royalty rate or substantial reductions in our end markets and volume assumptions could have a negative impact on the estimated fair values of any of our tradenames.
Business combinations - Acquisitions that meet the definition of a business combination are recorded using the acquisition method of accounting. We include the operating results of acquired entities from their respective dates of acquisition. We recognize and measure the identifiable assets acquired, liabilities assumed, including contingent consideration relating to potential earnout provisions and any non-controlling interest as of the acquisition date fair value. The valuation of intangible assets is determined using an income approach methodology. We use assumptions to value the intangible assets including projected cash flows, including revenue growth rates and margins, customer attrition rates, royalty rates, tax rates and discount rates. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed, and any non-controlling interest is recognized as goodwill. Costs incurred as a result of a business combination other than costs related to the issuance of debt or equity securities are recorded in the period the costs are incurred.
Contingent consideration
We assess any contingent consideration included in the consideration paid of a business combination. The value recorded is based on estimates of future financial projections on revenue under various potential scenarios, in which a Monte Carlo simulation model runs many iterations based on comparable companies' revenue growth rates and their implied revenue volatilities. These cash flow projections are discounted with a risk adjusted rate. Each quarter until such contingent amounts are earned, the fair value of the liability is remeasured at each reporting period and adjusted as a component of operating expenses based on changes to the underlying assumptions. The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment, specifically revenue growth rates, implied revenue volatilities and discount rates.
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Asbestos matters – 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. We recorded a liability for our actual and anticipated future claims as well as an asset for anticipated insurance settlements. We performed a detailed analysis and projected an estimated range of the total liability for pending and unasserted future asbestos-related claims. In accordance with ASC 450, "Contingencies" (ASC 450), weWe recorded the liability at the low end of the range as we believed that no amount within the range is a better estimate than any other amount. Our key assumptions underlying the estimated asbestos-related liabilities included the number of people occupationally exposed and likely to develop asbestos-related diseases such as mesothelioma and lung cancer, the number of people likely to file an asbestos-related personal injury claim against us, the average settlement and resolution of each claim and the percentage of claims resolved with no payment. Asbestos-related defense costs were excluded from the asbestos claims liability and were recorded separately as services were incurred. None of our existing or previously-owned businesses were a producer or manufacturer of asbestos. We recorded certain income and expenses associated with our asbestos liabilities and corresponding insurance recoveries within Discontinued operations, net of tax, as they related to previously divested businesses, except for amounts associated with asbestos liabilities and corresponding insurance recoveries of Murray and its predecessors, which were recorded within continuing operations.
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Revenue recognition – Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of our revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of our revenues are recognized over time as the customer simultaneously receives control as we perform work under a contract. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as we incursincur costs. We adopted Accounting Standard Update (ASU) No. 2014-09, "Revenue from Contracts with Customers" (ASC 606), on January 1, 2018 using the modified retrospective approach. Refer to Note 3, "Summary of Significant Accounting Policies" and Note 13, "Revenue" for additional information related to the adoption of ASC 606.
The transaction price allocated to performance obligations reflects our expectations about the consideration we will be entitled to receive from a customer. To determine the transaction price, variable and noncashnon-cash consideration are assessed as well as whether a significant financing component exists. We include variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. We consider historical data in determining our best estimates of variable consideration, and the related accruals are recorded using the expected value method.
We enter into sales arrangements that contain multiple goods and services, such as equipment, installation and extended warranties.services. For these arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation and whether the sales price for each obligation is representative of standalone selling price. If available, we utilize observable prices for goods or services sold separately to similar customers in similar circumstances to evaluate relative standalone selling price. List prices are used if they are determined to be representative of standalone selling prices. Where necessary, we ensure that the total transaction price is then allocated to the distinct performance obligations based on the determination of their relative standalone selling price at the inception of the arrangement.
We recognize revenue for delivered goods or services when the delivered good or service is distinct, control of the good or service has transferred to the customer, and only customary refund or return rights related to the goods or services exist. For extended warranties and long-term service agreements, revenue for these distinct performance obligations are recognized over time on a straight-line basis over the respective contract term.
Income taxes – Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. We recognize future tax benefits, such as net operating losses and tax credits, to the extent that realizing these benefits is considered in our judgment to be more likely than not. We regularly review the recoverability of our deferred tax assets considering our historic profitability, projected future taxable income, timing of the reversals of existing temporary differences and the feasibility of our tax planning strategies. Where appropriate, we record a valuation allowance with respect to a future tax benefit.
The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which we operate. Future changes in applicable laws, projected levels of taxable income, and tax planning could change the effective tax rate and tax balances recorded by us. In addition, tax authorities periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which we operate. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. We believe that we have adequately provided for any reasonably foreseeable resolution of these matters. We will adjust our estimate if significant events so dictate. To the extent that the ultimate results differ from our original or adjusted estimates, the effect will be recorded in the provision for income taxes in the period that the matter is finally resolved.
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Employee benefit plans – We provide a range of benefits to eligible employees and retirees, including pensions, postretirement and postemployment benefits. Determining the cost associated with such benefits is dependent on various actuarial assumptions including discount rates, expected return on plan assets, compensation increases, mortality, turnover rates and healthcare cost trend rates. Actuarial valuations are performed to determine expense in accordance with GAAP. Actual results may differ from the actuarial assumptions and are generally accumulated and amortized into earnings over future periods. We review our actuarial assumptions at each measurement date and make modifications to the assumptions based on current rates and trends, if appropriate. The discount rate, the rate of compensation increase and the expected long-term rates of return on plan assets are determined as of each measurement date. We believe that the assumptions utilized in recording our obligations under our plans are reasonable based on input from our actuaries, outside investment advisors and information as to assumptions used by plan sponsors.
Changes in any of the assumptions can have an impact on the net periodic pension cost or postretirement benefit cost. Estimated sensitivities to the expected 20212023 net periodic pension cost of a 0.25% rate decline in the two basic
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assumptions are as follows: the decline in the discount rate would increase expense by approximately $4.8$0.5 million and the decline in the estimated return on assets would increase expense by approximately $7.6$5.2 million. A 0.25% rate decrease in the discount rate for postretirement benefits would increase expected 20212023 net periodic postretirement benefit cost by $0.5$0.3 million.
Recent Accounting Pronouncements
See Note 32, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to fluctuations in currency exchange rates, interest rates and commodity prices which could impact our results of operations and financial condition.
Foreign Currency Exposures
We have operations throughout the world that manufacture and sell products in various international markets. As a result, we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other currencies throughout the world.
Many of our non-U.S. operations have a functional currency other than the U.S. dollar, and their results are translated into U.S. dollars for reporting purposes. Therefore, our reported results will be higher or lower depending on the weakening or strengthening of the U.S. dollar against the respective foreign currency. Our largest concentration of revenues from non-U.S. operations as of December 31, 20202023 are in Euros and Chinese Yuan. A hypothetical 10% unfavorable change in the average exchange rate used to translate Net revenues for the year ended December 31, 20202023 from either Euros or Chinese Yuan-based operations into U.S. dollars would not haveresult in a material impact on our financial statements.decline of approximately $165 million and $70 million, respectively.
We use derivative instruments to partially hedge those material exposures that cannot be naturally offset. The instruments utilized are viewed as risk management tools, primarily involve little complexity and are not used for trading or speculative purposes. To minimize the risk of counter partycounterparty non-performance, derivative instrument agreements are made only through major financial institutions with significant experience in such derivative instruments.
We evaluate our exposure to changes in currency exchange rates on our foreign currency derivatives using a sensitivity analysis. The sensitivity analysis is a measurement of the potential loss in fair value based on a percentage change in exchange rates. Based on the firmly committed currency derivative instruments in place at December 31, 2020,2023, a hypothetical change in fair value of those derivative instruments assuming a 10% adverse change in exchange rates would result in an unrealized loss of approximately $22.3$6.5 million, as compared with $27.8$7.5 million at December 31, 2019.2022. These amounts, when realized, would be offset by changes in the fair value of the underlying transactions.
Commodity Price Exposures
We are exposed to volatility in the prices of commodities used in some of our products and we use commodity hedge contracts in the financial derivatives market and fixed price purchase contracts to manage this exposure. We do not have committedCommodity risks are systematically managed pursuant to policy guidelines. As a cash flow hedge, gains and losses resulting from the hedging instruments mitigate a portion of our exposures to changes in commodity prices. The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities. Based on the commodity derivative instruments in place at December 31, 2020.2023, a hypothetical change in fair value of those derivative instruments assuming a 10% decrease in commodity prices would result in an unrealized loss of $8.2 million, as compared with $9.0 million at December 31, 2022. These amounts, when realized, would be offset by changes in the fair value of the underlying commodity purchases.
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Interest Rate Exposure
Our debt portfolio mainly consists of fixed-rate instruments, and therefore any fluctuation in market interest rates is not expected to have a material effect on our results of operations.
Item 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a)The following Consolidated Financial Statements and the report thereon of PricewaterhouseCoopers LLP dated February 9, 2021,8, 2024, are presented in this Annual Report on Form 10-K beginning on page F-1.
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Earnings for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 20192023, 2022 and 20182021
Consolidated Balance Sheets at December 31, 20202023 and 20192022
ForConsolidated Statements of Equity for the years ended December 31, 2020, 20192023, 2022 and 2018:
Consolidated Statements of Equity2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
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(b)In connection with the completion of the Transaction, we do not beneficially own any Ingersoll Rand Industrial shares of common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. As a result, the following unaudited selected quarterly financial data presents the results of Ingersoll Rand Industrial as a discontinued operation for periods prior to the Distribution date. The unaudited selected quarterly financial data for the two years ended December 31, is as follows:
2020
In millions, except per share amountsFirst
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net revenues$2,641.3 $3,138.8 $3,495.5 $3,179.1 
Cost of goods sold(1,898.8)(2,160.5)(2,360.8)(2,231.2)
Operating income154.4 423.5 566.9 388.0 
Earnings from continuing operations52.8 278.3 410.1 250.2 
Discontinued operations, net of tax(78.7)(36.2)(5.5)(1.0)
Net earnings (loss)(25.9)242.1 404.6 249.2 
Net earnings (loss) attributable to Trane Technologies plc(29.2)238.8 400.6 244.7 
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations$50.0 $275.4 $406.1 $245.7 
Discontinued operations(79.2)(36.6)(5.5)(1.0)
Net earnings (loss)$(29.2)$238.8 $400.6 $244.7 
Earnings (Loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations$0.21 $1.15 $1.69 $1.02 
Discontinued operations$(0.33)$(0.15)$(0.02)$— 
Diluted:
Continuing operations$0.21 $1.14 $1.67 $1.01 
Discontinued operations$(0.33)$(0.15)$(0.03)$— 
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net revenues$2,803.7 $3,617.6 $3,470.9 $3,183.7 
Cost of goods sold(1,989.2)(2,462.8)(2,366.6)(2,266.9)
Operating income236.5 566.9 536.5 330.2 
Earnings from continuing operations147.3 412.6 386.3 214.1 
Discontinued operations, net of tax56.4 47.7 77.1 87.0 
Net earnings (loss)203.7 460.3 463.4 301.1 
Net earnings (loss) attributable to Trane Technologies plc199.9 456.1 458.8 296.1 
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations$144.2 $409.1 $382.6 $209.2 
Discontinued operations55.7 47.0 76.2 86.9 
Net earnings (loss)$199.9 $456.1 $458.8 $296.1 
Earnings (Loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations$0.59 $1.69 $1.58 $0.87 
Discontinued operations$0.23 $0.19 $0.32 $0.36 
Diluted:
Continuing operations$0.59 $1.67 $1.57 $0.86 
Discontinued operations$0.23 $0.19 $0.31 $0.36 
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Item 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A.    CONTROLS AND PROCEDURES
(a)Evaluation of Disclosure Controls and Procedures
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2020,2023, that the Company's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act has been recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and that such information has been accumulated and communicated to the Company's management including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b)Management's Report on Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by the Company's Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2020.2023. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control - Integrated Framework (2013). Management concluded that based on its assessment, the Company's internal control over financial reporting was effective as of December 31, 2020.2023.
The effectiveness of the Company's internal control over financial reporting as of December 31, 20202023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
(c)Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 20202023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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Item 9B.    OTHER INFORMATION
None.
Item 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
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PART III
Item 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information regarding our executive officers is included in Part I under the caption “Executive Officers of Registrant.”
The other information required by this item is incorporated herein by reference to the information contained under the headings “Item 1. Election of Directors”, Delinquent“Delinquent Section 16(a) ReportsReports” and “Corporate Governance” in our definitive proxy statement for the 20212024 annual general meeting of shareholders (2021(2024 Proxy Statement).
Item 11.     EXECUTIVE COMPENSATION
The other information required by this item is incorporated herein by reference to the information contained under the headings “Compensation Discussion and Analysis,” “Compensation of Directors,” “Executive Compensation,” “Compensation“Human Resources and Compensation Committee Report” and “Compensation“Human Resources and Compensation Committee Interlocks and Insider Participation” in our 20212024 Proxy Statement.
Item 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The other information required by this item is incorporated herein by reference to the information contained under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our 20212024 Proxy Statement.
Item 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The other information required by this item is incorporated herein by reference to the information contained under the headings “Corporate Governance” and “Certain Relationships and Related Person Transactions” in our 20212024 Proxy Statement.
Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated herein by reference to the information contained under the caption “Fees of the Independent Auditors” in our 20212024 Proxy Statement.
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PART IV
Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1.
Financial Statements
See Item 8.
2.Financial Statement Schedules
Schedules have been omitted because the required information is not applicable or because the required information is included elsewhere in this Annual Report on Form 10-K.
3.Exhibits
The exhibits listed on the accompanying index to exhibits are filed as part of this Annual Report on Form 10-K.
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TRANE TECHNOLOGIES PLC
INDEX TO EXHIBITS
(Item 15(a))
Description
Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), Trane Technologies plc (the “Company”) has filed certain agreements as exhibits to this Annual Report on Form 10-K. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.
On July 1, 2009, Ingersoll-Rand Company Limited, a Bermuda company, completed a reorganization to change the jurisdiction of incorporation of the parent company from Bermuda to Ireland. As a result, Ingersoll-Rand plc replaced Ingersoll-Rand Company Limited as the ultimate parent company effective July 1, 2009. All references related to the Company prior to July 1, 2009 relate to Ingersoll-Rand Company Limited. On March 2, 2020, Ingersoll-Rand plc changed its name to Trane Technologies plc.
(a) Exhibits
Exhibit No.Description  Method of Filing
2.11.1

Incorporated by reference to Exhibit 3.11.1 to the Company’s 2023 Form 8-K (File No. 001-34400) filed with the SEC on December 2, 2013.
March 3, 2023.
2.22.1Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on May 6, 2019.
2.32.2Incorporated by reference to Exhibit 2.2 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on May 6, 2019).
3.1  Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on June 7, 2016.
3.2Filed herewith.Incorporated by reference to Exhibit 3.2 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
The Company and its subsidiaries are parties to several long-term debt instruments under which, in each case, the total amount of securities authorized does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis.  Pursuant to paragraph 4 (iii)(A) of Item 601 (b) of Regulation S-K, the Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request.
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Exhibit No.DescriptionMethod of Filing
4.1Incorporated by reference to Exhibit 4.1 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 26, 2013.
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Exhibit No.DescriptionMethod of Filing
4.2Incorporated by reference to Exhibit 4.2 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 26, 2013.
4.3Incorporated by reference to Exhibit 4.3 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 26, 2013.
4.4Incorporated by reference to Exhibit 4.4 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 26, 2013.
4.5Incorporated by reference to Exhibit 4.1 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on November 26, 2013.
4.6Incorporated by reference to Exhibit 4.5 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on October 29, 2014.
4.7Incorporated by reference to Exhibit 4.21 to the Company's Form 10-K for the fiscal year ended 2015 (File No. 001-34400) filed with the SEC on February 12, 2016.
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Exhibit No.DescriptionMethod of Filing
4.8

Incorporated by reference to Exhibit 4.19 to the Company’s Form 10-K for the fiscal year ended 2016 (File No. 001-34400) filed with the SEC on February 13, 2017.

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Exhibit No.DescriptionMethod of Filing
4.9Filed herewith.Incorporated by reference to Exhibit 4.9 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.10Filed herewith.Incorporated by reference to Exhibit 4.10 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.11Filed herewith.Incorporated by reference to Exhibit 4.11 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.12Incorporated by reference to Exhibit 4.12 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.13Incorporated by reference to Exhibit 4.13 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
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Exhibit No.DescriptionMethod of Filing
4.14Filed herewith.
4.134.15Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on October 29, 2014
4.144.16Incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on October 29, 2014.
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Exhibit No.4.17DescriptionMethod of Filing
4.15Incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on October 29, 2014.
4.164.18Incorporated by reference to Exhibit 4.4 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on October 29, 2014.
4.174.19Incorporated by reference to Exhibit 4.27 to the Company's Form 10-K for the fiscal year ended 2015 (File No. 001-34400) filed with the SEC on February 12, 2016.
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Exhibit No.DescriptionMethod of Filing
4.184.20

Incorporated by reference to Exhibit 4.25 to the Company’s Form 10-K for the fiscal year ended 2016 (File No. 001-34400) filed with the SEC on February 13, 2017.
4.194.21Filed herewith.Incorporated by reference to Exhibit 4.19 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.204.22Filed herewith.Incorporated by reference to Exhibit 4.20 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.214.23Filed herewith.Incorporated by reference to Exhibit 4.21 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
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Exhibit No.4.24DescriptionMethod of Filing
4.22Incorporated by reference to Exhibit 4.22 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.25Incorporated by reference to Exhibit 4.24 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
4.26Filed herewith.
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Exhibit No.DescriptionMethod of Filing
4.234.27Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on February 26, 2018.
4.244.28Incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on February 26, 2018.
4.254.29Incorporated by reference to Exhibit 4.4 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on February 26, 2018.
4.264.30Incorporated by reference to Exhibit 4.6 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on February 26, 2018.
4.274.31Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on March 26, 2019.
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Exhibit No.4.32DescriptionMethod of Filing
4.28Incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on March 26, 2019.
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Exhibit No.DescriptionMethod of Filing
4.294.33Incorporated by reference to Exhibit 4.5 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on March 26, 2019.
4.304.34Filed herewith.Incorporated by reference to Exhibit 4.30 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.314.35Filed herewith.Incorporated by reference to Exhibit 4.31 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.324.36Filed herewith.Incorporated by reference to Exhibit 4.32 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
4.334.37Filed herewith.
4.34Incorporated by reference to Exhibit 4.64.33 to the Company’s 2020 Form S-310-K (File No. 333-161334)001-34400) filed with the SEC on August 13, 2009.February 9, 2021.
4.38Incorporated by reference to Exhibit 4.36 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
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Exhibit No.Description  Method of Filing
4.354.39Filed herewith.
4.41Incorporated by reference to Exhibit 4.1 to the Company’s 2023 Form 8-K (File No. 001-34400) filed with the SEC on March 3, 2023.
4.42Incorporated by reference to Exhibit 4.2 to the Company’s 2023 Form 8-K (File No. 001-34400) filed with the SEC on March 3, 2023.
4.43Filed herewith.
4.44Filed herewith.
10.1*  Filed herewith.herewith
10.2*  Filed herewith.herewith
10.3*  Filed herewith.herewith
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Exhibit No.DescriptionMethod of Filing
10.4
Credit Agreement dated April 17, 2018June 18, 2021 among Ingersoll-RandTrane Technologies Holdco Inc., Trane Technologies Global Holding Company Limited Ingersoll-Randand Trane Technologies Financing Limited, Trane Technologies plc, Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-RandTrane Technologies Lux International Holding Company S.à r.l., Ingersoll-Rand Trane Technologies Irish Holdings Unlimited Company, Ingersoll-RandTrane Technologies Company LLC, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, Bank of America, N.A.,J.P. Morgan Securities LLC and BNP Paribas, as Sustainability Structuring Agents, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, Mizuho Bank, Ltd., and MUFG Bank, Ltd. and U.S. Bank National Association as Documentation Agents, and JPMorgan Chase Bank, N.A., Citibank, N.A., BofA Securities, Inc., BNP Securities Corp. and Citigroup Global Markets Inc.Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners, and certain lending institutions from time to time parties thereto.thereto

.
Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on April 19, 2018.June 24, 2021.
10.5Incorporated by reference to Exhibit 10.3 to the Company’s Q2 2022 Form 10-Q (File No. 001-34400) filed with the SEC on August 3, 2022.
10.6Incorporated by reference to Exhibit 10.1 to the Company's Q3 2023 Form 10-Q (file No. 001-34400) filed with the SEC on November 1, 2023.
10.7Filed herewith.
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Exhibit No.DescriptionMethod of Filing
10.8
Credit Agreement dated April 25, 2022 among Trane Technologies Holdco Inc., Trane Technologies Global Holding Company Limited and Trane Technologies Financing Limited, Trane Technologies plc, Trane Technologies Lux International Holding Company S.à r.l. (“TT Lux Holding Company”), Trane Technologies Irish Holdings Unlimited Company, (“Irish Holdings”), Trane Technologies Company LLC, (“TTC” and, together with TT Parent, Irish Holdings and TT Lux Holding Company, the “Guarantors”), JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, J.P. Morgan Securities LLC and BNP Paribas, as Sustainability Structuring Agents, Bank of America, N.A., BNP Paribas, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, and MUFG Bank, Ltd. and U.S. Bank, N.A., as Documentation Agents, and JPMorgan Chase Bank, N.A., Citibank, N.A., BofA Securities, Inc., BNP Securities Corp. and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners, and certain lending institutions from time to time parties thereto.
Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on June 10, 2020.April 28, 2022.
10.9Incorporated by reference to Exhibit 10.2 to the Company's Q3 2023 Form 10-Q (file No. 001-34400) filed with the SEC on November 1, 2023.
10.610.10Filed herewith.
10.11

Incorporated by reference to Exhibit 10.510.1 to the Company’s Q2 2022 Form 8-K10-Q (File No. 001-34400) filed with the SEC on July 1, 2009.August 3, 2022.
10.710.12

Incorporated by reference to Exhibit 10.1 to Trane Inc.’s Form 8-K (File No. 001-11415) filed with the SEC on July 20, 2007.
10.8Incorporated by reference to Exhibit 10.2 to the Company'sCompany’s Q2 2022 Form 8-K10-Q (File No. 001-34400) filed with the SEC on December 2, 2013.August 3, 2022.
10.9*10.13*  Filed herewith.Incorporated by reference to Exhibit 10.9 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
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Exhibit No.10.14*DescriptionMethod of Filing
10.10*Filed herewith.Incorporated by reference to Exhibit 10.10 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.11*10.15*Filed herewith.Incorporated by reference to Exhibit 10.11 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.12*10.16*  Incorporated by reference to Exhibit 10.13 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
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Filed herewith.Exhibit No.DescriptionMethod of Filing
10.13*10.17*Filed herewith.Incorporated by reference to Exhibit 10.13 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.14*10.18*Filed herewith.Incorporated by reference to Exhibit 10.14 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.15*10.19*  Filed herewith.Incorporated by reference to Exhibit 10.15 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.16*10.20*  Filed herewith.Incorporated by reference to Exhibit 10.16 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.17*10.21*  Filed herewith.Incorporated by reference to Exhibit 10.17 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.18*10.22*Filed herewith.Incorporated by reference to Exhibit 10.18 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.19*10.23*Filed herewith.Incorporated by reference to Exhibit 10.19 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.20*10.24*Filed herewith.Incorporated by reference to Exhibit 10.20 to the Company’s 2020 Form 10-K (File No. 001-34400) filed with the SEC on February 9, 2021.
10.21*10.25*Filed herewith.
10.22*Incorporated by reference to Exhibit 10.3010.22 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 12, 2018.7, 2022.
10.26*Incorporated by reference to Exhibit 10.23 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
10.23*10.27*

Incorporated by reference to Exhibit 99.110.23 to the Company's 2022 Form 8-K10-K (File No. 001-16831)001-34400) filed with the SEC on December 4, 2006.February 10, 2023.
10.24*10.28*Incorporated by reference to Exhibit 99.210.24 to the Company’sCompany's 2022 Form 8-K10-K (File No. 001-16831)001-34400) filed with the SEC on December 4, 2006.February 10, 2023.
10.25*10.29*Incorporated by reference to Exhibit 10.32 to the Company’s Form 10-Q for the period ended June 30, 2009 (File No. 001-34400) filed with the SEC on August 6, 2009.
10.26*10.30*Incorporated by reference to Exhibit 10.33 to the Company’s Form 10-Q for the period ended June 30, 2009 (File No. 001-34400) filed with the SEC on August 6, 2009.
10.27*10.31*Filed herewith.
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Exhibit No.DescriptionMethod of Filing
10.28*Incorporated by reference to Exhibit 10.3510.27 to the Company’s 2020 Form 10-K for the fiscal year ended 2003 (File No. 001-16831) filed with the SEC on February 27, 2004.
10.29*Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K (File No. 001-16831) filed with the SEC on June 10, 2008.
10.30*Incorporated by reference to Exhibit 10.43 to the Company’s Form 10-K for the fiscal year ended 2008 (File No. 001-16831) filed with the SEC on March 2, 2009.
10.31*Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on February 5, 2010.9, 2021.
10.32*Incorporated by reference to exhibit 10.48 to the Company's Form 10-K for the fiscal year ended 2012 (File No. 001-34400) filed with the SEC on February 14, 2013.
10.33*Incorporated by reference to Exhibit 10.45 to the Company's Form 10-K for the fiscal year ended December 31, 2006 (File No. 001-16831) filed with the SEC on March 1, 2007.
10.34*Incorporated by reference to exhibit 10.53 to the Company's Form 10-K for the fiscal year ended 2012 (File No. 001-34400) filed with the SEC on February 14, 2013.
10.35*Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on October 2, 2013.
10.36*Incorporated by reference to Exhibit 10.44 to the Company’s Form 10-K for the year ended December 31, 2018 (File No. 001-34400) filed with the SEC on February 12, 2019.
10.37*10.33*Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on December 11, 2019.
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Exhibit No.DescriptionMethod of Filing
10.34*Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (Filed No. 001-34400) filed with the SEC on June 4, 2021.
10.35*Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on December 10, 2019.
10.39*10.36*Incorporated by reference to Exhibit 10.42 to the Company’s 2021 Form 10-K (File No. 001-34400) filed with the SEC on February 7, 2022.
10.37*Incorporated by reference to Exhibit 10.1 to the Company'sCompany’s Form 8-K (File No. 001-34400) filed with the SEC on December 2, 2013.October 14, 2022.
10.38*Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-34400) filed with the SEC on January 10, 2024.
21Filed herewith.
22.1Filed herewith.
23.1Filed herewith.
31.1  Filed herewith.
31.2  Filed herewith.
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Exhibit No.DescriptionMethod of Filing
32  Furnished herewith.
97.1Filed herewith.
97.2Filed herewith.
101The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2022, formatted in Inline XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Earnings, (ii) the Consolidated Statements of Comprehensive Income, (ii)(iii) the Consolidated Balance Sheets, (iii)(iv) the Consolidated Statements of Equity, (iv)(v) the Consolidated Statements of Cash Flows, and (v)(vi) Notes to Consolidated Financial Statements.  Furnished herewith.
104Cover Page Interactive Data File (embedded within the iXBRL document and contained in Exhibit 101).Filed herewith.
* Management contract or compensatory plan or arrangement.
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Item 16. FORM 10-K SUMMARY
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRANE TECHNOLOGIES PLC
(Registrant)
 
By:/s/ Michael W. LamachDavid S. Regnery
Michael W. LamachDavid S. Regnery
ChairmanChair of the Board and Chief Executive Officer (Principal Executive Officer)
Date:February 9, 20218, 2024
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Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signature  Title Date
/s/ Michael W. LamachDavid S. Regnery  ChairmanChair of the Board and Chief Executive Officer (Principal Executive Officer) February 9, 20218, 2024
(Michael W. Lamach)David S. Regnery)
/s/ Christopher J. Kuehn  SeniorExecutive Vice President and Chief Financial Officer (Principal Financial Officer) February 9, 20218, 2024
(Christopher J. Kuehn)
/s/ Heather R. HowlettMark A. Majocha  Vice President and Chief Accounting Officer (Principal Accounting Officer) February 9, 20218, 2024
(Heather R. Howlett)Mark A. Majocha)
/s/ Kirk E. Arnold  Director February 9, 20218, 2024
(Kirk E. Arnold)
/s/ Ana P. AssisDirectorFebruary 8, 2024
(Ana P. Assis)
/s/ Ann C. Berzin  Director February 9, 20218, 2024
(Ann C. Berzin)
/s/ John BrutonApril Miller BoiseDirectorFebruary 9, 20218, 2024
(John Bruton)April Miller Boise)
/s/ Jared L. CohonDirectorFebruary 9, 2021
(Jared L. Cohon)
/s/ Gary D. Forsee  Director February 9, 20218, 2024
(Gary D. Forsee)
/s/ Mark R. GeorgeDirectorFebruary 8, 2024
(Mark R. George)
/s/ John A. HayesDirectorFebruary 8, 2024
(John A. Hayes)
/s/ Linda P. HudsonDirectorFebruary 9, 20218, 2024
(Linda P. Hudson)
/s/ Myles P. Lee  DirectorFebruary 9, 20218, 2024
(Myles P. Lee)
/s/ April Miller BoiseMelissa N. SchaefferDirectorFebruary 9, 20218, 2024
(April Miller Boise)Melissa N. Schaeffer)
/s/ Karen B. PeetzDirectorFebruary 9, 2021
(Karen B. Peetz)
/s/ John P. SurmaDirectorFebruary 9, 20218, 2024
 (John P. Surma)
/s/ Richard J. SwiftDirectorFebruary 9, 2021
(Richard J. Swift)
/s/ Tony L. WhiteDirectorFebruary 9, 2021
(Tony L. White)

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TRANE TECHNOLOGIES PLC
Index to Consolidated Financial Statements
 
F-2
F-5
F-56
F-7
F-8
F-9
F-10
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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors and Shareholders of Trane Technologies plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Trane Technologies plc and its subsidiaries (the “Company”"Company") as of December 31, 20202023 and 2019,2022 and the related consolidated statements of earnings, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2020,2023, including the related notes (collectively referred to as the “consolidated"consolidated financial statements”statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20202023 and 2019, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20202023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’sManagement's Report on Internal Control Overover Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’sCompany's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’scompany's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’scompany's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’scompany's assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Table of Contents
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Tax-Free Determination of the Reverse Morris Trust TransactionRevenue Recognition from Contracts with Customers
As described in Notes 2 18 and 1912 to the consolidated financial statements, the Company recognized $17.7 billion of consolidated revenue for the year ended December 31, 2023. Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company's revenue is recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenue is recognized over-time as the customer simultaneously receives control as the Company performs work under a contract. For these arrangements, management uses the cost-to-cost input method as it best depicts the transfer of control to the customer that occurs as the Company incurs costs. The transaction price allocated to performance obligations reflects the Company's expectations about the consideration it will be entitled to receive from a customer. To determine the transaction price, management assesses variable and noncash consideration as well as whether a significant financing component exists.
The principal considerations for our determination that performing procedures relating to revenue recognition from contracts with customers is a critical audit matter are the high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company's revenue recognition of point-in-time and over-time contracts with customers.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on February 29, 2020,the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process on the Company's point-in-time and over-time contracts with customers. These procedures also included, among others (i) evaluating revenue transactions on a sample basis by obtaining and inspecting evidence of an arrangement with a customer, evidence of goods delivered or services provided and evidence of consideration received in exchange for transferring those goods or services, and (ii) evaluating the completeness and accuracy of data provided by management.
Valuation of Certain Intangible Assets– Acquisitions of MTA S.p.A., Helmer Scientific Inc., and Nuvolo Technologies Corporation
As described in Note 17 to the consolidated financial statements, during 2023, the Company completed its Reverse Morris Trust transaction (the Transaction)the acquisitions of MTA S.p.A. (MTA), Helmer Scientific Inc. (Helmer), and Nuvolo Technologies Corporation (Nuvolo). The total purchase consideration for the MTA acquisition was $224.4 million, net of cash acquired. Intangible assets fair value associated with Gardner Denver Holdings, Inc. (Gardner Denver, which changed its namethe MTA acquisition totaled $93.3 million and primarily relate to Ingersoll Rand, Inc. aftercustomer relationships. The total purchase consideration for the Transaction) wherebyHelmer acquisition was $266.4 million, net of cash acquired. Intangible assets fair value associated with the Company distributed Ingersoll-Rand U.S. Holdco, Inc., which containedHelmer acquisition totaled $95.7 million and primarily related to customer relationships. The total purchase price for the Company's former Industrial segment (Ingersoll Rand Industrial), throughNuvolo acquisition was expected to be $442.9 million, comprised of the upfront cash consideration of $352.6 million paid and the fair value of the contingent consideration arrangements at the acquisition date of $90.3 million. Developed technology makes up a pro rata distribution (the Distribution)portion of the total intangibles assets fair value of $141.0 million associated with the Nuvolo acquisition. The preliminary valuation of intangible assets related to shareholdersthe acquisitions of record as of February 24, 2020. Ingersoll Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. As disclosedMTA, Helmer and Nuvolo was determined by management the Transaction was determined to qualify for tax-free treatment under certain sectionsusing an income approach methodology. Management estimated a portion of the Internal Revenue Code. The determinationfair value of the Transaction as tax-free requires managementcustomer relationships intangible assets using an excess earnings model and a portion using the with and without method. Management estimated a portion of the fair value of the developed technology intangible asset using a relief from royalty approach and a portion using an excess earnings model. Key assumptions include projected cash flows, including revenue growth rates and margins, customer attrition rates, royalty rates and discount rates attributable to make significant judgments about the interpretation of tax laws and regulations. This determination is the subject of periodic audits by U.S. tax authorities. Unfavorable audit findings and tax rulings may have a material adverse effect on the Company’s financial condition, results of operations or cash flows.each intangible asset.
The principal considerations for our determination that performing procedures relating to the tax-free determinationvaluation of certain intangible assets related to the Reverse Morris Trust transactionacquisitions of MTA, Helmer, and Nuvolo is a critical audit matter are (i) the significant judgment by management regardingwhen developing the Transactionfair value estimates of the customer relationships acquired in the MTA and application of U.S. tax lawsHelmer acquisitions, and regulationsdeveloped technology acquired in determining that the Transaction would qualify as tax-free,Nuvolo acquisition; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidencemanagement’s significant assumptions related to the tax-free determination,margins and discount rates for the customer relationships and the revenue growth rates, margins, and discount rate for the developed technology; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the determination
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Table of the tax-free treatmentContents
acquisition accounting, including controls over management’s valuation of the Transaction.customer relationships and developed technology acquired. These procedures also included, among others (i) reading the purchase agreements; (ii) testing management’s process in determiningfor developing the tax-free treatmentfair value estimates of the Transaction, (ii)customer relationships acquired in the MTA and Helmer acquisitions and developed technology acquired in the Nuvolo acquisition; (iii) evaluating the appropriateness of the excess earnings models used by management; (iv) testing the informationcompleteness and accuracy of certain underlying data used in management’s determination, including opinions of third-party tax advisors, tax lawsthe excess earnings models; (v) and regulations, and (iii) evaluating the reasonableness of significant assumptions used by management related to the margins and discount rates related to the customer relationships and the revenue growth rates, margins, and discount rate related to the developed technology. Evaluating the reasonableness of management’s interpretationsignificant assumptions related to the margins related to the customer relationships and the revenue growth rates and margins related to the developed technology involved considering (i) the past performance of the tax lawsacquired businesses, (ii) the consistency with external market and regulationsindustry data, and determinations reached for the tax treatment of each component(iii) whether these assumptions were consistent with evidence obtained in other areas of the Transaction.audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the evaluationappropriateness of the tax-free treatment of the Transaction, including evaluating certain representations from management,excess earnings models and management’s application of the relevant tax laws and regulations.
Reassignment of Goodwill to Newly Designated Reporting Units
As described in Note 6 to the consolidated financial statements, in connection with the new organizational model and business segment structure, the Company reassigned its goodwill among the newly designated reporting units using a relative fair value approach. As disclosed by management, because quoted market prices are not available for their reporting units, the calculation of their estimated fair value was determined using the guideline public company method specifically a market-adjusted multiple of earnings and revenues (a market approach). The earnings and revenues multiple approach reflects the market's expectations for future growth and risk, with adjustments to account for differences between the guideline publicly traded companies and the subject reporting units. Total goodwill amounts to $5.3 billion as of December 31, 2020.
The principal considerations for our determination that performing procedures relating to the reassignment of goodwill to the newly designated reporting units is a critical audit matter are (i) the significant judgment by management in developing the relative fair value of the reporting units; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the multiples of earnings and revenues used in the market approach; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to developing the fair value of the reporting units, including controls over the multiples of earnings and revenues utilized within the valuations. These procedures also included, among others, testing management’s process for developing the fair value estimate, evaluating the reasonableness of the market approach, and evaluating the reasonableness of the significant
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assumptions used by management related to the multiples of earnings and revenues used in the market approach. Evaluating the reasonableness of management’s significant assumptions related to the multiples of earnings and revenues involved (i) comparing the multiples to peer groups, (ii) verifying the multiples are within the range identified by the valuation specialists engaged by the Company, and (iii) testing the completeness and accuracy of underlying data used in the model. Professionals with specialized skill and knowledge were used to assist in the evaluation of management's market approach.discount rate assumptions.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 9, 20218, 2024

We have served as the Company’sCompany's auditor since at least 1906. We have not been able to determine the specific year we began serving as auditor of the Company.

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Trane Technologies plc
Consolidated Statements of Comprehensive Income
In millions, except per share amounts
For the years ended December 31,202020192018
Net revenues$12,454.7 $13,075.9 $12,343.8 
Cost of goods sold(8,651.3)(9,085.5)(8,582.5)
Selling and administrative expenses(2,270.6)(2,320.3)(2,249.2)
Operating income1,532.8 1,670.1 1,512.1 
Interest expense(248.7)(242.8)(221.0)
Other income/(expense), net4.1 (28.4)(33.3)
Earnings before income taxes1,288.2 1,398.9 1,257.8 
Benefit (provision) for income taxes(296.8)(238.6)(234.9)
Earnings from continuing operations991.4 1,160.3 1,022.9 
Discontinued operations, net of tax(121.4)268.2 334.6 
Net earnings870.0 1,428.5 1,357.5 
Less: Net earnings from continuing operations attributable to noncontrolling interests(14.2)(15.2)(15.1)
Less: Net earnings from discontinuing operations attributable to noncontrolling interests(0.9)(2.4)(4.8)
Net earnings attributable to Trane Technologies plc$854.9 $1,410.9 $1,337.6 
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations$977.2 $1,145.1 $1,007.8 
Discontinued operations(122.3)265.8 329.8 
Net earnings$854.9 $1,410.9 $1,337.6 
Earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations$4.07 $4.74 $4.08 
Discontinued operations(0.51)1.10 1.33 
Net earnings$3.56 $5.84 $5.41 
Diluted:
Continuing operations$4.02 $4.69 $4.03 
Discontinued operations(0.50)1.08 1.32 
Net earnings$3.52 $5.77 $5.35 
Trane Technologies plc
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TableConsolidated Statements of Contents
Earnings
Trane Technologies plc
Consolidated Statements of Comprehensive Income (continued)
In millions, except per share amounts
For the years ended December 31,202020192018
Net earnings$870.0 $1,428.5 $1,357.5 
Other comprehensive income (loss):
Currency translation261.5 (37.1)(230.6)
Cash flow hedges
Unrealized net gains (losses) arising during period3.3 (2.7)1.2 
Net gains (losses) reclassified into earnings1.9 0.7 0.9 
Tax (expense) benefit0.9 (0.1)
Total cash flow hedges, net of tax5.2 (1.1)2.0 
Pension and OPEB adjustments:
Prior service costs for the period(1.9)(5.7)(16.0)
Net actuarial gains (losses) for the period(52.5)(41.9)12.8 
Amortization reclassified into earnings43.4 48.1 50.7 
Settlements/curtailments reclassified to earnings(1.8)2.2 2.5 
Currency translation and other(10.4)(1.4)7.5 
Tax (expense) benefit(0.7)(4.7)(17.2)
Total pension and OPEB adjustments, net of tax(23.9)(3.4)40.3 
Other comprehensive income (loss), net of tax242.8 (41.6)(188.3)
Comprehensive income, net of tax$1,112.8 $1,386.9 $1,169.2 
Less: Comprehensive income attributable to noncontrolling interests(17.8)(18.5)(16.9)
Comprehensive income attributable to Trane Technologies plc$1,095.0 $1,368.4 $1,152.3 
In millions, except per share amounts
For the years ended December 31,202320222021
Net revenues
Products$11,975.4 $10,930.8 $9,498.8 
Services5,702.2 5,060.9 4,637.6 
17,677.6 15,991.7 14,136.4 
Costs and expenses
Cost of products sold(8,414.2)(7,935.2)(6,843.1)
Cost of services sold(3,406.2)(3,091.7)(2,823.7)
Selling and administrative expenses(2,963.2)(2,545.9)(2,446.3)
Operating income2,894.0 2,418.9 2,023.3 
Interest expense(234.5)(223.5)(233.7)
Other income/(expense), net(92.2)(23.3)1.1 
Earnings before income taxes2,567.3 2,172.1 1,790.7 
Provision for income taxes(498.4)(375.9)(333.5)
Earnings from continuing operations2,068.9 1,796.2 1,457.2 
Discontinued operations, net of tax(27.2)(21.5)(20.6)
Net earnings2,041.7 1,774.7 1,436.6 
Less: Net earnings from continuing operations attributable to noncontrolling interests(17.8)(18.2)(13.2)
Net earnings attributable to Trane Technologies plc$2,023.9 $1,756.5 $1,423.4 
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations$2,051.1 $1,778.0 $1,444.0 
Discontinued operations(27.2)(21.5)(20.6)
Net earnings$2,023.9 $1,756.5 $1,423.4 
Earnings (loss) per share attributable to Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations$8.97 $7.65 $6.05 
Discontinued operations(0.12)(0.10)(0.09)
Net earnings$8.85 $7.55 $5.96 
Diluted:
Continuing operations$8.89 $7.57 $5.96 
Discontinued operations(0.12)(0.09)(0.09)
Net earnings$8.77 $7.48 $5.87 
See accompanying notes to Consolidated Financial Statements.


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Trane Technologies plc
Consolidated Statements of Comprehensive Income
In millions
For the years ended December 31,202320222021
Net earnings$2,041.7 $1,774.7 $1,436.6 
Other comprehensive income (loss):
Currency translation72.5 (202.7)(122.7)
Cash flow hedges
Unrealized net gains (losses) arising during period(4.4)(24.3)1.6 
Net (gains) losses reclassified into earnings13.5 10.2 (6.4)
Tax (expense) benefit(1.6)2.5 1.1 
Total cash flow hedges, net of tax7.5 (11.6)(3.7)
Pension and OPEB adjustments:
Prior service costs for the period— (3.3)0.3 
Net actuarial gains (losses) for the period16.8 54.2 111.4 
Amortization reclassified into earnings7.4 21.6 38.6 
Net curtailment and settlement (gains) losses reclassified to earnings1.4 15.0 8.0 
Currency translation and other(3.7)12.7 5.2 
Tax (expense) benefit(6.2)(16.1)(43.7)
Total pension and OPEB adjustments, net of tax15.7 84.1 119.8 
Other comprehensive income (loss), net of tax95.7 (130.2)(6.6)
Comprehensive income, net of tax$2,137.4 $1,644.5 $1,430.0 
Less: Comprehensive income attributable to noncontrolling interests(18.1)(16.6)(12.7)
Comprehensive income attributable to Trane Technologies plc$2,119.3 $1,627.9 $1,417.3 
See accompanying notes to Consolidated Financial Statements.
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Trane Technologies plc
Consolidated Balance Sheets
In millions, except share amounts
December 31,December 31,20202019December 31,20232022
ASSETSASSETS
Current assets:Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalentsCash and cash equivalents$3,289.9 $1,278.6 
Accounts and notes receivable, netAccounts and notes receivable, net2,202.1 2,184.6 
InventoriesInventories1,189.2 1,278.6 
Other current assetsOther current assets224.4 344.8 
Assets held-for-sale4,207.2 
Other current assets
Other current assets
Total current assetsTotal current assets6,905.6 9,293.8 
Property, plant and equipment, netProperty, plant and equipment, net1,349.5 1,352.0 
GoodwillGoodwill5,342.8 5,125.7 
Intangible assets, netIntangible assets, net3,286.4 3,323.6 
Other noncurrent assetsOther noncurrent assets1,272.4 1,397.2 
Total assetsTotal assets$18,156.7 $20,492.3 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY
Current liabilities:Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payableAccounts payable$1,520.2 $1,381.3 
Accrued compensation and benefitsAccrued compensation and benefits451.1 442.4 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities1,592.0 1,564.2 
Short-term borrowings and current maturities of long-term debtShort-term borrowings and current maturities of long-term debt775.6 650.3 
Liabilities held-for-sale1,200.4 
Total current liabilities
Total current liabilities
Total current liabilitiesTotal current liabilities4,338.9 5,238.6 
Long-term debtLong-term debt4,496.5 4,922.9 
Postemployment and other benefit liabilitiesPostemployment and other benefit liabilities1,024.6 1,048.2 
Deferred and noncurrent income taxesDeferred and noncurrent income taxes578.5 572.0 
Other noncurrent liabilitiesOther noncurrent liabilities1,291.1 1,398.2 
Total liabilitiesTotal liabilities11,729.6 13,179.9 
Equity:Equity:
Trane Technologies plc shareholders’ equityTrane Technologies plc shareholders’ equity
Ordinary shares, $1.00 par value (263,309,250 and 262,804,939 shares issued at December 31, 2020 and 2019, respectively)263.3 262.8 
Ordinary shares held in treasury, at cost (24,500,862 and 24,499,897 shares at December 31, 2020 and 2019, respectively)(1,719.4)(1,719.4)
Trane Technologies plc shareholders’ equity
Trane Technologies plc shareholders’ equity
Ordinary shares, $1.00 par value (251,673,874 and 253,328,263 shares issued at December 31, 2023 and 2022, respectively)
Ordinary shares, $1.00 par value (251,673,874 and 253,328,263 shares issued at December 31, 2023 and 2022, respectively)
Ordinary shares, $1.00 par value (251,673,874 and 253,328,263 shares issued at December 31, 2023 and 2022, respectively)
Ordinary shares held in treasury, at cost (24,500,713 and 24,500,868 shares at December 31, 2023 and 2022, respectively)
Retained earningsRetained earnings8,495.3 9,730.8 
Accumulated other comprehensive (loss)(631.5)(1,006.6)
Retained earnings
Retained earnings
Accumulated other comprehensive income (loss)
Total Trane Technologies plc shareholders’ equityTotal Trane Technologies plc shareholders’ equity6,407.7 7,267.6 
Noncontrolling interestNoncontrolling interest19.4 44.8 
Total equityTotal equity6,427.1 7,312.4 
Total liabilities and equityTotal liabilities and equity$18,156.7 $20,492.3 
See accompanying notes to Consolidated Financial Statements.

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Trane Technologies plc
Consolidated Statements of Equity
Trane Technologies plc shareholders’ equity
Trane Technologies plc shareholders’ equity
Trane Technologies plc shareholders’ equity
Trane Technologies plc shareholders’ equity
In millions, except per share amountsIn millions, except per share amountsTotal
equity
Ordinary sharesOrdinary shares held in treasury, at costCapital in
excess of
par value
Retained
earnings
Accumulated  other
comprehensive
income (loss)
Noncontrolling Interest
Amount at par valueShares
Balance at December 31, 2017$7,206.9 $274.0 274.0 $(1,719.4)$461.3 $8,903.2 $(778.8)$66.6 
In millions, except per share amounts
Amount at par value
Amount at par value
Balance at December 31, 2020
Balance at December 31, 2020
Balance at December 31, 2020
Net earnings
Net earnings
Net earningsNet earnings1,357.5 — — 1,337.6 19.9 
Other comprehensive income (loss)Other comprehensive income (loss)(188.3)— — (185.3)(3.0)
Other comprehensive income (loss)
Other comprehensive income (loss)
Shares issued under incentive stock plansShares issued under incentive stock plans43.1 2.1 2.1 — 41.0 
Shares issued under incentive stock plans
Shares issued under incentive stock plans
Repurchase of ordinary shares
Repurchase of ordinary shares
Repurchase of ordinary sharesRepurchase of ordinary shares(900.2)(9.7)(9.7)(581.2)(309.3)
Share-based compensationShare-based compensation74.7 — — 78.8 (4.1)
Share-based compensation
Share-based compensation
Dividends declared to noncontrolling interestDividends declared to noncontrolling interest(41.4)— — (41.4)
Adoption of ASU 2014-09 (Revenue Recognition)
2.4 — — — — 2.4 — — 
Adoption of ASU 2016-16 (Intra-Entity Transfers)
(9.1)— — — — (9.1)— — 
Cash dividends declared ($1.96 per share)(480.8)— — (480.8)
Dividends declared to noncontrolling interest
Dividends declared to noncontrolling interest
Cash dividends declared ($2.36 per share)
Cash dividends declared ($2.36 per share)
Cash dividends declared ($2.36 per share)
Separation of Ingersoll Rand Industrial
Separation of Ingersoll Rand Industrial
Separation of Ingersoll Rand Industrial
OtherOther— 0.1 (0.1)
Balance at December 31, 2018$7,064.8 $266.4 266.4 $(1,719.4)$$9,439.8 $(964.1)$42.1 
Other
Other
Balance at December 31, 2021
Balance at December 31, 2021
Balance at December 31, 2021
Net earnings
Net earnings
Net earningsNet earnings1,428.5 — — 1,410.9 17.6 
Other comprehensive income (loss)Other comprehensive income (loss)(41.6)— — (42.5)0.9 
Other comprehensive income (loss)
Other comprehensive income (loss)
Shares issued under incentive stock plansShares issued under incentive stock plans72.5 2.8 2.8 — 69.7 
Shares issued under incentive stock plans
Shares issued under incentive stock plans
Repurchase of ordinary shares
Repurchase of ordinary shares
Repurchase of ordinary sharesRepurchase of ordinary shares(750.1)(6.4)(6.4)(136.1)(607.6)
Share-based compensationShare-based compensation63.5 — — 66.4 (2.9)
Share-based compensation
Share-based compensation
Dividends declared to noncontrolling interestDividends declared to noncontrolling interest(15.8)— — (15.8)
Cash dividends declared ($2.12 per share)(509.5)— — (509.5)
Dividends declared to noncontrolling interest
Dividends declared to noncontrolling interest
Acquisition/divestiture of noncontrolling interest
Acquisition/divestiture of noncontrolling interest
Acquisition/divestiture of noncontrolling interest
Cash dividends declared ($2.68 per share)
Cash dividends declared ($2.68 per share)
Cash dividends declared ($2.68 per share)
Separation of Ingersoll Rand Industrial
Separation of Ingersoll Rand Industrial
Separation of Ingersoll Rand Industrial
OtherOther0.1 — — 0.1 — — 
Balance at December 31, 2019$7,312.4 $262.8 262.8 $(1,719.4)$$9,730.8 $(1,006.6)$44.8 
Other
Other
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Net earnings
Net earnings
Net earningsNet earnings870.0 — — 854.9 15.1 
Other comprehensive income (loss)Other comprehensive income (loss)242.8 — — 240.1 2.7 
Other comprehensive income (loss)
Other comprehensive income (loss)
Shares issued under incentive stock plansShares issued under incentive stock plans64.5 2.3 2.3 — 62.2 
Shares issued under incentive stock plans
Shares issued under incentive stock plans
Repurchase of ordinary shares
Repurchase of ordinary shares
Repurchase of ordinary sharesRepurchase of ordinary shares(250.0)(1.8)(1.8)(135.6)(112.6)
Share-based compensationShare-based compensation66.3 — — 69.5 (3.2)
Share-based compensation
Share-based compensation
Dividends declared to noncontrolling interest
Dividends declared to noncontrolling interest
Dividends declared to noncontrolling interestDividends declared to noncontrolling interest(18.3)— — (18.3)
Investment by joint venture partner7.0 — — — 3.9 — — 3.1 
Cash dividends declared ($2.12 per share)(507.7)— — (507.7)
Separation of Ingersoll Rand Industrial(1,359.9)— — — — (1,466.9)135.0 (28.0)
Cash dividends declared ($3.00 per share)
Balance at December 31, 2020$6,427.1 $263.3 263.3 $(1,719.4)$$8,495.3 $(631.5)$19.4 
Cash dividends declared ($3.00 per share)
Cash dividends declared ($3.00 per share)
Other
Other
Other
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
See accompanying notes to Consolidated Financial Statements.
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Table of Contents
Trane Technologies plc
Consolidated Statements of Cash Flows
In millions
For the years ended December 31,For the years ended December 31,202020192018For the years ended December 31,202320222021
Cash flows from operating activities:Cash flows from operating activities:
Net earningsNet earnings$870.0 $1,428.5 $1,357.5 
Net earnings
Net earnings
Discontinued operations, net of taxDiscontinued operations, net of tax121.4 (268.2)(334.6)
Adjustments for non-cash transactions:Adjustments for non-cash transactions:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization294.3 288.8 282.3 
Pension and other postretirement benefitsPension and other postretirement benefits68.8 96.3 85.0 
Stock settled share-based compensationStock settled share-based compensation69.5 66.4 78.8 
Other non-cash items, netOther non-cash items, net(1.5)(17.8)(99.2)
Changes in other assets and liabilities, net of the effects of acquisitions:Changes in other assets and liabilities, net of the effects of acquisitions:
Accounts and notes receivable
Accounts and notes receivable
Accounts and notes receivableAccounts and notes receivable5.9 (77.8)(213.5)
InventoriesInventories109.0 3.9 (186.9)
Other current and noncurrent assetsOther current and noncurrent assets29.7 (245.8)55.3 
Accounts payableAccounts payable75.8 93.2 99.6 
Other current and noncurrent liabilitiesOther current and noncurrent liabilities123.3 156.2 (127.0)
Net cash provided by (used in) continuing operating activitiesNet cash provided by (used in) continuing operating activities1,766.2 1,523.7 997.3 
Net cash provided by (used in) discontinued operating activitiesNet cash provided by (used in) discontinued operating activities(331.2)395.8 410.5 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities1,435.0 1,919.5 1,407.8 
Cash flows from investing activities:Cash flows from investing activities:
Capital expendituresCapital expenditures(146.2)(205.4)(284.7)
Capital expenditures
Capital expenditures
Acquisitions and equity method investments, net of cash acquiredAcquisitions and equity method investments, net of cash acquired(182.8)(83.4)(285.7)
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment0.1 2.2 9.7 
Deconsolidation of certain entities under Chapter 11(10.8)
Other investing activities, net
Other investing activities, net
Other investing activities, netOther investing activities, net1.2 4.8 (1.2)
Net cash provided by (used in) continuing investing activitiesNet cash provided by (used in) continuing investing activities(338.5)(281.8)(561.9)
Net cash provided by (used in) discontinued investing activitiesNet cash provided by (used in) discontinued investing activities(37.7)(1,498.2)(67.5)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(376.2)(1,780.0)(629.4)
Cash flows from financing activities:Cash flows from financing activities:
Short-term borrowings (payments), netShort-term borrowings (payments), net(6.4)
Short-term borrowings (payments), net
Short-term borrowings (payments), net
Proceeds from long-term debtProceeds from long-term debt1,497.9 1,147.0 
Payments of long-term debtPayments of long-term debt(307.5)(7.5)(1,123.0)
Net proceeds from (payments of) debtNet proceeds from (payments of) debt(307.5)1,490.4 17.6 
Debt issuance costsDebt issuance costs(3.6)(13.1)(12.0)
Dividends paid to ordinary shareholdersDividends paid to ordinary shareholders(507.3)(510.1)(479.5)
Dividends paid to noncontrolling interestsDividends paid to noncontrolling interests(18.3)(15.8)(41.4)
Proceeds (payments) from shares issued under incentive plans, netProceeds (payments) from shares issued under incentive plans, net64.5 72.5 43.1 
Repurchase of ordinary sharesRepurchase of ordinary shares(250.0)(750.1)(900.2)
Settlement related to special cash payment
Other financing activities, net
Receipt of special cash payment1,900.0 
Other financing activities, net6.5 (1.8)(3.5)
Net cash provided by (used in) continuing financing activities884.3 272.0 (1,375.9)
Net cash provided by (used in) discontinued financing activities(1.5)(2.9)
Net cash provided by (used in) financing activities
Net cash provided by (used in) financing activities
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities884.3 270.5 (1,378.8)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents68.2 (9.8)(45.6)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents2,011.3 400.2 (646.0)
Cash and cash equivalents – beginning of periodCash and cash equivalents – beginning of period1,278.6 878.4 1,524.4 
Cash and cash equivalents – end of periodCash and cash equivalents – end of period$3,289.9 $1,278.6 $878.4 
Cash paid during the year for:Cash paid during the year for:
InterestInterest$243.5 $220.9 $200.6 
Interest
Interest
Income taxes, net of refundsIncome taxes, net of refunds$151.6 $425.3 $375.4 
See accompanying notes to Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF COMPANY
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)Company or Trane Technologies) is a global climate innovator thatinnovator. The Company brings efficientsustainable and sustainable climateefficient solutions to buildings, homes and transportation driven bythrough the Company's strategic brands, Trane® and Thermo King®, and anits environmentally responsible portfolio of products, and services.
Reportable Segments
Prior to the separation of the Company's Industrial segment on February 29, 2020, the Company announced a new organizational model and business segment structure designed to enhance its regional go-to-market capabilities, aligning the structure with the Company's strategy and increased focus on climate innovation. Under the revised structure, the Company created three new regional operating segments from the former climate segment, which also serve as the Company's reportable segments.
The Company's 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 heatingconnected intelligent controls. The Company generates revenue and cooling;cash primarily through the design, manufacture, sales and service of solutions for Heating, Ventilation and Air Conditioning (HVAC), transport refrigeration, systems and custom refrigeration solutions.
The Company's 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.
The Company's 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 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, the Company's Chief Operating 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.
COVID-19 Global Pandemic
In March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a newly discovered coronavirus, known now as COVID-19, as a global pandemic and recommended containment and mitigation measures worldwide. Beginning in the first quarter of 2020, many countries responded by implementing measures to combat the outbreak which impacted global business operations and resulted in a Company decision to temporarily close or limit its workforce to essential crews within many facilities throughout the world in order to ensure employee safety. In addition, the Company's non-essential employees were instructed to work from home in compliance with global government stay-in-place protocols.
The Company has been adversely impacted by the COVID-19 global pandemic. Temporary facility closures beginning in the first quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations in the Americas and EMEA in the months thereafter. During the second quarter of 2020, the Company began to reopen facilities while maintaining appropriate health and safety precautions. However, the challenges in connection with the pandemic continued as the Company experienced lower volume, which negatively impacted revenue, and certain supply chain delays. In response, the Company proactively initiated cost cutting actions in an effort to mitigate the impact of the pandemic on its business. This included reducing discretionary spending, restricting travel, delaying merit-based salary increases and implementing employee furloughs in certain markets.
The Company continues to navigate the new realities brought about by the COVID-19 global pandemic. Despite these challenges, all production facilities remain open and the Company continues to sell, install and service its products. During the second half of 2020, the Company did not experience any major delays in its supply chain and continued to focus on health and safety precautions to protect its employees and customers. In addition, during the fourth quarter of 2020, the Company completed several restorative actions including the reinstatement of annual merit-based salary increases and resuming all aspects of our balanced capital allocation strategy which included acquisitions and share repurchases.
The preparation of financial statements 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 contingencies because they may arise from matters that are inherently uncertain. The financial statements reflect the Company's best estimates as of December 31, 2020 (including as it relates to the actual and potential future impacts of the global pandemic) with respect to the recoverability of its assets, including its receivables and long-lived assets such as goodwill and intangibles. However, due to
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significant uncertainty surrounding the COVID-19 global pandemic, management's judgment regarding this could change in the future. In addition, while the Company's results of operations, cash flows and financial condition could be negatively impacted, the extent of the impact cannot be estimated with certainty at this time.
Reorganization of Aldrich and Murray
On May 1, 2020, certain subsidiaries of the Company underwent an internal corporate restructuring that was effectuated through a series of transactions (2020 Corporate Restructuring). As a result, Aldrich 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 formerly known as Ingersoll-Rand Company, and Trane U.S. Inc, respectively. On a consolidated basis, the 2020 Corporate Restructuring did not have an impact on the Consolidated Financial Statements. In connection with the 2020 Corporate Restructuring, certain subsidiaries of the Company entered into funding agreements with Aldrich and Murray (collectively the Funding Agreements), pursuant to which those subsidiaries are obligated, among other things, to pay the costs and expenses of Aldrich and Murray during the pendency of the Chapter 11 cases to the extent distributions from their respective subsidiaries are insufficient to do so and to provide an amount for the funding for a trust established pursuant to section 524(g) of 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. The Trane Companies are expected to continue to operate as usual, with no disruption to their employees, suppliers, or customers globally. However, as of the Petition Date, Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated and their respective assets and liabilities were derecognized from the Company's Consolidated Financial Statements. Refer to Note 22,20, "Commitments and Contingencies," for more information regarding the Chapter 11 bankruptcy and asbestos-related matters.
NOTE 2. COMPLETION OF REVERSE MORRIS TRUST TRANSACTION
On February 29, 2020 (Distribution Date), the Company completed its 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 the Company distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained the Company's former Industrial segment (Ingersoll Rand Industrial), through a pro rata distribution (the Distribution) to 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, the Company’s 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, the Company’s 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 the Company. 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.
Discontinued Operations
After the Distribution Date, the Company does not beneficially own any Ingersoll Rand Industrial shares of common stock and will no longer consolidate Ingersoll Rand Industrial in its financial statements. In accordance with GAAP, the historical results of Ingersoll Rand Industrial are presented as a discontinued operation in the Consolidated Statement of Comprehensive Income (Loss) and Consolidated Statement of Cash Flows. In addition, the assets and liabilities of Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019. In connection with the Transaction, the Company entered into several agreements with Gardner Denver 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 the Company 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.
NOTE 3.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies used in the preparation of the accompanying Consolidated Financial Statements follows:
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Basis of Presentation: The accompanying Consolidated Financial Statements reflect the consolidated operations of the Company and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) as defined by the Financial Accounting Standards Board (FASB) within the FASB Accounting Standards Codification (ASC). Intercompany accounts and transactions have been eliminated. The assets, liabilities, results of operations and cash flows of all discontinued operations have been separately reported as discontinued operations for all periods presented.
The Consolidated Financial Statements include all majority-owned subsidiaries of the Company. A noncontrolling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent. The Company includes Noncontrolling interest as a component of Total equity in the Consolidated Balance SheetSheets and the Net earnings attributable to noncontrolling interests are presented as an adjustment from Net earnings used to arrive at Net earnings attributable to Trane Technologies plc in the Consolidated StatementStatements of Comprehensive Income. Partially-owned equity affiliates represent 20-50% ownership interests in investments where the Company demonstrates significant influence, but does not have a controlling financial interest. Partially-owned equity affiliates are accounted for under the equity method.Earnings.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the assessment of the probable future outcome. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the statementConsolidated Statements of operationsEarnings in the period that they are determined.
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Currency Translation: Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have been translated at year-end exchange rates, and income and expense accounts have been translated using average exchange rates throughout the year. Adjustments resulting from the process of translating an entity’s financial statements into the U.S. dollar have been recorded in the equity section of the Consolidated Balance SheetSheets within Accumulated other comprehensive income (loss). Transactions that are denominated in a currency other than an entity’s functional currency are subject to changes in exchange rates with the resulting gains and losses recorded within Net earnings.Other income/(expense), net.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits and all highly liquid investments with original maturities at the time of purchase of three months or less. The Company maintains amounts on deposit at various financial institutions, which may at times exceed federally insured limits. However, management periodically evaluates the credit-worthiness of those institutions and has not experienced any losses on such deposits.
Allowance for Doubtful AccountsCredit Losses: In accordance with Accounting Standard Update (ASU) 2016-13, “Financial Instruments - Credit Losses” (ASU 2016-13), theThe Company maintains an allowance for doubtful accounts receivablecredit losses which represents the best estimate of probableexpected loss inherent in the Company's accounts receivable portfolio. This estimate is based upon a two-step policy that results in the total recorded allowance for doubtful accounts.credit losses. The first step is to record a portfolio reserve based on the aging of the outstanding accounts receivable portfolio and the Company's historical experience with the Company's end markets, customer base and products. The second step is to create a specific reserve for significant accounts as to which the customer's ability to satisfy their financial obligation to the Company is in doubt due to circumstances such as bankruptcy, deteriorating operating results or financial position. In these circumstances, management uses its judgment to record an allowance based on the best estimate of probableexpected loss, factoring in such considerations as the market value of collateral, if applicable. Actual results could differ from those estimates. These estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated StatementStatements of Comprehensive IncomeEarnings in the period that they are determined. The Company reserved $40.0Company's allowance for credit losses was $44.8 million and $32.2$43.7 million for doubtful accounts as of December 31, 20202023 and 2019,2022, respectively.
Inventories: Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost or marketand net realizable value (NRV) using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost or marketand NRV using the FIFO method. At December 31, 20202023 and 2019, approximately 60%2022, approximately 59% and 62%58%, respectively, of all inventory utilized the LIFO method.
Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Assets placed in service are recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset except for leasehold improvements, which are depreciated over the shorter of their economic useful life or their lease term. The range of useful lives used to depreciate property, plant and equipment is as follows:
Buildings10to50years
Machinery and equipment2to12years
Software2to7years
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Major expenditures for replacements and significant improvements that increase asset values and extend useful lives are also capitalized. Capitalized costs are amortized over their estimated useful lives using the straight-line method. Repairs and maintenance expenditures that do not extend the useful life of the asset are charged to expense as incurred. The carrying amounts of assets that are sold or retired and the related accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected within current earnings.
Per ASC 360, "Property, Plant, and Equipment" (ASC 360), theThe Company assesses the recoverability of the carrying value of its property, plant and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of anthe asset group to the future net undiscounted cash flows expected to be generated by the asset group. If the undiscounted cash flows are less than the carrying amount of the asset group, an impairment loss is recognized for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.
Goodwill and Intangible Assets: The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a business combination. In accordance with ASC 350, "Intangibles-Goodwill and Other" (ASC 350), goodwillMeasurement period adjustments may be recorded once a final valuation has been performed. Goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset is more likely than not less than the carrying amount of the asset. In addition, an interim impairment test is completed upon a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion of a reporting unit.
Impairment of goodwill is assessedtested at the reporting unit level and begins with an optional qualitative assessment to determine if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test under ASC 350. For those reporting units that bypass or fail the qualitative assessment, thelevel. The test compares the carrying amount of the reporting unit to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss willwould be recognized for the amount by which the reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit.
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Intangible assets such as patents, customer-related intangible assets and other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful lives approximate the following:
Customer relationships1715years
Other108years
The Company assesses the recoverability of the carrying value of its intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to the future net undiscounted cash flows expected to be generated by the asset group. If the undiscounted cash flows are less than the carrying amount of the asset group, an impairment loss is recognized for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.
Business Combinations: In accordance with ASC 805, "Business Combinations" (ASC 805), acquisitionsAcquisitions that meet the definition of a business combination are recorded using the acquisition method of accounting. The Company includes the operating results of acquired entities from their respective dates of acquisition. The Company recognizes and measures the identifiable assets acquired, liabilities assumed, including contingent consideration relating to earnout provisions, and any non-controlling interest as of the acquisition date fair value. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any non-controlling interest is recognized as goodwill. Costs incurred as a result of a business combination other than costs related to the issuance of debt or equity securities are recorded in the period the costs are incurred. Additionally, at each reporting period, contingent consideration is remeasured to fair value, with changes recorded in Selling and administrative expenses in the Consolidated Statements of Earnings.
Equity Investments: Partially-owned equity affiliates generally represent 20-50% ownership interests in equity investments where the Company demonstrates significant influence, but does not have a controlling financial interest. Partially-owned equity affiliates are accounted for under the equity method.
The Company invests in companies that complement existing products and services further enhancing its product portfolio. The Company records equity investments for which it does not have significant influence and without a readily determinable fair value at cost with adjustments for observable changes in price or impairment as permitted by the measurement alternative. Investments for which the measurement alternative has been elected are assessed for impairment upon a triggering event. Equity investments without a readily determinable fair value were $69.9 million and $121.0 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Employee Benefit Plans: The Company provides a range of benefits, including pensions, postretirement and postemployment benefits to eligible current and former employees. Determining the cost associated with such benefits is dependent on various actuarial assumptions, including discount rates, expected return on plan assets, compensation increases, mortality, turnover rates, and healthcare cost trend rates. Actuaries perform the required calculations to determine expense in accordance with GAAP. Actual results may differ from the actuarial assumptions and are generally accumulated into Accumulated other comprehensive income (loss) and amortized into Net earnings over future periods. The Company reviews its actuarial assumptions at each measurement date and makes modifications to the assumptions based on current rates and trends, if appropriate.
Loss Contingencies: Liabilities are recorded for various contingencies arising in the normal course of business. The Company has recorded reserves in the financial statements related to these matters, which are developed using input derived from actuarial estimates and historical and anticipated experience data depending on the nature of the reserve, and in certain instances
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with consultation of legal counsel, internal and external consultants and engineers. Subject to the uncertainties inherent in estimating future costs for these types of liabilities, the Company believes its estimated reserves are reasonable and does not believe the final determination of the liabilities with respect to these matters would have a material effect on the financial condition, results of operations, liquidity or cash flows of the Company for any year.
Environmental Costs: The Company is subject to laws and regulations relating to protecting the environment. Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures relating to existing conditions caused by past operations, which do not contribute to current or future revenues, are expensed. Liabilities for remediation costs are recorded when they are probable and can be reasonably estimated, generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action. The assessment of this liability, which is calculated based on existing remediation technology, does not reflect any offset for possible recoveries from insurance companies, and is not discounted.
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Asbestos Matters: Prior to the Petition Date, certain of the Company's wholly-owned subsidiaries and former companies were named as defendants in asbestos-related lawsuits in state and federal courts. The Company recorded a liability for actual and anticipated future claims as well as an asset for anticipated insurance settlements. Asbestos-related defense costs were excluded from the asbestos claims liability and were recorded separately as services were incurred. None of the Company's existing or previously-owned businesses were a producer or manufacturer of asbestos. The Company recorded certain income and expenses associated with asbestos liabilities and corresponding insurance recoveries within discontinuedDiscontinued operations, net of tax, as they related to previously divested businesses, except for amounts associated with the predecessor of Murray's asbestos liabilities and corresponding insurance recoveries, which were recorded within continuing operations.
Product Warranties: Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available. The Company's extended warranty liability represents the deferred revenue associated with its extended warranty contracts and is amortized into revenue on a straight-line basis over the life of the contract, unless another method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.
Income Taxes: Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. The Company recognizes future tax benefits, such as net operating losses and tax credits, to the extent that realizing these benefits is considered in its judgment to be more likely than not. The Company regularly reviews the recoverability of its deferred tax assets considering its historic profitability, projected future taxable income, timing of the reversals of existing temporary differences and the feasibility of its tax planning strategies. Where appropriate, the Company records a valuation allowance with respect to a future tax benefit.
Revenue Recognition: Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. AThe majority of the Company's revenues arerevenue is recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenues arerevenue is recognized over timeover-time as the customer simultaneously receives control as the Company performs work under a contract. For these arrangements, the cost-to-cost input method (percentage of completion) is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs. See Note 1312, "Revenue" to the Consolidated Financial Statements for additional information regarding revenue recognition.
Research and Development Costs:The Company conducts research and development activities focused on product and system sustainability improvements such as increasing energy efficiency, developing products that allow for the purposeuse of developing and improving newlower global warming potential refrigerants, reducing material content in products, and services.designing products for circularity. These expenditures are expensed when incurred. For the years ended December 31, 2020, 20192023, 2022 and 2018,2021, these expenditures amounted to $165.0$252.3 million, $174.2$211.2 million and $166.7$193.5 million, respectively.
Recent Accounting Pronouncements
The FASB ASC is the sole source of authoritative GAAP other than the Securities and Exchange Commission (SEC) issued rules and regulations that apply only to SEC registrants. The FASB issues an ASUAccounting Standard Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. ASU's not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.
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Recently Adopted Accounting Pronouncements
In October 2020,September 2022, the FASB issued ASU 2020-09, "Debt (Topic 470)2022-04, “Liabilities - Supplier Finance Program (Subtopic 405-50): AmendmentsDisclosure of Supplier Program Finance Obligations," which requires that a company that enters into a supplier finance program disclose sufficient information about the program to SEC Paragraphs Pursuantallow a user of financial statements to SEC Release No. 33-10762" (ASU 2020-09), which amends Topic 470understand the program’s nature, activity during the period, changes from period to period, and certain other topics to conform to disclosure rules on guaranteed debt offerings in SEC Release No.33-10762. The SEC adopted amendments topotential magnitude. To achieve that objective, the financial disclosure requirements for guarantorscompany should disclose qualitative and issuers of guaranteed securities registered or being registered in Rule 3-10 of Regulations S-X, and affiliates whose securities registered or being registered in Rule 3-16 of Regulation S-X. The amended rules aim to improve disclosure, reduce compliance burdens for issuers and increase investor protection. ASU 2020-09 is effective on January 4, 2021, pursuant to SEC Release No. 33-10762 with early application permitted.quantitative information about its supplier finance programs. The Company early adopted this standard duringon January 1, 2023, except for the first quarter of 2020 and elected to disclose summarized financialamendment on roll forward information ofwhich is effective for fiscal years beginning after December 15, 2023. See Note 8, "Supplier Financing Arrangements" for more information regarding the issuers and guarantors on a combined basis within Management's Discussion and Analysis of Financial Condition and Results of Operations.Company's supplier financing program.
In August 2018,November 2021, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract"2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance" (ASU 2018-15)2021-10), which alignsrequires additional disclosures regarding government grants and cash contributions. The additional disclosures required by this update include information about the requirementsnature of the transactions and the related accounting policy used to account for capitalizing implementation costs in a cloud-computing arrangement service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, the guidance also clarifies the presentation requirements for reporting such costs intransaction, the financial statements.statement line items affected by the transactions and the amounts applicable to each financial statement line item and significant terms and conditions of the transactions, including commitments and contingencies. ASU 2018-152021-10 is effective for annual reporting periods beginning after December 15, 20192021 with early adoption permitted. The Company adopted this standard on January 1, 2020 on a prospective basis2022 with no material impact on its financial statements.Consolidated Financial Statements.
In June 2016,October 2021, the FASB issued ASU 2016-13,2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (ASU 2021-08), which changes the impairment model for most financialrequires contract assets and certain other instruments from an incurred loss model to an expected loss model. In addition, the guidance also requires incremental disclosures regarding allowances and credit quality indicators. ASU 2016-13 is requiredcontract liabilities acquired in a business combination to be adopted usingrecognized and measured by the modified-retrospective approach andacquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” (ASC 606). ASU 2021-08 is effective infor fiscal years beginning after December 15, 2019,2022 including interim periods within those fiscal years,therein with early adoption permitted. The Company early adopted this standard during the fourth quarter of 2021 and applied it retrospectively to all business combinations for which the acquisition date occurred on or after January 1, 2020 with2021 resulting in no material impact on its financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases” (ASC 842), which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The Company adopted this standard using a modified-retrospective approach as of January 1, 2019. Under this approach, the Company recognized and recorded a right-of-use (ROU) asset and related lease liability on the Consolidated Balance Sheet of $521 million with no impact to Retained earnings. Reporting periods prior to January 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP. As part of the adoption, the Company elected the package of practical expedients permitted under the transition guidance which includes the ability to carry forward historical lease classification. Refer to Note 11, “Leases,” for a further discussion on the adoption of ASC 842.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and hedging (Topic 815): Targeted improvements to accounting for hedging activities" (ASU 2017-12). This standard more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. ASU 2017-12 is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard on October 1, 2018 with no material impact to the financial statements.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (ASU 2016-16) which removed the prohibition in Topic 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. As a result, the income tax consequences of an intra-entity transfer of assets other than inventory will be recognized in the current period income statement rather than being deferred until the assets leave the consolidated group. The Company applied ASU 2016-16 on a modified retrospective basis through a cumulative effect adjustment which reduced Retained earnings by $9.1 million as of January 1, 2018.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (ASC 606), which created a comprehensive, five-step model for revenue recognition that requires a company to recognize revenue to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Under ASC 606, a company will be required to use more judgment and make more estimates when considering contract terms as well as relevant facts and circumstances when identifying performance obligations, estimating the amount of variable consideration in the transaction price and allocating the transaction price to each separate performance
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obligation. The Company adopted this standard on January 1, 2018 using the modified retrospective approach and recorded a cumulative effect adjustment to increase Retained earnings by $2.4 million with related amounts not materially impacting the Balance Sheet. Refer to Note 13, “Revenue,” for a further discussion on the adoption of ASC 606.
Recently Issued Accounting PronouncementsFinancial Statements.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" (ASU 2019-12), which simplifies certain aspects of income tax accounting guidance in ASC 740, reducing the complexity of its application. Certain exceptions to ASC 740 presented within the ASU include: intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date loss in interim periods, among others. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020 including interim periods therein with early adoption permitted. The Company adopted this standard on January 1, 2021 with no material impact on its Consolidated Financial Statements.
Accounting Pronouncements Issued but not yet Adopted
In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures (Topic 740)" (ASU 2023-09) which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (ASU 2023-07) which requires public entities to disclose information about their reportable segments' oversight and significant expenses on an interim and annual basis. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.
In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative" (ASU 2023-06) to amend a variety of disclosure requirements in the ASC. The effective date for each amendment will be the date on with the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited. Upon adoption, this ASU is not expected to have a material impact on its financial statements and related disclosures.
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NOTE 4.3. INVENTORIES
Depending on the business, U.S. inventories are stated at the lower of cost or market using the LIFO method or the lower of cost or market using the FIFO method. Non-U.S. inventories are primarily stated at the lower of cost or market using the FIFO method.
At December 31, the major classes of inventory were as follows:
In millionsIn millions20202019In millions20232022
Raw materialsRaw materials$305.0 $333.5 
Work-in-processWork-in-process163.9 173.7 
Finished goodsFinished goods761.4 804.9 
1,230.3 1,312.1 
2,322.5
LIFO reserveLIFO reserve(41.1)(33.5)
TotalTotal$1,189.2 $1,278.6 
The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value.the lower of cost and NRV. Reserve balances, primarily related to obsolete and slow-moving inventories, were $85.6$143.5 million and $66.1$94.3 million at December 31, 20202023 and December 31, 2019,2022, respectively.
NOTE 5.4. PROPERTY, PLANT AND EQUIPMENT
At December 31, the major classes of property, plant and equipment were as follows:
In millionsIn millions20202019In millions20232022
LandLand$40.7 $40.1 
BuildingsBuildings676.7 660.0 
Machinery and equipmentMachinery and equipment1,749.3 1,600.2 
SoftwareSoftware638.0 655.2 
3,104.7 2,955.5 
3,820.9
Accumulated depreciationAccumulated depreciation(1,755.2)(1,603.5)
TotalTotal$1,349.5 $1,352.0 
Depreciation expense for the years ended December 31, 2020, 20192023, 2022 and 20182021 was $172.8$178.3 million, $167.2$176.5 million and $160.7$170.5 million, which includeincludes amounts for software amortization of $50.2$36.5 million, $55.4$42.1 million and $51.6$45.7 million, respectively.
NOTE 6.5. GOODWILL
The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a business combination. Measurement period adjustments may be recorded once a final valuation has been performed. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the reporting unit may be less than its carrying value. In addition, an interim impairment test is completed upon a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion of a reporting unit.
In connection with the new organizational model and business segment structure, the Company performed a goodwill impairment assessment immediately prior to the reorganization becoming effective, the results of which did not indicate any
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goodwill impairment. The Company then reassigned its goodwill between the newly designated reporting units using a relative fair value approach. Subsequent to the reassignment, the Company performed a second goodwill impairment assessment under the new reporting structure, the results of which also did not indicate any goodwill impairment.
The reassigned amounts of goodwill as of December 31, 2018 and the changes in the carrying amount of goodwill are as follows: 
In millionsIn millionsAmericasEMEAAsia PacificTotalIn millionsAmericasEMEAAsia PacificTotal
Net balance as of December 31, 2018$3,809.4 $747.3 $542.5 $5,099.2 
Net balance as of December 31, 2021
Acquisitions (1)
Acquisitions (1)
45.3 45.3 
Currency translationCurrency translation4.1 (16.2)(6.7)(18.8)
Net balance as of December 31, 20193,858.8 731.1 535.8 5,125.7 
Net balance as of December 31, 2022
Acquisitions (1)
Acquisitions (1)
130.1 130.1 
Deconsolidation of certain entities under Chapter 11 (2)
(9.2)(9.2)
Measurement period adjustments
Currency translationCurrency translation0.3 62.4 33.5 96.2 
Net balance as of December 31, 2020$3,980.0 $793.5 $569.3 $5,342.8 
Net balance as of December 31, 2023
(1) Refer to Note 19,17, "Acquisitions and Divestitures" for more information regarding acquisitions.
(2) Refer to Note 22, "Commitments and Contingencies", for more information regarding the Chapter 11 bankruptcy and asbestos-related matters.
The net goodwill balances at December 31, 2020, 20192023, 2022 and 20182021 include $2,496.0 million of accumulated impairment.impairment, primarily related to the Americas segment. The accumulated impairment relates entirely to a charge recorded in 2008.
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NOTE 7.6. INTANGIBLE ASSETS
Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite useful lives are being amortized on a straight-line basis over their estimated useful lives.
The following table sets forth the gross amount and related accumulated amortization of the Company’s intangible assets at December 31:
20202019
202320232022
In millionsIn millionsGross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amountIn millionsGross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amount
Customer relationshipsCustomer relationships$2,010.2 $(1,362.4)$647.8 $1,928.5 $(1,239.2)$689.3 
OtherOther210.7 (199.4)11.3 212.2 (203.4)8.8 
Total finite-lived intangible assetsTotal finite-lived intangible assets$2,220.9 $(1,561.8)$659.1 $2,140.7 $(1,442.6)$698.1 
Trademarks (indefinite-lived)Trademarks (indefinite-lived)2,627.3 — 2,627.3 2,625.5 — 2,625.5 
TotalTotal$4,848.2 $(1,561.8)$3,286.4 $4,766.2 $(1,442.6)$3,323.6 
Intangible asset amortization expense for 2020, 20192023, 2022 and 20182021 was $115.7$165.2 million, $116.7$142.7 million and $116.8$123.6 million, respectively.
Future estimated amortization expense on existing intangible assets in each of the next five years as of December 31, 2023 amounts to approximately $122 million for 2021, $122 million for 2022, $121 million for 2023, $120 million for 2024, and $89 million for 2025.approximately:
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In millions
2024$178 
2025146 
202693 
202764 
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NOTE 8.7. DEBT AND CREDIT FACILITIES
At December 31, Short-term borrowings and current maturities of long-term debt consisted of the following:
In millions20202019
Debentures with put feature$343.0 $343.0 
2.625% Senior notes due 2020 (1)
299.8 
2.900% Senior notes due 2021 (2)
299.9 
9.000% Debentures due 2021 (3)
125.0 
Other current maturities of long-term debt7.7 7.5 
Total$775.6 $650.3 
(1) The 2.625% Senior notes due in May 2020 were redeemed in April 2020.
(2) The 2.900% Senior notes are due in February 2021.
(3) The 9.000% Debentures are due in August 2021.
In millions20232022
Debentures with put feature$295.0 $340.8 
4.250% Senior notes due 2023— 699.7 
3.550% Senior notes due 2024499.4 — 
Other current maturities of long-term debt7.5 7.5 
Total$801.9 $1,048.0 
The Company's short-term obligations primarily consist of debentures with put features and current maturities of long-term debt. The weighted-average interest rate for Short-term borrowings and current maturities of long-term debt at December 31, 20202023 and 20192022 was 5.4%4.6% and 4.6%4.9%, respectively.
Commercial Paper Program
The Company uses borrowings under its commercial paper program for general corporate purposes. The maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, under the commercial paper program is $2.0 billion as of December 31, 2020.2023. Under the commercial paper program, the Company may issue notes from time to time through Trane Technologies Global Holding Company LimitedHoldCo Inc. or Trane Technologies Luxembourg Finance S.A.Financing Limited. Each of Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company, Trane Technologies Lux International Holding Company S.à.r.l., Trane Technologies Americas Holding Corporation, Trane Technologies Global Holding II Company Limited, Trane Technologies Company LLC, Trane Technologies HoldCo Inc. and Trane Technologies Company LLCFinancing Limited provided irrevocable and unconditional guarantees for any notes issued under the commercial paper program. The Company had no outstanding balance under its commercial paper program as of December 31, 20202023 and December 31, 2019.2022.
Debentures with Put Feature
At December 31, 20202023 and December 31, 2019,2022, the Company had $343.0$295.0 million and $340.8 million, respectively, of fixed rate debentures outstanding which contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, the Company is obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount of the
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debentures plus accrued interest. If these options are not exercised, the final contractual maturity dates would range between 2027 and 2028. Holders of these debentures had the option to exercise the put feature on each of the outstanding debentures in 2020,2023, subject to the notice requirement. During the year ended December 31, 2023, $45.8 million put options were exercised. No material exercises were made in 2020 or 2019.2022.
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At December 31, long-term debt excluding current maturities consisted of:
In millionsIn millions20202019In millions20232022
2.900% Senior notes due 2021 (1)
299.1 
9.000% Debentures due 2021 (2)
124.9 
4.250% Senior notes due 2023698.4 697.8 
7.200% Debentures due 2020-202529.9 37.3 
7.200% Debentures due 2024-2025
3.550% Senior notes due 20243.550% Senior notes due 2024497.3 496.6 
6.480% Debentures due 20256.480% Debentures due 2025149.7 149.7 
3.500% Senior notes due 20263.500% Senior notes due 2026397.3 396.8 
3.750% Senior notes due 20283.750% Senior notes due 2028545.6 545.1 
3.800% Senior notes due 20293.800% Senior notes due 2029744.4 743.6 
5.250% Senior notes due 2033
5.750% Senior notes due 20435.750% Senior notes due 2043494.7 494.5 
4.650% Senior notes due 20444.650% Senior notes due 2044296.1 295.9 
4.300% Senior notes due 20484.300% Senior notes due 2048296.2 296.0 
4.500% Senior notes due 20494.500% Senior notes due 2049345.7 345.5 
Other loans and notes1.2 0.1 
TotalTotal$4,496.5 $4,922.9 
Total
Total
(1) The 2.900% Senior notes are due in February 2021 and have been reclassified from noncurrent to current.
(2) The 9.000% Debentures are due in August 2021 and have been reclassified from noncurrent to current.
Scheduled maturities of long-term debt, including current maturities, as of December 31, 20202023 are as follows:
In millionsIn millions  
2021$775.6 
20227.9 
2023706.3 
2024
2024
20242024505.1 
20252025157.2 
2026
2027
2028
ThereafterThereafter3,120.0 
TotalTotal$5,272.1 
Issuance of Senior Notes
In March 2019,2023, the Company, issued $1.5 billion principal amount of senior notes in three tranches through its wholly-owned subsidiary Trane Technologies Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consist of $400Financing Limited, issued $700.0 million aggregate principal amount of 3.500%5.250% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior notes due 2029 and $350 million aggregate principal amount of 4.500% senior notes due 2049.2033. The notes are fully and unconditionally guaranteed by each of Trane Technologies plc, Trane Technologies Americas Holding Corporation, Trane Technologies Global Holding II Company Limited, Trane Technologies Lux International Holding Company S.a.r.l., Trane Technologies Irish Holdings Unlimited Company, Trane Technologies Lux International Holding Company S.à.r.l, Trane Technologies Global Holding Company Limited, Trane Technologies HoldCo Inc.LLC and Trane Technologies Company LLC.Holdco Inc. The Company has the option to redeem the notes in whole or in part at any time prior to their stated maturity date at redemption prices set forth in the indenture agreement. The notes are subject to certain customary covenants, however, none of these covenants are considered restrictive to the Company’s operations. The net proceeds from the offering were used to fund the redemption of the $700.0 million aggregate principal amount of the outstanding 4.250% senior notes due June 2023.
Other Credit Facilities
On June 4, 2020, the Company entered into a new $1.0 billion senior unsecured revolving credit facility which matures in March 2022 and terminated its $1.0 billion facility set to expire in March 2021. As a result, theThe Company maintains two $1.0 billion senior unsecured revolving credit facilities, one of which matures in March 2022June 2026 and the other which matures in April 2023 (the2027 (collectively, the Facilities), through its wholly-owned subsidiaries, Trane Technologies HoldCo Inc., Trane Technologies Global Holding Company Limited and Trane Technologies Luxembourg Finance S.A.Financing Limited (collectively, the Borrowers). Each senior unsecured credit facility providesThe Facilities include Environmental, Social, and Governance (ESG) metrics related to two of the Company’s sustainability commitments: a reduction in greenhouse gas intensity and an increase in the percentage of women in management. The Company's annual performance against these ESG metrics may result in price adjustments to the commitment fee and applicable interest rate.
The Facilities provide support for the Company'sCompany’s commercial paper program and can be used for working capital and other general corporate purposes. Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company, Trane Technologies Lux International Holding Company S.à.r.l., Trane Technologies Americas Holding Corporation, Trane Technologies Global Holding II Company Limited, and Trane Technologies Company LLC each provide irrevocable and
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unconditional guarantees for these Facilities. In addition, each Borrower will guarantee the obligations under the Facilities of the other Borrower.Borrowers. Total commitments of $2.0 billion were unused at December 31, 20202023 and December 31, 2019.
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2022.
Fair Value of Debt
The Company considers the carrying value of short-term borrowings to be a reasonable estimate of the fair value due to the short-term nature of the instruments. The fair value of the Company's debt instruments at December 31, 20202023 and December 31, 20192022 was $6.3$4.7 billion and $6.2$4.6 billion, respectively. The Company measures the fair value of its long-term debt instruments for disclosure purposes based upon observable market prices quoted on public exchanges for similar assets. These fair value inputs are considered Level 2 within the fair value hierarchy. See Note 9, “Fair Value Measurements” for information on the fair value hierarchy.
NOTE 9. FINANCIAL INSTRUMENTS8. SUPPLIER FINANCING ARRANGEMENTS
InThe Company has an agreement with a U.S. financial institution that allows its suppliers to sell their receivables to the normal coursefinancial institution at the sole discretion of business,both the Company is exposed to certain risks arising from business operationssupplier and economic factors. These fluctuations can increase the cost of financing, investing and operating the business.financial institution on terms that are negotiated between them. The Company may use various financial instruments,not always be notified when its suppliers sell receivables under this program.
The Company’s obligations to its suppliers, including derivative instruments, to manage the risks associated with interest rate, commodity priceamounts due and foreign currency exposures. These financial instrumentsscheduled payment dates, are not used for trading or speculative purposes. The Company recognizes all derivatives onimpacted by the Consolidated Balance Sheet atsuppliers’ decisions to sell their fair value as either assets or liabilities.
Onreceivables under the date a derivative contract is entered into,program. Outstanding invoices under the Company designates the derivative instrument as a cash flow hedge of a forecasted transaction or as an undesignated derivative. The Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions.
The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed to be a highly effective hedge, the fair market value changes of the instrument are recorded to Accumulated other comprehensive income (loss) (AOCI). If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument will be recorded in Net earnings.
The fair values of derivative instruments included within the Consolidated Balance Sheet as of December 31supplier financing program were as follows:
 Derivative assetsDerivative liabilities
In millions2020201920202019
Derivatives designated as hedges:
Currency derivatives$0.7 $0.1 $1.7 $3.9 
Derivatives not designated as hedges:
Currency derivatives1.5 1.0 4.8 3.3 
Total derivatives$2.2 $1.1 $6.5 $7.2 
Asset and liability derivatives included in the table above are recorded within Other current assets and Accrued expenses and other current liabilities, respectively.
Currency Hedging Instruments
The notional amount of the Company’s currency derivatives was $0.5 billion at both December 31, 2020 and 2019, respectively. At December 31, 2020 and 2019, a net loss of $0.7$246.0 million and $2.9 million, net of tax, respectively, was included in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount expected to be reclassified into Net earnings over the next twelve months is a loss of $0.6 million. The actual amounts that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. Gains and losses associated with the Company’s currency derivatives not designated as hedges are recorded in Net earnings as changes in fair value occur. At December 31, 2020, the maximum term of the Company’s currency derivatives was approximately 12 months, except for currency derivatives in place related to a long-term contract.
Other Derivative Instruments
In the past, the Company utilized forward-starting interest rate swaps and interest rate locks to manage interest rate exposure in periods prior to the anticipated issuance of certain fixed-rate debt. These instruments were designated as cash flow hedges and had a notional amount of $1.3 billion. Consequently, when the contracts were settled upon the issuance of the underlying debt, any realized gains or losses in the fair values of the instruments were deferred into AOCI. These deferred gains or losses are subsequently recognized in Interest expense over the term of the related notes. The net unrecognized gain in AOCI was $5.3 million and $6.0$247.2 million at December 31, 20202023 and at December 31, 2019. The net deferred gain at December 31, 2020 will continue to be amortized over the term of notes with maturities ranging from 2023 to 2044. The amount expected to be
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amortized over the next twelve months is a net gain of $0.7 million. The Company has 0 forward-starting interest rate swaps or interest rate lock contracts outstanding at December 31, 2020 or 2019.
The following table represents the amounts associated with derivatives designated as hedges affecting2022, respectively, which are included within Net earningsAccounts payable and AOCI for the years ended December 31:
 
Amount of gain (loss)
recognized in AOCI
Location of gain (loss) reclassified from AOCI and recognized into Net earningsAmount of gain (loss) reclassified from AOCI and recognized into Net earnings
In millions202020192018202020192018
Currency derivatives - continuing$3.3 $(2.5)$0.7 Cost of goods sold$(2.6)$(1.5)$(1.0)
Currency derivatives - discontinued(0.2)0.5 Discontinued operations0.1 0.2 
Interest rate swaps & locksInterest expense0.7 0.7 (0.1)
Total$3.3 $(2.7)$1.2  $(1.9)$(0.7)$(0.9)
The following table represents the amounts associated with derivatives not designated as hedges affecting Net earnings for the years ended December 31:
In millionsLocation of gain (loss) recognized in Net earningsAmount of gain (loss) recognized in Net earnings
202020192018
Currency derivatives - continuingOther income (expense), net$7.5 $(5.2)$(30.0)
Currency derivatives - discontinuedDiscontinued operations(0.4)(1.2)0.4 
Total$7.1 $(6.4)$(29.6)
The gains and losses associated with the Company’s undesignated currency derivatives are materially offset in Net earnings by changes in the fair value of the underlying transactions.Consolidated Balance Sheets.
The following table presents the effects of the Company's designated financial instruments on the associated financial statement line item within the Consolidated Statement of Comprehensive Income where the financial instrument are recorded for the years ended December 31:
 Classification and amount of gain (loss) recognized in income on cash flow hedging relationships
202020192018
In millionsCost of goods soldInterest expenseCost of goods soldInterest expenseCost of goods soldInterest expense
Total amounts presented in the Consolidated Statements of Comprehensive Income$(8,651.3)$(248.7)$(9,085.5)$(242.8)$(8,582.5)$(221.0)
Gain (loss) on cash flow hedging relationships
Currency derivatives:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings$(2.6)$— $(1.5)$— $(1.0)$— 
Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization$(2.1)$— $(3.0)$— $(0.1)$— 
Interest rate swaps & locks:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings$— $0.7 $— $0.7 $— $(0.1)
For the years ended December 31, 2019 and 2018, the amount of gain (loss) reclassified from AOCI and recognized into Net earnings also included a gain of $0.1 million and $0.2 million, respectively, related to the historical results of Ingersoll Rand Industrial. The gains were recorded within Discontinued operations, net of tax.
Concentration of Credit Risk
The counterparties to the Company’s forward contracts consist of a number of investment grade major international financial institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties. However, the credit ratings and the concentration of risk in these financial institutions are monitored on a continuous basis and present no significant credit risk to the Company.
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NOTE 10.9. FAIR VALUE MEASUREMENTS
ASC 820, "Fair Value Measurement," (ASC 820) defines fairFair value asis the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-levelThe fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability is as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.
ASC 820 requires the use of observableObservable market data when available,is required to be used in making fair value measurements.measurements when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2020:2023:
In millionsIn millionsFair ValueFair value measurements
Level 1Level 2Level 3
In millions
Level 1
Level 1
Assets:
Assets:
Assets:Assets:
Derivative instrumentsDerivative instruments$2.2 $$2.2 $
Derivative instruments
Derivative instruments
Liabilities:
Liabilities:
Liabilities:Liabilities:
Derivative instrumentsDerivative instruments$6.5 $$6.5 $
Derivative instruments
Derivative instruments
Contingent consideration
Contingent consideration
Contingent consideration
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2019:2022:
In MillionsIn MillionsFair ValueFair value measurementsIn MillionsFair ValueFair value measurements
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:Assets:
Assets:
Assets:
Derivative instruments
Derivative instruments
Derivative instrumentsDerivative instruments$1.1 $$1.1 $
Liabilities:Liabilities:
Liabilities:
Liabilities:
Derivative instrumentsDerivative instruments$7.2 $$7.2 $
Derivative instruments
Derivative instruments
Contingent consideration
Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency balance sheet exposures.exposures and commodity swaps. The fair value of the derivative instrumentsforeign exchange derivatives are determined based on a pricing model that uses spot rates and forward prices from actively quoted currency markets that are readily accessible and observable.
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The fair value of the commodity derivatives is valued under a market approach using published prices, where applicable, or dealer quotes.
On November 2, 2023, the Company acquired 100% of Nuvolo Technologies Corporation (Nuvolo). In connection with the acquisition, the Company agreed to two contingent consideration arrangements. The first contingent consideration arrangement, payable of up to $90.0 million in cash, is based on the attainment of key revenue targets from November 2, 2023 through April 2025. If the first contingent consideration targets are met, a second contingent consideration arrangement with no maximum earnout is available to the sellers based on revenues in excess of the initial targets attained from a specified customer contract through April 2025.
On October 15, 2021, the Company acquired 100% of Farrar Scientific Corporation's (Farrar Scientific) assets. In connection with the acquisition, the Company agreed to contingent consideration of up to $115.0 million to be paid in 2025, tied to the attainment of key financial targets during the period January 1, 2022 through December 31, 2024. This additional payment, to the extent earned, will be payable in cash.
Each quarter, the Company is required to remeasure the fair value of the liability as assumptions change and such non-cash adjustments are recorded in Selling and administrative expenses in the Consolidated Statements of Earnings. Contingent consideration related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The fair value of the contingent consideration is determined using the Monte Carlo simulation model based on revenue projections during the earnout period, implied revenue volatility and a risk adjusted discount rate.
The changes in the fair value of the Company's Level 3 liabilities during the years ended December 31, 2023 and 2022 are as follows:
In millions20232022
Balance at beginning of period$49.3 $96.2 
Fair value of contingent consideration recorded in connection with acquisitions90.3 — 
Change in fair value of contingent consideration(49.3)(46.9)
Balance at end of period$90.3 $49.3 
The following inputs and assumptions were used in the Monte Carlo simulation model of Nuvolo to estimate the fair value of the contingent consideration at December 31, 2023:
2023
Discount rate (risk adjusted)8.14% - 8.48%
Volatility16.20%
The following inputs and assumptions were used in the Monte Carlo simulation model of Farrar to estimate the fair value of the contingent consideration at December 31, 2023 and 2022:
20232022
Discount rate13.00 %12.00 %
Volatility20.00 %20.00 %
Refer to Note 17, "Acquisitions and Divestitures" for more information regarding the contingent consideration.
The carrying values of cash and cash equivalents, accounts receivable and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. There have been no transfers between levels of the fair value hierarchy.
Certain assets are measured at fair value on a non-recurring basis. The Company's equity investments without a readily available fair value are accounted for using the measurement alternative and are measured at fair value when observable transactions of identical or similar securities occurs, or due to an impairment. When indicators of impairment exist or observable price changes of qualified transactions occur, the respective equity investment would be classified within Level 3 of the fair value hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment. During the year ended December 31, 2023, the Company recorded an impairment of an equity investment of $52.2 million within Other income/(expense), net.
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NOTE 11.10. LEASES
The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the Company’s leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based on information available at the commencement date.
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The following table includes a summary of the Company's lease portfolio and Balance Sheet classification:
In millionsIn millionsClassificationDecember 31,
2020
December 31,
2019
In millionsClassificationDecember 31,
2023
December 31,
2022
AssetsAssets
Operating lease right-of-use assets (1)
Operating lease right-of-use assets (1)
Other noncurrent assets$409.0 $469.4 
Operating lease right-of-use assets (1)
Operating lease right-of-use assets (1)
LiabilitiesLiabilities
Operating lease current
Operating lease current
Operating lease currentOperating lease currentOther current liabilities138.8 145.0 
Operating lease noncurrentOperating lease noncurrentOther noncurrent liabilities276.5 329.9 
Weighted average remaining lease termWeighted average remaining lease term4.0 years4.3 years
Weighted average remaining lease term
Weighted average remaining lease term5.0 years3.9 years
Weighted average discount rateWeighted average discount rate3.3 %3.6 %Weighted average discount rate4.5 %3.0 %
(1) Prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $6.3$9.6 million and $5.5$6.8 million at December 31, 20202023 and December 31, 2019,2022, respectively.
The Company accounts for each separate lease component of a contract and its associated non-lease component as a single lease component. In addition, the Company utilizes a portfolio approach for the vehicle, information technology and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.
The following table includes lease costs and related cash flow information for the yearyears ended December 31:
In millionsIn millions20202019
In millions
In millions
Operating lease expense
Operating lease expense
Operating lease expenseOperating lease expense$173.0 $163.5 
Variable lease expenseVariable lease expense24.9 19.9 
Variable lease expense
Variable lease expense
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leasesOperating cash flows from operating leases172.2 161.5 
Operating cash flows from operating leases
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilitiesRight-of-use assets obtained in exchange for new operating lease liabilities114.6 162.9 
Right-of-use assets obtained in exchange for new operating lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities
Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred as variable lease expense.
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Maturities of lease obligations were as follows:
In millionsDecember 31,
2020
Operating leases:
2021$152.0 
2022114.1 
202378.2 
202446.8 
202522.8 
After 202534.5 
Total lease payments$448.4 
Less: Interest(33.1)
Present value of lease liabilities$415.3 

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In millionsDecember 31,
2023
Operating leases:
2024$179.4 
2025137.2 
2026106.2 
202767.5 
202837.9 
After 202887.3 
Total lease payments$615.5 
Less: Interest(92.8)
Present value of lease liabilities$522.7 

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NOTE 12.11. PENSIONS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the Company's U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.
Pension Plans
The noncontributorynon-contributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key or highly compensated employees.
In connection with completion of the Transaction, the Company transferred certain pension obligations for current and former employees of Ingersoll Rand Industrial to Gardner Denver. The transfer of these obligations reduced pension liabilities by $486.2 million, pension assets by $351.7 million and AOCI by $111.3 million.
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The following table details information regarding the Company’s pension plans at December 31:
In millionsIn millions20202019In millions20232022
Change in benefit obligations:Change in benefit obligations:
Benefit obligation at beginning of yearBenefit obligation at beginning of year$3,851.2 $3,465.3 
Benefit obligation at beginning of year
Benefit obligation at beginning of year
Service costService cost58.3 73.6 
Interest costInterest cost83.8 119.1 
Employee contributionsEmployee contributions1.0 1.1 
Amendments1.9 5.7 
Actuarial (gains) losses (1)
Actuarial (gains) losses (1)
Actuarial (gains) losses (1)
Actuarial (gains) losses (1)
317.7 422.8 
Benefits paidBenefits paid(189.2)(225.3)
Currency translationCurrency translation43.8 9.0 
Curtailments, settlements and special termination benefitsCurtailments, settlements and special termination benefits(7.8)(3.1)
Impact of the Transaction(486.2)
Other, including expenses paidOther, including expenses paid(11.7)(17.0)
Benefit obligation at end of yearBenefit obligation at end of year$3,662.8 $3,851.2 
Change in plan assets:Change in plan assets:
Fair value at beginning of year
Fair value at beginning of year
Fair value at beginning of yearFair value at beginning of year$3,136.8 $2,766.9 
Actual return on assetsActual return on assets395.6 526.1 
Company contributionsCompany contributions99.7 83.1 
Employee contributionsEmployee contributions1.0 1.1 
Benefits paidBenefits paid(189.2)(225.3)
Currency translationCurrency translation39.5 12.0 
SettlementsSettlements(7.8)(5.3)
Impact of the Transaction(351.7)
Other, including expenses paidOther, including expenses paid(9.3)(21.8)
Fair value of assets end of yearFair value of assets end of year$3,114.6 $3,136.8 
Net unfunded liabilityNet unfunded liability$(548.2)$(714.4)
Net unfunded liability
Net unfunded liability
Amounts included in the balance sheet:Amounts included in the balance sheet:
Other noncurrent assetsOther noncurrent assets$72.8 $50.0 
Assets held-for-sale0.3 
Other noncurrent assets
Other noncurrent assets
Accrued compensation and benefitsAccrued compensation and benefits(22.9)(7.2)
Postemployment and other benefit liabilitiesPostemployment and other benefit liabilities(598.1)(617.3)
Liabilities held-for-sale(140.2)
Net amount recognizedNet amount recognized$(548.2)$(714.4)
(1) Actuarial (gains) losses primarily resulted from changes in discount ratesrates.
It is the Company’s objective to contribute to the pension plans to ensure adequate funds, and no less than required by law, are available in the plans to make benefit payments to plan participants and beneficiaries when required. However, certain plans are not or cannot be funded due to either legal, accounting, or tax requirements in certain jurisdictions. As of December 31, 2020,2023, approximately 7six percent of the Company's projected benefit obligation relates to plans that cannot be funded.
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The pretax amounts recognized in Accumulated other comprehensive income (loss) were as follows:
In millionsIn millionsPrior service benefit (cost)Net actuarial gains (losses)TotalIn millionsPrior service benefit (cost)Net actuarial gains (losses)Total
December 31, 2019$(32.4)$(800.2)$(832.6)
December 31, 2022
Current year changes recorded to AOCICurrent year changes recorded to AOCI(1.9)(43.2)(45.1)
Amortization reclassified to earningsAmortization reclassified to earnings5.3 43.7 49.0 
Settlements/curtailments reclassified to earningsSettlements/curtailments reclassified to earnings(1.8)(1.8)
Impact of the Transaction1.3 110.0 111.3 
Currency translation and otherCurrency translation and other(0.6)(9.8)(10.4)
December 31, 2020$(28.3)$(701.3)$(729.6)
December 31, 2023
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Weighted-average assumptions used to determine the benefit obligation at December 31 were as follows:
202320232022
Discount rate:
20202019
Discount rate:
U.S. plans
U.S. plans
U.S. plansU.S. plans2.52 %3.22 %5.16 %5.51 %
Non-U.S. plansNon-U.S. plans1.27 %1.66 %Non-U.S. plans4.18 %4.63 %
Rate of compensation increase:Rate of compensation increase:
U.S. plansU.S. plans4.00 %4.00 %
U.S. plans
U.S. plans4.02 %4.00 %
Non-U.S. plansNon-U.S. plans3.75 %3.75 %Non-U.S. plans4.07 %4.25 %
The accumulated benefit obligation for all defined benefit pension plans was $3,566.4$2,372.2 million and $3,734.5$2,343.2 million at December 31, 20202023 and 2019,2022, respectively. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations more than plan assets were $3,128.7$1,928.6 million, $3,043.9$1,902.3 million and $2,510.9$1,611.0 million, respectively, as of December 31, 2020,2023, and $3,405.7$1,850.0 million, $3,308.2$1,847.0 million and $2,645.1$1,585.6 million, respectively, as of December 31, 2019.2022.
Pension benefit payments are expected to be paid as follows:
In millions  
2021$210.7 
2022204.5 
2023207.1 
2024200.7 
2025246.6 
2026-2030960.9 

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In millions
2024$187.7 
2025195.5 
2026184.9 
2027192.5 
2028178.4 
2029-2033871.8 
The components of the Company’s net periodic pension benefit costs for the years ended December 31 include the following:
In millionsIn millions202020192018In millions202320222021
Service costService cost$58.3 $73.6 $75.0 
Interest costInterest cost83.8 119.1 109.7 
Expected return on plan assetsExpected return on plan assets(121.1)(138.5)(146.6)
Net amortization of:Net amortization of:
Prior service costs (benefits)Prior service costs (benefits)5.3 5.0 4.2 
Prior service costs (benefits)
Prior service costs (benefits)
Plan net actuarial (gains) losses
Plan net actuarial (gains) losses
Plan net actuarial (gains) lossesPlan net actuarial (gains) losses43.7 54.3 51.3 
Net periodic pension benefit costNet periodic pension benefit cost70.0 113.5 93.6 
Net curtailment, settlement, and special termination benefits (gains) lossesNet curtailment, settlement, and special termination benefits (gains) losses(1.8)4.5 2.3 
Net periodic pension benefit cost after net curtailment and settlement (gains) lossesNet periodic pension benefit cost after net curtailment and settlement (gains) losses$68.2 $118.0 $95.9 
Amounts recorded in continuing operations:Amounts recorded in continuing operations:
Operating income Operating income$51.7 $58.8 $61.0 
Operating income
Operating income
Other income/(expense), net Other income/(expense), net11.7 31.8 14.2 
Amounts recorded in discontinued operationsAmounts recorded in discontinued operations4.8 27.4 20.7 
TotalTotal$68.2 $118.0 $95.9 
Pension benefit cost for 20212024 is projected to be approximately $51$46 million.
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Weighted-average assumptions used to determine net periodic pension cost for the years ended December 31 were as follows:
202020192018
2023202320222021
Discount rate:Discount rate:
U.S. plansU.S. plans
U.S. plans
U.S. plans
Service costService cost3.36 %4.24 %3.70 %
Service cost
Service cost5.48 %3.06 %2.75 %
Interest costInterest cost2.78 %3.88 %3.24 %Interest cost5.35 %2.36 %1.82 %
Non-U.S. plansNon-U.S. plans
Service cost
Service cost
Service costService cost1.87 %2.81 %2.52 %4.82 %2.07 %1.56 %
Interest costInterest cost1.51 %2.83 %2.46 %Interest cost4.65 %1.62 %1.09 %
Rate of compensation increase:Rate of compensation increase:
U.S. plansU.S. plans4.00 %4.00 %4.00 %
U.S. plans
U.S. plans4.25 %4.00 %4.00 %
Non-U.S. plansNon-U.S. plans3.75 %4.00 %4.00 %Non-U.S. plans4.23 %4.00 %4.00 %
Expected return on plan assets:Expected return on plan assets:
U.S. plansU.S. plans4.75 %5.75 %5.50 %
U.S. plans
U.S. plans6.25 %4.00 %4.00 %
Non-U.S. plansNon-U.S. plans2.75 %3.25 %3.25 %Non-U.S. plans5.02 %2.50 %2.25 %
The expected long-term rate of return on plan assets reflects the average rate of returns expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate of return on plan assets is based on what is achievable given the plan’s investment policy, the types of assets held and target asset allocations. The expected long-term rate of return is determined as of the measurement date. The Company reviews each plan and its historical returns and target asset allocations to determine the appropriate expected long-term rate of return on plan assets to be used.
The Company's objective in managing its defined benefit plan assets is to ensure that all present and future benefit obligations are met as they come due. It seeks 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. The Company utilizes a dynamic approach to asset allocation whereby a plan's allocation to fixed income assets increases as the plan's funded status improves. The Company monitors plan funded status and asset allocation regularly in addition to investment manager performance.
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The fair values of the Company’s pension plan assets at December 31, 20202023 by asset category were as follows:
Fair value measurementsNet asset valueTotal
fair value
Fair value measurementsNet asset valueTotal
fair value
In millionsIn millionsLevel 1Level 2Level 3
Cash and cash equivalentsCash and cash equivalents$3.1 $34.2 $$$37.3 
Cash and cash equivalents
Cash and cash equivalents
Equity investments:Equity investments:
Registered mutual funds – equity specialtyRegistered mutual funds – equity specialty65.1 65.1 
Registered mutual funds – equity specialty
Registered mutual funds – equity specialty
Commingled funds – equity specialtyCommingled funds – equity specialty622.0 622.0 
687.1 687.1 
Fixed income investments:Fixed income investments:
U.S. government and agency obligations
U.S. government and agency obligations
U.S. government and agency obligationsU.S. government and agency obligations504.7 504.7 
Corporate and non-U.S. bonds(a)
Corporate and non-U.S. bonds(a)
1,424.2 1,424.2 
Asset-backed and mortgage-backed securitiesAsset-backed and mortgage-backed securities48.4 48.4 
Registered mutual funds – fixed income specialtyRegistered mutual funds – fixed income specialty118.3 118.3 
Commingled funds – fixed income specialtyCommingled funds – fixed income specialty153.3 153.3 
Other fixed income(b)
Other fixed income(b)
28.3 28.3 
Derivatives
1,977.3 28.3 271.6 2,277.2 
Derivatives0.3 0.3 
Real estate(c)
2.8 2.8 
Other(d)
Other(d)
Other(d)
Other(d)
112.3 112.3 
Total assets at fair valueTotal assets at fair value$3.1 $2,011.8 $143.4 $958.7 $3,117.0 
Receivables and payables, netReceivables and payables, net(2.4)
Net assets available for benefitsNet assets available for benefits   $3,114.6 
The fair values of the Company’s pension plan assets at December 31, 20192022 by asset category were as follows:
Fair value measurementsNet asset valueTotal
fair value
Fair value measurementsNet asset valueTotal
fair value
In millionsIn millionsLevel 1Level 2Level 3
Cash and cash equivalentsCash and cash equivalents$7.0 $26.3 $$$33.3 
Cash and cash equivalents
Cash and cash equivalents
Equity investments:Equity investments:
Registered mutual funds – equity specialtyRegistered mutual funds – equity specialty61.5 61.5 
Registered mutual funds – equity specialty
Registered mutual funds – equity specialty
Commingled funds – equity specialtyCommingled funds – equity specialty665.2 665.2 
726.7 726.7 
Fixed income investments:Fixed income investments:
U.S. government and agency obligations
U.S. government and agency obligations
U.S. government and agency obligationsU.S. government and agency obligations528.5 528.5 
Corporate and non-U.S. bonds(a)
Corporate and non-U.S. bonds(a)
1,393.0 0.4 1,393.4 
Asset-backed and mortgage-backed securitiesAsset-backed and mortgage-backed securities70.9 70.9 
Registered mutual funds – fixed income specialtyRegistered mutual funds – fixed income specialty103.3 103.3 
Commingled funds – fixed income specialtyCommingled funds – fixed income specialty127.6 127.6 
Other fixed income(b)
Other fixed income(b)
26.0 26.0 
1,992.4 26.4 230.9 2,249.7 
DerivativesDerivatives0.4 0.4 
Real estate(c)
Real estate(c)
3.4 3.4 
Other(d)
Other(d)
114.1 114.1 
Total assets at fair valueTotal assets at fair value$7.0 $2,019.1 $143.9 $957.6 $3,127.6 
Receivables and payables, netReceivables and payables, net9.2 
Net assets available for benefitsNet assets available for benefits   $3,136.8 
(a)This class includes state and municipal bonds.
(b)This class includes group annuity and guaranteed interest contracts.
(c)This class includes a private equity fund that invests in real estate.
(d)This investment comprises the Company's non-significant, non-US pension plan assets. It primarily includes insurance contracts.

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Cash equivalents are valued using a market approach with inputs including quoted market prices for either identical or similar instruments. Fixed income securities are valued through a market approach with inputs including, but not limited to, benchmark yields, reported trades, broker quotes and issuer spreads. Commingled funds are valued at their daily net asset value (NAV) per share or the equivalent. NAV per share or the equivalent is used for fair value purposes as a practical expedient. NAVs are calculated by the investment manager or sponsor of the fund. Private real estate fund values are reported by the fund manager and are based on valuation or appraisal of the underlying investments. Refer to Note 10,9, "Fair Value Measurements" for additional information related to the fair value hierarchy defined by ASC 820.hierarchy. There have been no significant transfers between levels of the fair value hierarchy.
The Company made required and discretionary contributions to its pension plans of $99.7$93.5 million in 2020, $83.12023, $90.5 million in 2019,2022, and $86.9$55.9 million in 20182021 and currently projects that it will contribute approximately $56$61 million to its plans worldwide in 2021. The contribution in 2020 included $24.4 million to fund Ingersoll Rand Industrial plans prior to the completion of the Transaction.2024. The Company’s policy allows it to fund an amount, which could be in excess of or less than the pension cost expensed, subject to the limitations imposed by current tax regulations. However, the Company anticipates funding the plans in 20212024 in accordance with contributions required by funding regulations or the laws of each jurisdiction.
Most of the Company’s U.S. employees are covered by defined contribution plans. Employer contributions are determined based on criteria specific to the individual plans and amounted to approximately $111.0$165 million, $140.2$138 million and $131.9$126 million in 2020, 20192023, 2022 and 2018,2021, respectively. The Company’s contributions relating to non-U.S. defined contribution plans and other non-U.S. benefit plans were $19.2$30.9 million, $56.7$33.8 million and $52.0$34.9 million in 2020, 20192023, 2022 and 2018,2021, respectively.
Multiemployer Pension Plans
The Company also participates in a number of multiemployer defined benefit pension plans related to collectively bargained U.S. employees of Trane. The Company's contributions and the administration of the fixed retirement payments, are determined by the terms of the related collective-bargaining agreements. These multiemployer plans pose different risks to the Company than single-employer plans, including:
1.The Company's contributions to multiemployer plans may be used to provide benefits to all participating employees of the program,plan, including employees of other employers.
2.In the event that another participating employer ceases contributions to a plan, the Company, together with other remaining participating employers, may be responsible for any unfunded obligations along withof the remaining participating employers.employer that ceased making contributions.
3.If the Company chooses to withdraw from any of the multiemployer plans or if a partial withdrawal occurs, the Company may be required to pay a withdrawal liability, based on the underfunded status of the plan.
As of December 31, 2020,2023, the Company does not participate in any multiemployer plans that are individually significant, nor is the Company an individually significant participant to any of these plans.significant.
Postretirement Benefits Other Than Pensions
The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.
In connection with the completion of the Transaction, the Company transferred certain postretirement benefit obligations for current and former employees of Ingersoll Rand Industrial to Gardner Denver. The transfer of these obligations reduced postretirement plan liabilities by $28.7 million and increased AOCI by $5.5 million.

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non-contributory.
The following table details changes in the Company’s postretirement plan benefit obligations for the years ended December 31:
In millionsIn millions20202019In millions20232022
Benefit obligation at beginning of year
Benefit obligation at beginning of year
Benefit obligation at beginning of yearBenefit obligation at beginning of year$428.8 $442.7 
Service costService cost2.4 2.6 
Interest costInterest cost9.7 14.8 
Plan participants’ contributionsPlan participants’ contributions8.2 7.7 
Actuarial (gains) losses (1)
Actuarial (gains) losses (1)
9.3 6.7 
Benefits paid, net of Medicare Part D subsidy (2)
Benefits paid, net of Medicare Part D subsidy (2)
(39.9)(45.6)
Amendments
Impact of the Transaction(28.7)
Other(0.7)(0.1)
Amendments
Amendments
Benefit obligations at end of yearBenefit obligations at end of year$389.1 $428.8 
Benefit obligations at end of year
Benefit obligations at end of year
(1) Net actuarial lossesActuarial gains in fiscal year 2023 primarily due to plan experience. Actuarial gains in fiscal year 2022 primarily resulted from losses driven by changes in discount rates offset by gains driven by changes in per capita cost assumptions.rates.
(2) Amounts are net of Medicare Part D subsidy of $0.7 million and $0.8$0.4 million in 2020both 2023 and 2019, respectively.2022.
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The benefit plan obligations are reflected in the Consolidated Balance Sheets as follows:
In millionsIn millionsDecember 31, 2020December 31, 2019In millionsDecember 31, 2023December 31, 2022
Accrued compensation and benefitsAccrued compensation and benefits$(37.1)$(38.3)
Accrued compensation and benefits
Accrued compensation and benefits
Postemployment and other benefit liabilitiesPostemployment and other benefit liabilities(352.0)(361.3)
Liabilities held-for-sale(29.2)
TotalTotal$(389.1)$(428.8)
Total
Total
The pre-tax amounts recognized in Accumulated other comprehensive income (loss) were as follows:
In millionsNet actuarial gains (losses)
Balance at December 31, 2019$72.8 
Gain (loss) in current period(9.3)
Amortization reclassified to earnings(5.6)
Impact of the Transaction(5.5)
Balance at December 31, 2020$52.4 
In millionsPrior service benefit (cost)Net actuarial gains (losses)Total
Balance at December 31, 2022$(3.3)$120.5 $117.2 
Current year changes recorded to AOCI— 7.4 7.4 
Amortization reclassified to earnings0.6 (13.0)(12.4)
Balance at December 31, 2023$(2.7)$114.9 $112.2 
The components of net periodic postretirement benefit (income) cost for the years ended December 31 were as follows:
In millionsIn millions202020192018In millions202320222021
Service costService cost$2.4 $2.6 $2.8 
Interest costInterest cost9.7 14.8 14.4 
Net amortization of:Net amortization of:
Prior service costs (benefits)Prior service costs (benefits)(0.3)(3.8)
Net actuarial (gains) losses(5.6)(10.9)(1.0)
Prior service costs (benefits)
Prior service costs (benefits)
Plan net actuarial (gains) losses
Net periodic postretirement benefit costNet periodic postretirement benefit cost$6.5 $6.2 $12.4 
Amounts recorded in continuing operations:
Amounts recorded in continuing operations:
Amounts recorded in continuing operations:Amounts recorded in continuing operations:000
Operating income Operating income$2.4 $2.5 $2.8 
Other income/(expense), net Other income/(expense), net3.0 3.1 6.9 
Amounts recorded in discontinued operationsAmounts recorded in discontinued operations1.1 0.6 2.7 
TotalTotal$6.5 $6.2 $12.4 
Postretirement cost for 20212024 is projected to be approximately $6$0.1 million. The amount expected to be recognized in net periodic postretirement benefits cost in 20212024 for net actuarial gains is approximately $2$13 million.
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Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 were as follows:
202020192018
2023202320222021
Discount rate:Discount rate:
Benefit obligations at December 31
Benefit obligations at December 31
Benefit obligations at December 31Benefit obligations at December 312.25 %2.99 %4.05 %5.17 %5.51 %2.73 %
Net periodic benefit costNet periodic benefit cost
Service costService cost3.18 %4.13 %3.47 %
Service cost
Service cost5.54 %2.82 %2.40 %
Interest costInterest cost2.73 %3.67 %2.94 %Interest cost5.38 %2.33 %1.84 %
Assumed health-care cost trend rates at December 31:Assumed health-care cost trend rates at December 31:
Current year medical inflationCurrent year medical inflation6.50 %6.75 %6.45 %
Current year medical inflation
Current year medical inflation6.28 %6.50 %6.25 %
Ultimate inflation rateUltimate inflation rate4.75 %4.75 %5.00 %Ultimate inflation rate5.00 %5.00 %4.75 %
Year that the rate reaches the ultimate trend rateYear that the rate reaches the ultimate trend rate202820282023Year that the rate reaches the ultimate trend rate20292028
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Benefit payments for postretirement benefits, which are net of expected plan participant contributions and Medicare Part D subsidy, are expected to be paid as follows:
In millions  
2021$37.1 
202235.8 
202333.7 
202431.7 
202529.9 
2026 — 2030121.7 
In millions
2024$30.1 
202528.2 
202626.5 
202724.8 
202823.3 
2029—203393.3 
NOTE 13.12. REVENUE
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company's revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenues are recognized over time as the customer simultaneously receives control as the Company performs work under a contract. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs.
Performance Obligations
A performance obligation is a distinct good, service or a bundle of goods and services promised in a contract. The Company identifies performance obligations at the inception of a contract and allocates the transaction price to individual performance obligations to faithfully depict the Company’s performance in transferring control of the promised goods or services to the customer.
The following are the primary performance obligations identified by the Company:
Equipment and parts. The Company principally generates revenue from the sale of equipment and parts to customers and recognizes revenue at a point in time when control transfers to the customer. Transfer of control is generally determined based on the shipping terms of the contract.
Contracting and Installationinstallation. The Company enters into various construction-type contracts to design, deliver and build integrated solutions to meet customer specifications. These transactions provide services that range from the development and installation of new HVAC systems to the design and integration of critical building systems to optimize energy efficiency and overall performance. These contracts have a typical term of less than one year and are considered a single performance obligation as multiple combined goods and services promised in the contract represent a single output delivered to the customer. Revenues associated with contracting and installation contracts are recognized over time with progress towards completion measured using anthe cost-to-cost input method (percentage of completion) as the basis to recognize revenue and an estimated profit. To-date efforts for work performed corresponds with and faithfully depicts transfer of control to the customer.
Services and Maintenancemaintenance. The Company provides various levels of preventative and/or repair and maintenance type service agreements for its customers. The typical length of a contract is between 12 months but can be as long asand 60 months. Revenues associated with these performance obligations are primarily recognized over time on a straight-line basis over the life of the
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contract as the customer simultaneously receives and consumes the benefit provided by the Company. However, if historical evidence indicates that the cost of providing these services on a straight-line basis is not appropriate, revenue is recognized over the contract period in proportion to the costs expected to be incurred while performing the service. CertainRevenues for certain repair services that do not meet the definition ofcriteria for over time revenue recognition as the Company does not transfer control to the customer until the service is completed. As a result, revenue related to these services isand sales of parts are recognized at a point in time.
Extended warranties. The Company enters into various warranty contracts with customers related to its products. A standard warranty generally warrants that a product is free from defects in workmanship and materials under normal use and conditions for a certain period of time. The Company’s standard warranty is not considered a distinct performance obligation as it does not provide services to customers beyond assurance that the covered product is free of initial defects. An extended warranty provides a customer with additional time that the Company is liable for covered incidents associated with its products. Extended warranties are purchased separately and can last up to five years. As a result, they are considered separate performance obligations for the Company. Revenue associated with these performance obligations areis primarily recognized over time on a straight-line basis over the life of the contract as the customer simultaneously receives and consumes the benefit provided by the Company. However, if historical evidence indicates that the cost of providing these services on a straight-line basis is not appropriate, revenue is recognized over the contract period in proportion to the costs expected to be incurred while performing the service. Refer to Note 22,20, "Commitments and Contingencies," for more information related to product warranties.
The transaction price allocated to performance obligations reflects the Company’s expectations about the consideration it will be entitled to receive from a customer. To determine the transaction price, variable and noncashnon-cash consideration are assessed as well as whether a significant financing component exists. The Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. The Company considers historical data in determining its best estimates of variable consideration, and the related accruals are recorded using the expected value method. The
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For projects financed through energy savings, the Company provides financial guarantees for in-process work and financial commitments with end dates varying from the current fiscal year through the completion of such transactions that could be triggered in the event of nonperformance. Additionally, for completed energy savings contracts, the Company has ongoing performance guarantees related to the customers' realization of committed energy savings contracts that are provided underthrough the maintenancemeasurement and verification portion of contracting and installation agreements extending from 2021-2047.agreements. These performance guarantees represent variable consideration and are estimated as part of the overall transaction price. TheAs of December 31, 2023, the Company has notoutstanding performance guarantees of approximately $1 billion related to completed energy savings contracts that extend from 2024-2049. Since 1995, the Company has recognized any significantan immaterial amount in adjustments to the overall transaction price due to variable consideration.of energy savings contracts as a result of these performance guarantees.
The Company enters into sales arrangements that contain multiple goods and services, such as equipment, installation and extended warranties.services. For these arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation and whether the sales price for each obligation is representative of standalone selling price. If available, the Company utilizes observable prices for goods or services sold separately to similar customers in similar circumstances to evaluate relative standalone selling price. List prices are used if they are determined to be representative of standalone selling prices. Where necessary, the Company ensures that the total transaction price is then allocated to the distinct performance obligations based on the determination of their relative standalone selling price at the inception of the arrangement.
The Company recognizes revenue for delivered goods or services when the delivered good or service is distinct, control of the good or service has transferred to the customer, and only customary refund or return rights related to the goods or services exist. The Company excludes from revenues taxes it collects from a customer that are assessed by a government authority.
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Disaggregated Revenue
Net revenues by geography and major type of good or service for the yearyears ended at December 31 were as follows:
In millionsIn millions202020192018In millions202320222021
AmericasAmericas
Equipment Equipment$6,479.0 $6,880.4 $6,236.6 
Services and parts3,206.9 3,179.1 2,982.8 
Equipment
Equipment
Services
Total AmericasTotal Americas$9,685.9 $10,059.5 $9,219.4 
EMEAEMEA
EquipmentEquipment$1,119.9 $1,208.0 $1,271.7 
Services and parts528.2 554.6 559.4 
Equipment
Equipment
Services
Total EMEATotal EMEA$1,648.1 $1,762.6 $1,831.1 
Asia PacificAsia Pacific
Equipment Equipment$773.6 $879.7 $917.3 
Services and parts347.1 374.1 376.0 
Equipment
Equipment
Services
Total Asia PacificTotal Asia Pacific$1,120.7 $1,253.8 $1,293.3 
Total Net revenuesTotal Net revenues$12,454.7 $13,075.9 $12,343.8 
Total Net revenues
Total Net revenues
Revenue from goods and services transferred to customers at a point in time accounted for approximately 81%, 82% and 82% of the Company's revenue for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.
Contract Balances
The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended December 31, 20202023 and December 31, 20192022 were as follows:
In millions20202019
Contract assets$255.4 $172.6 
Contract liabilities1,077.0 941.9 
In millionsLocation on Consolidated Balance Sheet20232022
Contract assets - currentOther current assets$458.4 $201.2 
Contract assets - noncurrentOther noncurrent assets— 239.6 
Contract liabilities - currentAccrued expenses and other current liabilities1,301.2 1,010.6 
Contract liabilities - noncurrentOther noncurrent liabilities247.2 471.4 
The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets, and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet.Sheets. In general, the Company receives payments
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from customers based on a billing schedule established in its contracts. Contract assets relate to the conditional right to consideration for any completed performance under the contract when costs are incurred in excess of billings under the percentage-of-completionpercentage of completion methodology. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities relate to payments received in advance of performance under the contract or when the Company has a right to consideration that is unconditional before it transfers a good or service to the customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. During the fourth quarter of 2023, the Company reclassified $249.0 million and $254.1 million of noncurrent contract assets and liabilities, respectively, to current contract assets and liabilities based on expected contract fulfillment in 2024. During the years ended December 31, 20202023 and 2019,2022, changes in contract asset and liability balances were not materially impacted by any other factors.
Approximately 55%58% of the contract liability balance at December 31, 20192022 was recognized as revenue during the year ended December 31, 2020.2023. Additionally, approximately 40%16% of the contract liability balance at December 31, 20202023 was classified as noncurrent and not expected to be recognized as revenue in the next 12 months.
NOTE 14.13. EQUITY
The authorized share capital of Trane Technologies plc is 1,185,040,000 shares, consisting of (1) 1,175,000,000 ordinary shares, par value $1.00 per share, (2) 40,000 ordinary shares, par value EUR 1.00 and (3) 10,000,000 preference shares, par value $0.001 per share. There were 0 preferenceno Euro-denominated ordinary shares or Euro-denominated ordinarypreference shares outstanding at December 31, 20202023 or 2019.
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2022.
The changes in ordinary shares and treasury shares for the year ended December 31, 20202023 were as follows:
In millionsIn millionsOrdinary shares issuedOrdinary shares held in treasuryIn millionsOrdinary shares issuedOrdinary shares held in treasury
December 31, 2019262.8 24.5 
December 31, 2022
Shares issued under incentive plansShares issued under incentive plans2.3 
Repurchase of ordinary sharesRepurchase of ordinary shares(1.8)
December 31, 2020263.3 24.5 
December 31, 2023
Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. Shares acquired and canceled upon repurchase are accounted for as a reduction of Ordinary Shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess of par value is exhausted. Shares acquired and held in treasury are presented separately on the balance sheet as a reduction to Equity and recognized at cost.
In October 2018,February 2022, the Company's Board of Directors authorized thea share repurchase program of up to $1.5$3.0 billion of its ordinary shares under a(2022 Authorization) upon the completion of its $2.0 billion ordinary share repurchase program (2018authorized in 2021 (2021 Authorization) upon completion of the prior authorized share repurchase program. NaN material amounts were repurchased under this program in 2018.. During the year ended December 31, 2019,2023, the Company repurchased and canceled approximately $750$669 million of its ordinary shares, thus completing the 2021 Authorization and initiating repurchases under the 2022 Authorization of approximately $469 million of its ordinary shares, leaving approximately $750 million remaining under the 2018 Authorization. During the year ended December$2.5 billion remaining. Additionally, through January 31, 2020,2024 the Company repurchased and canceled approximately $250$81 million of our ordinary shares leaving approximately $500 million remaining under the 2018 Authorization. Additionally, through February 9, 2021, we repurchased approximately $100 million of ourits ordinary shares under the 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 20182022 Authorization.
Accumulated Other Comprehensive Income (Loss)
The changes in Accumulated other comprehensive income (loss) were as follows:
In millionsDerivative InstrumentsPension and OPEB ItemsForeign Currency TranslationTotal
December 31, 2018$6.7 $(454.0)$(516.8)$(964.1)
Other comprehensive income (loss) attributable to Trane Technologies plc(1.1)(3.4)(38.0)(42.5)
December 31, 2019$5.6 $(457.4)$(554.8)$(1,006.6)
Separation of Ingersoll Rand Industrial, net of tax64.8 70.2 135.0 
Other comprehensive income (loss) attributable to Trane Technologies plc5.2 (23.9)258.8 240.1 
December 31, 2020$10.8 $(416.5)$(225.8)$(631.5)
In millionsDerivative InstrumentsPension and OPEB ItemsForeign Currency TranslationTotal
December 31, 2021$7.1 $(297.9)$(346.8)$(637.6)
Other comprehensive income (loss) attributable to Trane Technologies plc(11.6)83.8 (200.8)(128.6)
December 31, 2022$(4.5)$(214.1)$(547.6)$(766.2)
Other comprehensive income (loss) attributable to Trane Technologies plc7.5 15.2 72.7 95.4 
December 31, 2023$3.0 $(198.9)$(474.9)$(670.8)
The amounts of Other comprehensive income (loss) attributable to noncontrolling interests for 2020, 20192023, 2022 and 20182021 were $2.7$(0.2) million, $0.9$(1.9) million and $(3.0)$(1.7) million, respectively, related to currency translation. Additionally, Other comprehensive income (loss) attributable to noncontrolling interests for 2023, 2022, and 2021 includes $0.5 million, $0.3 million, and $1.2 million, respectively, related to pension and postretirement obligation adjustments.
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NOTE 15.14. SHARE-BASED COMPENSATION
The Company accounts for stock-basedshare-based compensation plans in accordance with ASC 718, "Compensation - Stock Compensation" (ASC 718), which requires aunder the fair-value based method for measuring the value of stock-based compensation.method. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs), and deferred compensation. Under the Company's incentive stockshare plan, the total number of ordinary shares authorized by the shareholders is 23.0 million, of which 15.711.4 million remains available as of December 31, 20202023 for future incentive awards.
In connection with the completion of the Transaction, the provisions of the Company's existing share-based compensation plans required adjustment to the terms of outstanding awards in order to preserve the intrinsic value of the awards immediately before and after the separation. The outstanding awards will continue to vest over the original vesting period, which is generally three years from the grant date.
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The stock awards held as of February 29, 2020 were adjusted as follows:
Vested stock options - Outstanding stock options that were vested and exercisable at the time of the Transaction were converted into vested and exercisable stock options of the Company. The number of underlying shares and exercise price for each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the Transaction.
Unvested stock options - Unvested stock options held at the time of the Transaction were converted into stock options of the participants employer following the separation. The number of underlying shares and exercise price for each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the Transaction.
Restricted stock units - Outstanding RSUs held at the time of the Transaction were converted into RSUs of the participants employer following the separation. The number of underlying shares was adjusted to preserve the overall intrinsic value of the awards immediately prior to the Transaction.
Performance share units - Active and outstanding PSU awards held at the time of the Transaction were converted into active and outstanding PSUs of the Company. Post-transaction, the Company's employees will continue to participate in the plan at target levels with payout based on actual performance at the end of the respective three-year performance period for each award. Post-transaction, Ingersoll Rand Industrial employees will continue to participate in the plan with the target number of PSUs prorated based on the portion of the performance cycle completed as of the transaction date with payout based on actual performance at the end of the respective three year performance period for each award. The number of underlying shares was adjusted to preserve the overall intrinsic value of the awards immediately prior to the Transaction.
Per ASC 718, an adjustment to the terms of a stock-based compensation award to preserve its value after an equity restructuring may result in significant incremental compensation cost if there was no requirement to make such an adjustment based on the awards existing terms. The Company reviewed the provisions of its existing share-based compensation plans and determined the Transaction required modification to the terms of outstanding awards. As a result, the Company incurred less than $0.1 million of incremental compensation costs at the date of the Transaction.
Compensation Expense
Share-based compensation expense related to continuing operations is included in Selling and administrative expenses. The following table summarizes the expenses recognized:
In millions202020192018
Stock options$17.9 $20.2 $23.5 
RSUs23.3 26.5 30.4 
PSUs26.7 17.9 23.0 
Deferred compensation3.9 3.1 3.4 
Other (1)
3.3 3.5 0.5 
Pre-tax expense75.1 71.2 80.8 
Tax benefit(18.2)(17.3)(19.6)
After-tax expense$56.9 $53.9 $61.2 
Amounts recorded in continuing operations55.2 46.5 52.5 
Amounts recorded in discontinued operations1.7 7.4 8.7 
Total$56.9 $53.9 $61.2 
(1) Includes certain plans that have a market-based component.
In millions202320222021
Stock options$16.1 $14.1 $16.7 
RSUs23.5 19.7 21.9 
PSUs23.2 20.7 26.1 
Deferred compensation4.3 1.2 3.0 
Pre-tax expense67.1 55.7 67.7 
Tax benefit(16.3)(13.5)(16.4)
After-tax expense$50.8 $42.2 $51.3 
Amounts recorded in continuing operations$50.8 $42.6 $51.3 
Amounts recorded in discontinued operations— (0.4)— 
Total$50.8 $42.2 $51.3 
Grants issued during the yearyears ended December 31 were as follows:
202020192018
Number GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per award
2023202320222021
Number GrantedNumber GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per award
Stock optionsStock options1,021,628 $16.75 1,286,857 $17.17 1,541,025 $15.51 
RSUsRSUs213,142 $104.76 268,465 $102.98 327,411 $90.07 
Performance shares (1)
Performance shares (1)
278,468 $140.72 312,362 $111.12 363,342 $106.31 
(1) The number of performance shares represents the maximum award level.
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Stock Options / RSUs
Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. The fair value of each of the Company’s stock option and RSU awards is expensed on a straight-line basis over the required service period, which is generally the 3-year vesting period. However, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense for the fair value at the grant date.
The average fair value of the stock options granted is determined using the Black Scholes option pricing model. The following assumptions were used during the year ended December 31:
202020192018
2023202320222021
Dividend yieldDividend yield2.01 %2.06 %2.00 %Dividend yield1.50 %1.60 %1.60 %
VolatilityVolatility24.33 %21.46 %21.64 %Volatility29.37 %28.23 %27.90 %
Risk-free rate of returnRisk-free rate of return0.56 %2.46 %2.48 %Risk-free rate of return3.62 %1.56 %0.45 %
Expected life in yearsExpected life in years4.84.84.8Expected life in years4.8
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A description of the significant assumptions used to estimate the fair value of the stock option awards is as follows:
Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments as of the grant date and the current fair market value of the Company’s shares.
Volatility - The expected volatility is based on a weighted average of the Company’s implied volatility and the most recent historical volatility of the Company’s stockshares commensurate with the expected life.
Risk-free rate of return -The- The Company applies a yield curve of continuous risk-free rates based upon the published US Treasury spot rates on the grant date.
Expected life in years - The expected life of the Company’s stock option awards represents the weighted-average of the actual period since the grant date for all exercised or canceled options and an expected period for all outstanding options.
Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments as of the grant date and the current fair market value of the Company’s stock.
Forfeiture Rate - The Company analyzes historical data of forfeited options to develop a reasonable expectation of the number of options to forfeit prior to vesting per year. This expected forfeiture rate is applied to the Company’s ongoing compensation expense; however, all expense is adjusted to reflect actual vestings and forfeitures.
Changes in options outstanding under the plans for the years 2020, 20192023, 2022 and 20182021 were as follows:
Shares
subject
to option
Weighted-
average
exercise price
Aggregate
intrinsic
value (millions)
Weighted-
average
remaining life (years)
December 31, 20176,354,882 $56.49 
Granted1,541,025 89.71 
Exercised(1,515,955)45.44 
Cancelled(94,601)79.53   
December 31, 20186,285,351 66.95 
Granted1,286,857 101.42 
Exercised(2,076,338)56.17 
Cancelled(76,624)92.38   
December 31, 20195,419,246 78.91 
Granted1,021,628 105.29 
Exercised(1,767,782)58.27 
Cancelled(49,539)88.12   
Adjustment due to the Transaction1,095,805 n/a
Outstanding December 31, 20205,719,358 $70.53 $426.9 6.2
Exercisable December 31, 20203,352,349 $58.77 $289.6 5.0
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Shares
subject
to option
Weighted-
average
exercise price
Aggregate
intrinsic
value (millions)
Weighted-
average
remaining life (years)
December 31, 20205,719,358 $70.53 
Granted589,417 150.34 
Exercised(1,872,069)64.74 
Cancelled(25,706)115.33   
December 31, 20214,411,000 $83.39 
Granted430,496 167.93 
Exercised(633,962)66.06 
Cancelled(57,050)137.38   
December 31, 20224,150,484 $94.06 
Granted425,444 182.27 
Exercised(1,382,846)80.67 
Cancelled(21,365)168.18   
Outstanding December 31, 20233,171,717 $111.23 $420.8 5.4
Exercisable December 31, 20232,284,656 $88.17 $355.8 4.3
The following table summarizes information concerning currently outstanding and exercisable options:
  Options outstandingOptions exercisable
Range of
exercise price
Number
outstanding at
December 31,
2020
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
Number
exercisable at
December 31,
2020
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
$15.01 $30.00 91,434 0.9$26.16 91,434 0.9$26.16 
30.01 40.00 682,984 4.037.95 682,984 4.037.95 
40.01 50.00 232,405 3.046.56 232,405 3.046.56 
50.01 60.00 328,001 3.752.28 328,001 3.752.28 
60.01 70.00 939,243 5.663.19 776,864 5.262.66 
70.01 80.00 2,430,895 6.874.53 1,207,923 6.473.38 
80.01 90.00 1,667 8.386.31 555 8.386.31 
90.01 100.00 19,921 8.694.50 1,369 8.792.92 
100.01 110.00 991,715 8.9105.25 30,814 3.5105.28 
110.01 145.00 1,093 9.9144.34 0.0
$18.90 $144.34 5,719,358 6.2$70.53 3,352,349 5.0$58.77 
Options outstandingOptions exercisable
Range of
exercise price
Number
outstanding at
December 31,
2023
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
Number
exercisable at
December 31,
2023
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
$25.01 $50.00 213,462 1.8$40.10 213,462 1.8$40.10 
50.01 75.00 757,205 3.166.35 757,205 3.166.35 
75.01 100.00 506,855 4.178.99 506,855 4.178.99 
100.01 125.00 464,452 5.7105.28 464,452 5.7105.28 
125.01 150.00 406,450 6.4148.62 213,678 6.8148.95 
150.01 175.00 415,977 7.9167.58 113,426 7.8167.16 
175.01 200.00 373,227 8.9181.30 15,578 7.5186.83 
200.01 250.00 34,089 9.8213.59 — — — 
$46.64 $231.35 3,171,717 5.4$111.23 2,284,656 4.3$88.17 
At December 31, 2020,2023, there was $8.3$10.7 million of total unrecognized compensation cost from stock option arrangements granted under the plan, which is primarily related to unvested shares of non-retirement eligible employees. The aggregate intrinsic value of options exercised during the yearyears ended December 31, 20202023 and 20192022 was $120.5$159.8 million and $124.5$61.2 million, respectively. Generally, stock options expire ten years from their date of grant.
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The following table summarizes RSU activity for the years 2020, 20192023, 2022 and 2018:2021:
RSUsWeighted-
average grant
date fair value
Outstanding and unvested at December 31, 2017803,699 $67.09 
RSUsRSUsWeighted-
average grant
date fair value
Outstanding and unvested at December 31, 2020
GrantedGranted327,411 90.07 
VestedVested(389,285)64.88 
CancelledCancelled(20,186)77.95 
Outstanding and unvested at December 31, 2018721,639 $78.40 
Outstanding and unvested at December 31, 2021
GrantedGranted268,465 102.98 
VestedVested(364,817)70.26 
CancelledCancelled(20,947)89.64 
Outstanding and unvested at December 31, 2019604,340 $93.56 
Outstanding and unvested at December 31, 2022
GrantedGranted213,142 104.76 
VestedVested(338,952)86.62 
CancelledCancelled(11,356)84.38 
Adjustment due to the Transaction22,348 n/a
Outstanding and unvested at December 31, 2020489,522 $87.75 
Outstanding and unvested at December 31, 2023
Outstanding and unvested at December 31, 2023
Outstanding and unvested at December 31, 2023
At December 31, 2020,2023, there was $11.5$21.7 million of total unrecognized compensation cost from RSU arrangements granted under the plan, which is related to unvested shares of non-retirement eligible employees.
Performance Shares
The Company has a Performance Share Program (PSP) for key employees. The program provides awards in the form of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a number of the Company's ordinary shares based on the fair market value of the Company's stock on the date of grant. All PSUs are settled in the form of ordinary shares.
Beginning with the 2018 grant year, PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) to the S&P 500 Industrials Index over a 3-year performance period, and 50% upon a market condition, measured by the Company's relative total shareholder return (TSR) as compared to the TSR of the S&P 500 Industrials Index over a 3-year performance period. The fair value of the market condition is estimated using a Monte
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Carlo Simulation approachsimulation model in a risk-neutral framework based upon historical volatility, risk-free rates and correlation matrix. Awards granted prior to 2018 were earned based 50% upon a performance condition, measured by relative earnings-per-share (EPS) growth to the industrial group
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The following table summarizes PSU activity for the maximum number of shares that may be issued for the years 2020, 20192023, 2022 and 2018:2021:
PSUsWeighted-average grant date fair value
Outstanding and unvested at December 31, 20171,364,536 $73.31 
PSUsPSUsWeighted-average grant date fair value
Outstanding and unvested at December 31, 2020
GrantedGranted363,342 106.31 
VestedVested(309,306)76.00 
ForfeitedForfeited(172,408)90.89 
Outstanding and unvested at December 31, 20181,246,164 $79.83 
Outstanding and unvested at December 31, 2021
GrantedGranted312,362 111.12 
VestedVested(539,402)53.76 
ForfeitedForfeited(34,194)106.14 
Outstanding and unvested at December 31, 2019984,930 $103.12 
Outstanding and unvested at December 31, 2022
GrantedGranted278,468 140.72 
VestedVested(340,400)93.63 
ForfeitedForfeited(56,430)89.94 
Adjustment due to the Transaction151,904 n/a
Outstanding and unvested at December 31, 20201,018,472 $99.53 
Outstanding and unvested at December 31, 2023
At December 31, 2020,2023, there was $18.0$20.0 million of total unrecognized compensation cost from PSU arrangements based on current performance, which is related to unvested shares. This compensation will be recognized over the required service period, which is generally the three-year vesting period.
Deferred Compensation
The Company allows key employees to defer a portion of their eligible compensation into a number of investment choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution.
NOTE 16. RESTRUCTURING ACTIVITIES
The Company incurs costs associated with restructuring initiatives intended to result in improved operating performance, profitability and working capital levels. Actions associated with these initiatives include workforce reduction, improving manufacturing productivity, realignment of management structures and rationalizing certain assets. Restructuring charges recorded during the years ended December 31 were as follows:
In millions202020192018
Americas$35.3 $39.0 $27.5 
EMEA7.4 5.1 4.6 
Asia Pacific5.1 6.7 2.0 
Corporate and Other27.9 1.8 9.4 
Total$75.7 $52.6 $43.5 
Cost of goods sold$24.1 $37.3 $25.2 
Selling and administrative expenses51.6 15.3 18.3 
Total$75.7 $52.6 $43.5 
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The changes in the restructuring reserve were as follows:
In millionsAmericasEMEAAsia PacificCorporate
and Other
Total
December 31, 2018$15.3 $1.7 $1.9 $2.6 $21.5 
Additions, net of reversals (1)
36.3 5.1 6.7 1.8 49.9 
Cash paid/Other(39.7)(4.0)0.5 (2.8)(46.0)
December 31, 201911.9 2.8 9.1 1.6 25.4 
Additions, net of reversals (2)
31.3 7.4 5.1 27.9 71.7 
Cash paid/Other(30.6)(5.9)(12.2)(18.9)(67.6)
December 31, 2020$12.6 $4.3 $2.0 $10.6 $29.5 
(1) Excludes the non-cash costs of asset rationalizations ($2.7 million).
(2) Excludes the non-cash costs of asset rationalizations ($4.0 million).
During the year ended December 31, 2020, costs associated with announced restructuring actions primarily included the following:
costs related to the reorganization of resources and facilities in response to the completion of the Transaction and separation of Ingersoll Rand Industrial; and
the plan to close a U.S. manufacturing facility within the Americas and relocate production to another existing U.S. facility announced in 2018.
Amounts recognized primarily relate to severance and exit costs. In addition, the Company also includes costs that are directly attributable to the restructuring activity but do not fall into the severance, exit or disposal categories. As of December 31, 2020, the Company had $29.5 million accrued for costs associated with its ongoing restructuring actions, of which a majority is expected to be paid within one year.
NOTE 17.15. OTHER INCOME/(EXPENSE), NET
The components of Other income/(expense), net for the years ended December 31, 2020, 20192023, 2022 and 20182021 were as follows:
In millionsIn millions202020192018In millions202320222021
Interest income/(loss)$4.5 $0.6 $2.4 
Foreign currency exchange gain (loss)(10.0)(9.5)(12.8)
Other components of net periodic benefit cost(14.7)(34.9)(21.1)
Interest income
Foreign currency exchange loss
Other components of net periodic benefit credit/(cost)
Other activity, netOther activity, net24.3 15.4 (1.8)
Other income/(expense), netOther income/(expense), net$4.1 $(28.4)$(33.3)
Other income /(expense)income/(expense), net includes the results from activities other than normalcore business operations such as interest income and foreign currency gains and losses on transactions that are denominated in a currency other than an entity’s functional currency. In addition, the Company includes the components of net periodic benefit costcredit/(cost) for pension and post retirement obligations other than the service cost component. During the year ended December 31, 2022 the Company recorded a $15.0 million settlement charge for a compensation related payment to a retired executive within other components of net periodic benefit credit/(cost).
Other activity, net primarily includes items associated with certain legal matters, as well as asbestos-related activities through the Petition Date.activities. During the year ended December 31, 2020,2023, the Company recorded within other activity, net an impairment of an equity investment of $52.2 million. During the year ended December 31, 2021, the Company 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$12.8 million related to the deconsolidationrelease of Murray anda pension indemnification liability, partially offset by a charge of $7.2 million to increase its wholly-owned subsidiary ClimateLabs within other activity, net.Funding Agreement liability from asbestos-related activities of Murray. Refer to Note 22,20, "Commitments and Contingencies," for more information regarding asbestos-related matters.
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NOTE 18.16. INCOME TAXES
Current and deferred provision for income taxes
Earnings before income taxes for the years ended December 31 were taxed within the following jurisdictions:
In millions202020192018
United States$653.9 $837.4 $728.2 
Non-U.S.634.3 561.5 529.6 
Total$1,288.2 $1,398.9 $1,257.8 
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In millions202320222021
United States$1,690.7 $1,312.3 $995.5 
Non-U.S.876.6 859.8 795.2 
Total$2,567.3 $2,172.1 $1,790.7 
The components of the Provision for income taxes for the years ended December 31 were as follows:
In millionsIn millions202020192018In millions202320222021
Current tax expense (benefit):Current tax expense (benefit):
United States
United States
United StatesUnited States$168.3 $181.8 $201.0 
Non-U.S.Non-U.S.106.3 77.4 131.7 
Total:Total:274.6 259.2 332.7 
Deferred tax expense (benefit):Deferred tax expense (benefit):
United StatesUnited States11.2 2.2 (50.2)
United States
United States
Non-U.S.Non-U.S.11.0 (22.8)(47.6)
Total:Total:22.2 (20.6)(97.8)
Total tax expense (benefit):Total tax expense (benefit):
United StatesUnited States179.5 184.0 150.8 
United States
United States
Non-U.S.Non-U.S.117.3 54.6 84.1 
TotalTotal$296.8 $238.6 $234.9 
The Provision for income taxes differs from the amount of income taxes determined by applying the applicable U.S. statutory income tax rate to pretax income, as a result of the following differences:
Percent of pretax income Percent of pretax income
202020192018
2023202320222021
Statutory U.S. rateStatutory U.S. rate21.0 %21.0 %21.0 %Statutory U.S. rate21.0 %21.0 %21.0 %
Increase (decrease) in rates resulting from:Increase (decrease) in rates resulting from:
Non-U.S. tax rate differential
Non-U.S. tax rate differential
Non-U.S. tax rate differentialNon-U.S. tax rate differential(1.1)(2.8)(2.6)
Tax on U.S. subsidiaries on non-U.S. earnings (a)
Tax on U.S. subsidiaries on non-U.S. earnings (a)
0.3 (0.2)(0.6)
State and local income taxes (b)
State and local income taxes (b)
4.3 3.0 2.1 
Valuation allowances (c)
Valuation allowances (c)
(1.1)(2.9)0.7 
Change in permanent reinvestment assertion (a), (d)
(3.1)
Transition tax (d)
2.0 
Remeasurement of deferred tax balances (d)
0.4 
Stock based compensationStock based compensation(1.7)(1.7)(1.0)
Expiration of carryforward tax attributes1.1 
Reserves for uncertain tax positions(0.1)(0.5)0.5 
Provision to return and other true-up adjustments(0.2)0.1 (0.8)
Stock based compensation
Stock based compensation
Other adjustments
Other adjustments
Other adjustmentsOther adjustments0.5 1.1 0.1 
Effective tax rateEffective tax rate23.0 %17.1 %18.7 %Effective tax rate19.4 %17.3 %18.6 %
(a)Net of foreign tax credits
(b)Net of changes in state valuation allowances
(c)Primarily federal and non-U.S., excludes state valuation allowances
(d)Provisional amounts reported under SAB 118 were finalized in 2018
Tax incentives, in the form of tax holidays, have been granted to the Company in certain jurisdictions to encourage industrial development. The expiration of these tax holidays varies by country. The tax holidays are conditional on the Company meeting certain employment and investment thresholds. The most significant tax holidays relate to the Company’s qualifying locations in China, Puerto Rico and Panama. The benefit for the tax holidays for the years ended December 31, 2020, 20192023, 2022 and 20182021 was $24.6$51.9 million, $28.3$52.5 million and $21.3$32.6 million, respectively.

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Deferred tax assets and liabilities
A summary of the deferred tax accounts at December 31 were as follows:
In millionsIn millions20202019In millions20232022
Deferred tax assets:Deferred tax assets:
Inventory and accounts receivableInventory and accounts receivable$11.7 $13.3 
Fixed assets and intangibles9.5 9.7 
Inventory and accounts receivable
Inventory and accounts receivable
Depreciable and amortizable assets
Operating lease liabilitiesOperating lease liabilities101.0 117.6 
Postemployment and other benefit liabilitiesPostemployment and other benefit liabilities323.5 340.6 
Product liabilityProduct liability4.8 68.9 
Funding liability71.8 
Other reserves and accruals
Other reserves and accruals
Other reserves and accrualsOther reserves and accruals164.8 143.6 
Net operating losses and credit carryforwardsNet operating losses and credit carryforwards509.0 562.6 
OtherOther58.5 33.6 
Gross deferred tax assetsGross deferred tax assets1,254.6 1,289.9 
Less: deferred tax valuation allowancesLess: deferred tax valuation allowances(320.5)(309.4)
Deferred tax assets net of valuation allowancesDeferred tax assets net of valuation allowances$934.1 $980.5 
Deferred tax liabilities:Deferred tax liabilities:
Inventory and accounts receivableInventory and accounts receivable$(22.3)$(25.3)
Fixed assets and intangibles(1,186.0)(1,184.7)
Inventory and accounts receivable
Inventory and accounts receivable
Depreciable and amortizable assets
Operating lease right-of-use assetsOperating lease right-of-use assets(99.5)(117.6)
Postemployment and other benefit liabilitiesPostemployment and other benefit liabilities(14.1)(10.9)
Other reserves and accrualsOther reserves and accruals(7.2)(12.4)
Product liability(0.2)(0.7)
Undistributed earnings of foreign subsidiaries
Undistributed earnings of foreign subsidiaries
Undistributed earnings of foreign subsidiariesUndistributed earnings of foreign subsidiaries(22.4)(22.1)
OtherOther(3.2)(18.7)
Gross deferred tax liabilitiesGross deferred tax liabilities(1,354.9)(1,392.4)
Net deferred tax assets (liabilities)Net deferred tax assets (liabilities)$(420.8)$(411.9)
At December 31, 2020,2023, no deferred taxes have been provided for earnings of certain of the Company’s subsidiaries, since these earnings have been and under current plans will continue to be permanently reinvested in these subsidiaries. These earnings amount to approximately $1.6 billion$700 million which if distributed would result in additional taxes, which may be payable upon distribution, of approximately $260.0$200 million.
At December 31, 2020,2023, the Company had the following operating loss, capital loss and tax credit carryforwards available to offset taxable income in prior and future years:
In millionsAmountExpiration
Period
U.S. Federal net operating loss carryforwards$611.8113.9 2021-20362024-Unlimited
U.S. Federal credit carryforwards138.695.0 2022-20302026-2043
U.S. State net operating loss carryforwards2,898.42,497.0 2021-Unlimited2024-Unlimited
U.S. State credit carryforwards31.727.1 2021-Unlimited2024-Unlimited
Non-U.S. net operating loss carryforwards490.8477.3 2021-Unlimited2024-Unlimited
Non-U.S. credit carryforwards9.317.3 Unlimited
The U.S. state net operating loss carryforwards were incurred in various jurisdictions. The non-U.S. net operating loss carryforwards were incurred in various jurisdictions, predominantly in Belgium, Brazil, India, Luxembourg, Spain and the United Kingdom.Spain.
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Activity associated with the Company’s valuation allowance is as follows:
In millionsIn millions202020192018In millions202320222021
Beginning balanceBeginning balance$309.4 $310.3 $320.6 
Increase to valuation allowanceIncrease to valuation allowance38.9 44.0 54.6 
Decrease to valuation allowanceDecrease to valuation allowance(22.8)(43.6)(52.8)
Other deductions(0.1)
Write off against valuation allowanceWrite off against valuation allowance(3.7)(4.6)
Write off against valuation allowance
Write off against valuation allowance
Acquisition and purchase accounting
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(1.2)(1.3)(7.5)
Ending balanceEnding balance$320.5 $309.4 $310.3 
During 2020,2023, the Company recorded a $22.3 million increase in valuation allowance on deferred tax assets primarily related to certain state net deferred tax assets as a result of the Transaction. In addition, the Company recorded a $16.0$30.3 million reduction in valuation allowances primarily related to non-U.S.deferred tax assets associated with both foreign tax credits and operations of international subsidiaries. Additional reductions in the valuation allowance related to deferred tax assets associated with foreign tax credits could be recognized in future periods if foreign source income exceeds current projections for the periods 2024 through 2027, the remainder of the carryforward period.
During 2022, the Company recorded a $48.2 million reduction in valuation allowances primarily related to certain net operating losses, primarily as a result of a planned restructuring in a non-U.S.state deferred tax jurisdiction,assets resulting from U.S. legal entity restructurings and deferred tax assets associated with foreign tax credits as a result of revised projections of futurean increase in the 2022 year and projected foreign source income.
During 2019,2021, the Company recorded a $43.6$21.4 million reduction in valuation allowance on deferred tax assets primarily related to non-U.S. net operating losses. In addition, the Company recorded a $19.3 million increase in a valuation allowance for certain state net deferredforeign tax assetscredits as a result of revised projections of future state taxable income during the carryforward period.
During 2018, the Company recorded a net addition to the valuation allowance related to excessan increase in current year foreign tax credits in the amount of $17.3 million. In addition, the Company recorded a $35.0 million reduction in a valuation allowance for certain state net deferred tax assets primarily the result of revised projections of future state taxable income during the carryforward period.source income.
Unrecognized tax benefits
The Company has total unrecognized tax benefits of $65.4$84.9 million and $63.7$82.4 million as of December 31, 2020,2023, and December 31, 2019,2022, respectively. The amount of unrecognized tax benefits that, if recognized, would affect the continuing operations effective tax rate are $36.8$43.6 million as of December 31, 2020.2023. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
In millionsIn millions202020192018In millions202320222021
Beginning balanceBeginning balance$63.7 $68.7 $108.4 
Additions based on tax positions related to the current yearAdditions based on tax positions related to the current year1.0 1.2 1.1 
Additions based on tax positions related to prior yearsAdditions based on tax positions related to prior years2.1 9.3 23.0 
Additions based on tax positions related to prior years
Additions based on tax positions related to prior years
Reductions based on tax positions related to prior yearsReductions based on tax positions related to prior years(1.5)(13.1)(47.3)
Reductions related to settlements with tax authoritiesReductions related to settlements with tax authorities(0.7)(0.9)(14.2)
Reductions related to lapses of statute of limitationsReductions related to lapses of statute of limitations(1.7)(0.6)(0.6)
Translation (gain) lossTranslation (gain) loss2.5 (0.9)(1.7)
Ending balanceEnding balance$65.4 $63.7 $68.7 
The Company records interest and penalties associated with the uncertain tax positions within its Provision for income taxes.taxes. The Company had reserves associated with interest and penalties, net of tax, of $14.6$16.0 million and $16.0$11.3 million at December 31, 20202023 and December 31, 2019,2022, respectively. For the yearyears ended December 31, 20202023 and December 31, 2019,2022, the Company recognized a $0.1$0.2 million and $3.7 million tax expense, and a $0.7 million tax benefit, respectively, in interest and penalties, net of tax in continuing operations related to these uncertain tax positions.
The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits, excluding interest and penalties, could potentially be reduced by up to approximately $4.7$35 million during the next 12 months.
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The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an
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issue raised by a revenue authority with respect to that return. In the normal course of business the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Belgium, Brazil, Canada, China, France, Germany, Ireland, Italy, Luxembourg, Mexico, Singapore, Spain, the Netherlands, the United Kingdom and the United States. These examinations on their own, or any subsequent litigation related to the examinations, may result in additional taxes or penalties against the Company. If the ultimate result of these audits differ from original or adjusted estimates, they could have a material impact on the Company’s income tax provision. In general, the examination of the Company’s materialU.S. federal tax returns is complete or effectively settled for years prior to 2016. The Company’s U.S. federal income tax returns for 2016 to 2019 are currently under examination by the Internal Revenue Service (IRS). In general, the examination of the Company’s material non-U.S. income tax returns is complete or effectively settled for the years prior to 2011,2013, with certain matters prior to 20112013 being resolved through appeals and litigation and also unilateral procedures as provided for under double tax treaties.
In connection withOn December 18, 2023, Ireland enacted legislation related to the Transaction,15% minimum tax element of the CompanyOrganisation for Economic Co-operation and Gardner Denver entered into aDevelopment's (OECD) tax sharing agreement for the allocation of taxes.reform initiative, commonly referred to as “Pillar Two”, effective January 1, 2024. The Company has an indemnity payableis continuing to Gardner Denver, included within other non-current liabilities, inevaluate the amountpotential impacts of $13.5 million ofproposed and enacted legislative changes as new guidance becomes available. The legislation does not impact the Company's 2023 effective tax and interest primarily related to open audit years in non-U.S. tax jurisdictions.rate.
NOTE 19.17. ACQUISITIONS AND DIVESTITURES
Acquisitions and Equity Method Investments
Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, "Business Combinations" (ASC 805). As a result, the aggregate purchase price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. The valuation of intangible assets are determined using an income approach methodology.Fiscal Year 2023
During 2020,On May 2, 2023, the Company acquired independent dealers, reported within the Americas segment, to support the Company's ongoing strategy to expand its distribution network and service area. The aggregate cash paid,100% of MTA S.p.A (MTA) for $224.4 million, net of cash acquired, totaled $182.8 million and was financed through commercial paper and cash on hand. MTA is a leading industrial process cooling technology business which brings complementary, high-performing solutions to the comprehensive Commercial HVAC product and services portfolios in the EMEA and Americas segments. Intangible assets associated with these acquisitionsthis acquisition totaled $78.9$93.3 million and primarily relate to customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $130.1$112.8 million, inclusive of the impact of measurement period adjustments. The goodwill resulting from the acquisition is not deductible for tax purposes. The values assigned to individual assets acquired and liabilities assumed are based on management’s current best estimate and subject to change as certain matters are finalized. The primary areas that remain open are related to tax. The results of the acquisition are reported within the EMEA and Americas segments from the date of acquisition.
On May 12, 2023, the Company acquired 100% of Helmer Scientific Inc (Helmer), a precision temperature cooling company in the life sciences vertical within the Americas segment. The aggregate cash paid, net of cash acquired, totaled $266.4 million and was financed through commercial paper and cash on hand. Intangible assets associated with this acquisition totaled $95.7 million and primarily relate to customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $130.0 million, inclusive of the impact of measurement period adjustments. For income tax purposes, the acquisition was treated as an asset purchase and the goodwill will be deductible for tax purposes. The values assigned to individual assets acquired and liabilities assumed are based on management’s current best estimate and subject to change as certain matters are finalized. The primary areas that remain open are related to tax. The results of the acquisition are reported within the Americas segment from the date of acquisition.
On November 2, 2023, the Company acquired 100% of Nuvolo, a global leader in modern, cloud-based enterprise asset management and connected workplace software and solutions. The results of the acquisition are reported within the Americas segment from the date of acquisition.
The Company paid $352.6 million in initial cash consideration, financed through cash on hand, and agreed to two additional contingent consideration arrangements. The first contingent consideration arrangement, payable of up to $90.0 million in cash, is based on the attainment of revenue targets from November 2, 2023 through April 2025. If the first contingent consideration targets are met, a second contingent consideration arrangement related to a specified customer contract is available to the sellers, with no maximum earnout, based on revenues attained from that specified customer contract through April 2025. The total purchase price for the acquisition was expected to be $442.9 million, comprised of the upfront cash consideration of $352.6 million paid on November 2, 2023 and the fair value of the contingent consideration arrangements at the acquisition-date of $90.3 million. See Note 9, "Fair Value Measurements" to the Consolidated Financial Statements for additional information regarding fair value of contingent consideration.
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Intangible assets associated with the Nuvolo acquisition totaled $141.0 million and primarily relate to developed technology and customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $317.6 million. The goodwill is primarily attributable to the fair value of market share and revenue growth from Nuvolo. The benefit of access to the workforce is an additional element of goodwill. The goodwill created in the acquisition is not deductible for tax purposes. The fair values of the assets acquired and liabilities assumed, and the related tax balances, are based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances.
The preliminary amounts assigned to the major identifiable intangible asset classifications for the 2023 acquisitions were as follows:
In millionsWeighted-average useful life (in years)Fair value
Customer relationships13$189.9 
Developed technology9107.1
Other633.0 
Total intangible assets$330.0 
The preliminary valuation of intangible assets was determined using an income approach methodology. The Company estimated a portion of the fair value of the customer relationships intangible assets using an excess earnings model and a portion using the with and without method. The Company estimated a portion of the fair value of the developed technology intangible asset using a relief from royalty approach and a portion using an excess earnings model. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include projected cash flows, including revenue growth rates and margins, customer attrition rates, royalty rates and discount rates attributable to each intangible asset.
The Company has not included pro forma financial information for the 2023 acquisitions as the impact was not significant.
Fiscal Year 2022
On October 31, 2022, the Company acquired 100% of AL-KO Air Technology (AL-KO) for $111.7 million, net of cash acquired, financed through cash on hand, and inclusive of the impact of measurement period adjustments. AL-KO designs, engineers, manufactures, sells, installs, and services air handling and extraction systems in commercial applications. Intangible assets associated with this acquisition totaled $49.4 million and primarily relate to customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $48.5 million, inclusive of the impact of measurement period adjustments. The results of operations of AL-KO are reported within the EMEA and Asia Pacific segments from the date of acquisition.
On April 1, 2022, the Company acquired a Commercial HVAC independent dealer, reported within the Americas segment from the date of acquisition, to support the Company's ongoing strategy to expand its distribution network and service area. The aggregate cash paid, net of cash acquired, totaled $110.0 million and was financed through cash on hand. Intangible assets associated with this acquisition totaled $52.7 million and primarily relate to customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $42.5 million.
The preliminary amounts assigned to the major identifiable intangible asset classifications for the 2022 acquisitions were as follows:
In millionsWeighted-average useful life (in years)Fair value
Customer relationships15$82.9 
Other619.2 
Total intangible assets$102.1 
The valuation of intangible assets was determined using an income approach methodology. The fair valuesvalue of the customer relationship intangible assets were determined using the multi-period excess earnings method based on discounted projected net cash flows associated with the net earnings attributable to the acquired customer relationships. These projected cash flows are estimated over the remaining economic life of the intangible asset and are considered from a market participant perspective. Key assumptions used in estimating future cash flows included projected revenue growth rates and customer attrition rates. The projected future cash flows are discounted to present value using an appropriate discount rate.
The customer relationships had a weighted-average useful lifeCompany has not included pro forma financial information for the 2022 acquisitions as the impact was not significant.
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During 2019,Fiscal Year 2021
On October 15, 2021, the Company acquired several businesses100% of Farrar Scientific's assets, including independent dealers to support its ongoing strategy to expand its distribution networkpatented ultra-low temperature control technologies, a development and service area as well asassembly operation in Marietta, Ohio, and a specialized team of engineers, sales engineers, operators, and technicians. Farrar Scientific is a leader in ultra-low temperature control for biopharmaceutical and other businesses that strengthenlife science applications. The results of Farrar Scientific are reported within the Company's product portfolios. Americas segment from the date of acquisition.
The aggregateCompany paid $251.2 million in initial cash paid, net of cash acquired, totaled $83.4 million and was fundedconsideration, financed through cash on hand.hand, and agreed to contingent consideration of up to $115.0 million to be paid in 2025, tied to the attainment of key revenue targets during the period of January 1, 2022 through December 31, 2024. The purchase price for the acquisition was expected to be $349.9 million, comprised of the upfront cash consideration of $251.2 million paid on October 15, 2021 and the fair value of the earnout payment at the time of closing the acquisition of $98.7 million. See Note 9, "Fair Value Measurements" to the Consolidated Financial Statements for additional information regarding fair value of contingent consideration.
The aggregate purchase price has been allocated to the assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. Intangible assets associated with these acquisitionsthe acquisition totaled $25.5$140.7 million and primarily relate to trademarks and customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $45.3$203.6 million. These acquisitions were not material to the Company's financial statements and were reported in the Americas segment.
During 2018, theThe Company acquired several businesses and entered into a joint venture. The aggregate cash paid, net of cash acquired, totaled $285.7 million and was funded through cashrecorded intangible assets based on hand. Primary activity during 2018 related to the acquisition of ICS Group Holdings Limited in January 2018. The business, reported within the EMEA segment, specializes in the temporary rental of energy efficient chillers for commercial and industrial buildings across Europe. In addition, the Company acquired independent dealers to expand its distribution network and service area. Intangible assets associated with these acquisitions totaled $45.2 million and primarily relate to trademarks and customer relationships. The excess purchase price over thetheir estimated fair value, which consisted of net assets acquired was recognized asthe following:
In millionsWeighted-average useful life (in years)October 15, 2021
Customer relationships14$105.2 
Other635.5 
Total intangible assets$140.7 
The goodwill and totaled $118.0 million.
In addition, the Company completed its investment of a 50% ownership interest in a joint venture with Mitsubishi Electric Corporation (Mitsubishi) in May 2018. The joint venture, reported within the Americas segment, focuses on marketing, selling and supporting variable refrigerant flow (VRF) and ductless heating and air conditioning systems through Trane, American Standard and Mitsubishi channels in the U.S. and select Latin American countries. Ownership interests in a joint venture are accounted for under the equity method when the Company does not have a controlling financial interest and reported within Other noncurrent assets on the Balance Sheet. Ongoing results since the date of investment are accounted for under the equity method and are not considered materialis primarily attributable to the Company’s resultsfair value of operations.market share and revenue growth from Farrar Scientific. The benefit of access to the workforce is an additional element of goodwill. For income tax purposes, the acquisition was an asset purchase and the goodwill will be deductible for tax purposes.
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The Company has not included pro forma financial information for the 2021 acquisitions as the impact was not significant.
Divestitures
The Company has retained obligations from previously sold businesses that primarily include ongoing expenses for postretirement benefits, product liability, legal costs and asbestos-related activities of Aldrich. The components of Discontinued operations, net of tax for the years ended December 31 were as follows:
In millions202020192018
Net revenues$469.8 $3,523.0 $3,324.4 
Cost of goods sold(315.8)(2,366.0)(2,265.1)
Selling and administrative expenses(234.4)(809.5)(654.0)
Operating income (loss)(80.4)347.5 405.3 
Other income/ (expense), net(55.9)50.0 (88.3)
Pre-tax earnings (loss) from discontinued operations(136.3)397.5 317.0 
Benefit (provision) for income taxes14.9 (129.3)17.6 
Discontinued operations, net of tax$(121.4)$268.2 $334.6 
In millions202320222021
Pre-tax earnings (loss) from discontinued operations(34.7)(26.9)(39.3)
Tax benefit (expense)7.5 5.4 18.7 
Discontinued operations, net of tax$(27.2)$(21.5)$(20.6)
The table above presentsFor the financial statement line items thatyears ended December 31, 2023 and 2022, pre-tax earnings (loss) from discontinued operations included a charge of $20.2 million and $16.5 million, respectively, to support amounts includedAldrich's ongoing legal costs in Discontinued operations, net of tax.accordance with the Company's Funding Agreement. For the year ended December 31, 2020, Selling and administrative expenses included2021, pre-tax Ingersoll Rand Industrial separation costs of $114.2 million, which are primarily related to legal, consulting and advisory fees. In addition, for the year ended December 31, 2020, Other income/ (expense), netearnings (loss) from discontinued operations included a losscharge of $25.8$14.0 million related to increase the deconsolidation of Aldrich and its wholly-owned subsidiary 200 Park. The year ended December 31, 2019includes $94.6 million of pre-tax Ingersoll Rand Industrial separation costs within Selling and administrative expenses.
Separation of Industrial Segment Businesses
On February 29, 2020, the Company completed the Transaction with Gardner Denver whereby the Company separated Ingersoll Rand Industrial which then merged with a wholly-owned subsidiary of Gardner Denver. In accordance with GAAP, the historical results of Ingersoll Rand Industrial are presented as a discontinued operation in the Consolidated Statement of Comprehensive Income and Consolidated Statement of Cash Flows. In addition, the assets and liabilities of Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019.
Net revenues and earningsCompany's Funding Agreement liability from operations, net of tax of Ingersoll Rand Industrial for the years ended December 31 were as follows:
In millions202020192018
Net revenues$469.8 $3,523.0 $3,324.4 
Earnings (loss) attributable to Trane Technologies plc(85.8)225.2 351.3 
Earnings (loss) attributable to noncontrolling interests0.9 2.4 4.8 
Earnings (loss) from operations, net of tax$(84.9)$227.6 $356.1 
Earnings (loss) attributable to Trane Technologies plc includes Ingersoll Rand Industrial separation costs, net of tax primarily related to legal, consulting and advisory fees of $96.2 million during the year ended December 31, 2020. In addition, the year ended December 31, 2019 includes $89.4 million of Ingersoll Rand Industrial separation costs, net of tax.
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The components of Ingersoll Rand Industrial's assets and liabilities recorded as held-for-sale on the Consolidated Balance Sheet at December 31, 2019 were as follows:
In millionsDecember 31, 2019
Assets
Current assets(1)
$1,130.6 
Property, plant and equipment, net454.3 
Goodwill1,657.4 
Intangible assets, net825.2 
Other noncurrent assets139.7 
Assets held-for-sale$4,207.2 
Liabilities
Current liabilities$823.7 
Noncurrent liabilities376.7 
Liabilities held-for-sale$1,200.4 
(1) Includes $25 million cash and cash equivalents in accordance with the merger agreement.
Other Discontinued Operations
Other discontinued operations, net of tax related to retained obligations from previously sold businesses that primarily include ongoing expenses for postretirement benefits, product liability and legal costs. In addition, the Company includes asbestos-related activities of Aldrich through the Petition Date.
The components of Discontinued operations, net of tax for the years ended December 31 were as follows:
In millions202020192018
Ingersoll Rand Industrial, net of tax$(84.9)$227.6 $356.1 
Other discontinued operations, net of tax(36.5)40.6 (21.5)
Discontinued operations, net of tax$(121.4)$268.2 $334.6 
In addition, other discontinued operations, net of tax includes a loss of $25.8 millionwell as pension and post retirement obligations and environmental costs related to businesses formerly owned by the deconsolidation of Aldrich and its wholly-owned subsidiary 200 Park, for the year ended December 31, 2020.Company. Refer to Note 22,20, "Commitments and Contingencies," for more information regarding the deconsolidation and asbestos-related matters.
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NOTE 20.18. EARNINGS PER SHARE (EPS)
Basic EPS is calculated by dividing Net earnings attributable to Trane Technologies plc by the weighted-average number of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes shares issuable under share-based compensation plans. The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per share calculations:
In millionsIn millions202020192018In millions202320222021
Weighted-average number of basic shares outstandingWeighted-average number of basic shares outstanding240.1 241.6 247.2 
Shares issuable under incentive stock plans3.0 2.8 2.9 
Shares issuable under incentive share plans
Weighted-average number of diluted shares outstanding
Weighted-average number of diluted shares outstanding
Weighted-average number of diluted shares outstandingWeighted-average number of diluted shares outstanding243.1 244.4 250.1 
Anti-dilutive sharesAnti-dilutive shares0.6 1.5 
Dividends declared per ordinary shareDividends declared per ordinary share$2.12 $2.12 $1.96 
Dividends declared per ordinary share
Dividends declared per ordinary share
NOTE 21.19. BUSINESS SEGMENT INFORMATION
The Company operates under threefour regional operating segments designed to create deep customer focus and relevance in markets around the world. The Company determined that its two Europe, Middle East and Africa (EMEA) operating segments meet the aggregation criteria based on similar operating and economic characteristics, resulting in one reportable segment. Therefore, the Company has three regional reportable segments, Americas, EMEA and Asia Pacific. In January 2024, the Company aligned its operating segments with its three regional reportable segments. Intercompany sales between segments are immaterial.
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The Company's Americas segment innovates for customers in the North America and Latin America regions.America. The Americas segment encompasses commercial heating, cooling and coolingventilation systems, building controls and solutions, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.
The Company's EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and coolingventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.
The Company's Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and coolingventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions.
Management measures segment operating performance based on net earnings excluding interest expense, income taxes, depreciation and amortization, restructuring, non-cash adjustment for contingent consideration, insurance settlements on property claims, merger and acquisition-related costs, impairment of an equity investment, unallocated corporate expenses and discontinued operations (Segment Adjusted EBITDA). Segment Adjusted EBITDA is not defined under GAAP and may not be comparable to similarly-titled measures used by other companies and should not be considered a substitute for net earnings or other results reported in accordance with GAAP. The Company believes 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 the Company's operating performance from period to period by excluding certain items that it believes are not representative of its core business and the Company uses this measure for business planning purposes. Segment Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and the Company's ability to generate cash 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.
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A summary of operations by reportable segment for the years ended December 31 were as follows:
In millions202020192018
Net revenues
Americas$9,685.9 $10,059.5 $9,219.4 
EMEA1,648.1 1,762.6 1,831.1 
Asia Pacific1,120.7 1,253.8 1,293.3 
Total Net revenues$12,454.7 $13,075.9 $12,343.8 
Segment Adjusted EBITDA
Americas$1,677.7 $1,742.1 $1,565.5 
EMEA265.7 267.7 302.7 
Asia Pacific188.8 182.8 173.2 
Total Segment Adjusted EBITDA$2,132.2 $2,192.6 $2,041.4 
Reconciliation of Segment Adjusted EBITDA to earnings before income taxes
Total Segment Adjusted EBITDA$2,132.2 $2,192.6 $2,041.4 
Interest expense(248.7)(242.8)(221.0)
Depreciation and amortization(294.3)(288.8)(282.3)
Restructuring costs(75.7)(52.6)(43.5)
Unallocated corporate expenses(225.3)(209.5)(236.8)
Earnings before income taxes$1,288.2 $1,398.9 $1,257.8 
Depreciation and Amortization
Americas$224.0 $213.6 $208.8 
EMEA32.6 31.0 30.0 
Asia Pacific11.6 13.4 13.2 
Depreciation and amortization from reportable segments$268.2 $258.0 $252.0 
Unallocated depreciation and amortization26.1 30.8 30.3 
Total depreciation and amortization$294.3 $288.8 $282.3 
Capital Expenditures
Americas$98.2 $146.8 $195.3 
EMEA24.7 30.0 14.5 
Asia Pacific7.7 11.3 7.5 
Capital expenditures from reportable segments$130.6 $188.1 $217.3 
Corporate capital expenditures15.6 17.3 67.4 
Total capital expenditures$146.2 $205.4 $284.7 
In millions202320222021
Net revenues
Americas$13,832.0 $12,640.8 $10,957.1 
EMEA2,401.2 2,034.5 1,944.9 
Asia Pacific1,444.4 1,316.4 1,234.4 
Total Net revenues$17,677.6 $15,991.7 $14,136.4 
Segment Adjusted EBITDA
Americas$2,669.6 2,326.3 2,008.8 
EMEA464.7 338.1 359.2 
Asia Pacific321.3 248.3 228.5 
Total Segment Adjusted EBITDA$3,455.6 $2,912.7 $2,596.5 
Reconciliation of Segment Adjusted EBITDA to earnings before income taxes
Total Segment Adjusted EBITDA$3,455.6 $2,912.7 $2,596.5 
Interest expense(234.5)(223.5)(233.7)
Depreciation and amortization(348.1)(323.6)(299.4)
Restructuring costs(15.1)(20.7)(27.0)
Non-cash adjustments for contingent consideration49.3 46.9 — 
Insurance settlements on property claims10.0 25.0 — 
Impairment of equity investment(52.2)— — 
Acquisition inventory step-up(6.4)(0.8)— 
Unallocated corporate expenses(291.3)(243.9)(245.7)
Earnings before income taxes$2,567.3 $2,172.1 $1,790.7 
Depreciation and Amortization
Americas$259.2 $256.9 $227.6 
EMEA51.4 28.8 33.3 
Asia Pacific19.1 17.6 16.5 
Depreciation and amortization from reportable segments$329.7 $303.3 $277.4 
Unallocated depreciation and amortization18.4 20.3 22.0 
Total depreciation and amortization$348.1 $323.6 $299.4 
Capital Expenditures
Americas$217.2 $230.5 $148.7 
EMEA31.9 25.9 23.6 
Asia Pacific14.3 11.2 20.6 
Capital expenditures from reportable segments$263.4 $267.6 $192.9 
Corporate capital expenditures37.3 24.2 30.1 
Total capital expenditures$300.7 $291.8 $223.0 
At December 31, a summary of long-lived assets by geographic area were as follows:
In millionsIn millions20202019In millions20232022
United StatesUnited States$1,219.4 $1,346.3 
United States
United States
Non-U.S.Non-U.S.539.1 475.1 
TotalTotal$1,758.5 $1,821.4 
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NOTE 22.20. COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigations,litigation, claims and administrative proceedings, including those related to the bankruptcy proceedings for Aldrich and Murray and environmental asbestos, and product liability matters. In accordance with ASC 450, "Contingencies" (ASC 450), theThe Company
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records accruals for loss contingencies when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, except as expressly set forth in this note, management believes that any liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.
Asbestos-Related Matters
Certain wholly-owned subsidiaries and former companies of the Company werehave been named as defendants in asbestos-related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies have also been named as defendants. The vast majority of those claims were filed against predecessors of Aldrich and Murray and generally allege injury caused by exposure to asbestos contained in certain historical products sold by predecessors of Aldrich or Murray, primarily pumps, boilers and railroad brake shoes. None of the Company's existing or previously-owned businesses were a producer or manufacturer of asbestos.
On June 18, 2020, Aldrich and Murray filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code to resolve equitably and permanently all current and future asbestos related claims in a manner beneficial to claimants and to 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. In addition, at the request of Aldrich and Murray, the Bankruptcy Court has entered an order temporarily staying all asbestos-related claims against the Trane Companies that relate to claims against Aldrich or Murray (except for asbestos-related claims for which the exclusive remedy is provided under workers' compensation statutes or similar laws). On August 23, 2021, the Bankruptcy Court entered its findings of facts and conclusions of law and order declaring that the automatic stay applies to certain asbestos related claims against the Trane Companies and enjoining such actions. As a result, all asbestos-related lawsuits against Aldrich, Murray and the Trane Companies remain stayed.
The goal of these Chapter 11 filings is an efficientto resolve equitably and permanent resolution ofpermanently all current and future asbestosasbestos-related claims in a manner beneficial to claimants and to Aldrich and Murray through court approval of a plan of reorganization whichthat would establish, in accordance withcreate a trust pursuant to section 524(g) of the Bankruptcy Code, aestablish claims resolution procedures for all current and future asbestos-related claims against Aldrich and Murray and channel such claims to the trust to which all asbestos claims would be channeled for resolution.resolution in accordance with those procedures. Aldrich and Murray intend to seek an agreement with representatives of the asbestos claimants on the terms of a plan for the establishment of such a trust.
Prior to the Petition Date, predecessors of each of Aldrich and Murray had been litigating asbestos-related claims brought against them. No such claims have been paid since the Petition Date, and it is not contemplated that any such claims will be paid until the end of the Chapter 11 cases. At this point in the Chapter 11 cases of Aldrich and Murray, it is not possible to predict whether or how long the Bankruptcy Court order temporarily staying asbestos-related claims against the Trane Companies will be extended, whether or when any agreement with representatives of the asbestos claimants on the terms of a plan for the establishment of a trust will be reached, what the terms of any plan of reorganization or the extent of the asbestos liability will be or how long the Chapter 11 cases will last.
From an accounting perspective, the Company no longer has control over Aldrich and Murray as of the Petition Date as their activities are subject to review and oversight by the Bankruptcy Court. Therefore, Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date and their respective assets and liabilities were derecognized from the Company's Consolidated Financial Statements. Amounts derecognized in 2020 primarily related to the legacy asbestos-related liabilities and asbestos-related insurance recoveries and $41.7 million of cash. However, in connection with the 2020 Corporate Restructuring, certain subsidiaries of the Company entered into funding agreements with Aldrich and Murray (collectively the Funding Agreements), pursuant to which those subsidiaries are obligated, among other things, to pay the costs and expenses of Aldrich and Murray during the pendency of the Chapter 11 cases to the extent distributions from their respective subsidiaries are insufficient to do so and to provide an amount for the funding for a trust established pursuant to section 524(g) of the Bankruptcy Code, to the extent that the other assets of Aldrich and Murray are insufficient to provide the requisite trust funding.
Accounting Treatment Prior to the Petition Date
Historically, the Company performed a detailed analysis and projected an estimated range of the Company’s total liability for pending and unasserted future asbestos-related claims. In accordance with ASC 450, theThe Company recorded the liability at the low end of the range as it believed that no amount within the range was a better estimate than any other amount. Asbestos-related defense costs were excluded from the liability and were recorded separately as services were incurred. The methodology used to prepare estimates relied upon and included the following factors, among others:
the interpretation of a widely accepted forecast of the population likely to have been occupationally exposed to asbestos;
epidemiological studies estimating the number of people likely to develop asbestos-related diseases such as mesothelioma and lung cancer;
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the Company’s historical experience with the filing of non-malignancy claims and claims alleging other types of malignant diseases filed against the Company relative to the number of lung cancer claims filed against the Company;
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the analysis of the number of people likely to file an asbestos-related personal injury claim against the Company based on such epidemiological and historical data and the Company’s claims history;
an analysis of the Company’s pending cases, by type of disease claimed and by year filed;
an analysis of the Company’s history to determine the average settlement and resolution value of claims, by type of disease claimed;
an adjustment for inflation in the future average settlement value of claims, at a 2.5% annual inflation rate, adjusted downward to 1.0% to take account of the declining value of claims resulting from the aging of the claimant population; and
an analysis of the period over which the Company has and is likely to resolve asbestos-related claims against it in the future (currently projected through 2053).
Prior to the Petition Date, and at December 31, 2019, over 73 percent of the open and active claims against the Company were non-malignant or unspecified disease claims. In addition, the Company had a number of claims which had been placed on inactive or deferred dockets and expected to have little or no settlement value against the Company.
At June 17, 2020, immediately prior to the Petition Date, and at December 31, 2019, the Company’s liability for asbestos-related matters and the asset for probable asbestos-related insurance recoveries were included in the following accounts within the Consolidated Balance Sheet:
In millionsJune 17,
2020
December 31,
2019
Accrued expenses and other current liabilities$57.1 $63.0 
Other noncurrent liabilities451.0 484.4 
Total asbestos-related liabilities$508.1 $547.4 
Other current assets$50.3 $66.2 
Other noncurrent assets220.6 237.8 
Total asset for probable asbestos-related insurance recoveries$270.9 $304.0 
The Company's asbestos insurance receivable related to the predecessors of Aldrich and Murray were $160.4 million and $110.5 million, respectively, at June 17, 2020 and $188.7 million and $115.3 million, respectively, at December 31, 2019. These receivables attributable to the predecessors of each of Aldrich and Murray for probable insurance recoveries as of June 17, 2020 and December 31, 2019 are entirely supported by settlement agreements between them and their respective insurance carriers. Most of these settlement agreements constitute “coverage-in-place” arrangements, in which the insurer signatories agree to reimburse the predecessors of Aldrich and Murray, as applicable, for specified portions of their respective costs for asbestos bodily injury claims and the predecessors of Aldrich and Murray, as applicable, agree to certain claims-handling protocols and grants to the insurer signatories certain releases and indemnifications.
Prior to the Petition Date, the costs associated with the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of the Company's liability for potential future claims and recoveries were included in the Consolidated StatementStatements of Comprehensive IncomeEarnings within continuing operations or discontinued operations depending on the business to which they relate. Income and expenses associated with asbestos-related matters of Aldrich and its predecessors were recorded within discontinued operations as they related to previously divested businesses, primarily Ingersoll-Dresser Pump, which was sold by the Company in 2000. Income and expenses associated with asbestos-related matters for Murray and its predecessors were recorded within continuing operations. The year ended December 31, 2020 includes a $17.4 million adjustment to correct an overstatement of a legacy legal liability that originated in prior years.
The net income (expense) associated with these pre-Petition Date transactions for the years ended December 31, were as follows:
In millions202020192018
Continuing operations$14.8 $7.0 $(10.4)
Discontinued operations(11.2)68.2 (56.5)
Total$3.6 $75.2 $(66.9)
The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets arewere based on currently available information. Key assumptions underlying the estimated asbestos-related liabilities includeincluded the number of people
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occupationally exposed and likely to develop asbestos-related diseases such as mesothelioma and lung cancer, the number of people likely to file an asbestos-related personal injury claim against the Company, the average settlement and resolution of each claim and the percentage of claims resolved with no payment. Furthermore, predictions with respect to estimates of the liability arewere subject to greater uncertainty as the projection period lengthens. Other factors that may affecthave affected the Company’s liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may behave been made by state and federal courts, and the passage of state or federal tort reform legislation.
The aggregate amount of the stated limits in insurance policies available to Aldrich and Murray for asbestos-related claims acquired, over many years and from many different carriers, is substantial. However, as a result of limitations in that coverage, the projected total liability to claimants substantially exceeds the probable insurance recovery.
Accounting Treatment After the Petition Date
Upon deconsolidation in 2020, the Company recorded its retained interest in Aldrich and Murray at fair value within Other noncurrent assets in the Consolidated Balance Sheet.Sheets. In determining the fair value of its equity investment, the Company used a market-adjusted multiple of earnings valuation technique (a market approach). Under the market approach, the Company used an adjusted multiple ranging from 11.0 to 12.5 of projected earnings before interest, taxes, depreciation and amortization (EBITDA) based on the market information of comparable companies.technique. As a result, the Company recorded an aggregate equity investment of $53.6 million as of the Petition Date. Subsequent to deconsolidation, the Company will account for its equity investment in Aldrich and Murray at cost less impairment under the measurement alternative election in ASC 321, "Investments - Equity Securities".
Simultaneously, the Company recognized a liability of $248.8 million within Other noncurrent liabilities in the Consolidated Balance SheetSheets related to its obligation under the Funding Agreements. Although the amounts that Aldrich and Murray may ultimately require under the Funding Agreements are unknown, the Company believes that an estimate of $248.8 million in the aggregate is reasonable at this time as the Company has no better estimate for the amounts that may ultimately be required under the Funding Agreement. The liability iswas based on asbestos-related liabilities and insurance-related assets balances previously recorded by the Company prior to the Petition Date and may be subject to change based on the facts and circumstances of the Chapter 11 proceedings.Date.
As a result of these actions,the deconsolidation, the Company recognized an aggregate loss of $24.9 million in its Consolidated Statements of Comprehensive Income.Earnings during the year ended December 31, 2020. A gain of $0.9 million related to Murray and its wholly-owned subsidiary ClimateLabs was recorded within Other income/ (expense), net and a loss of $25.8 million related to Aldrich and its wholly-owned subsidiary 200 Park was recorded within Discontinued operations, net of tax. Additionally, the deconsolidation resulted in an investing cash outflow of $41.7 million in the Company's Consolidated Statements of Cash Flows, of which $10.8 million was recorded within continuing operations.operations during the year ended December 31, 2020.
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On August 26, 2021, the Company announced that Aldrich and Murray reached an agreement in principle with the court-appointed legal representative of future asbestos claimants (the FCR) in the bankruptcy proceedings. The agreement in principle includes the key terms for the permanent resolution of all current and future asbestos claims against Aldrich and Murray pursuant to a plan of reorganization (the Plan). Under the agreed terms, the Plan would create a trust pursuant to section 524(g) of the Bankruptcy Code and establish claims resolution procedures for all current and future claims against Aldrich and Murray (Asbestos Claims). On the effective date of the Plan, Aldrich and Murray would fund the trust with $545.0 million, comprised of $540.0 million in cash and a promissory note to be issued by Aldrich and Murray to the trust in the principal amount of $5.0 million, and the Asbestos Claims would be channeled to the trust for resolution in accordance with the claims resolution procedures. Following the effective date of the Plan, Aldrich and Murray would have no further obligations with respect to the Asbestos Claims. The FCR has agreed to support such Plan. The agreement in principle with the FCR is subject to final documentation and is conditioned on arrangements acceptable to Aldrich and Murray with respect to their asbestos insurance assets. It is currently contemplated that the asbestos insurance assets of Aldrich and Murray would be contributed to the trust, and that, in consideration of their cash contribution to the trust, Aldrich and Murray would have the exclusive right to pursue, collect and retain all insurance reimbursements available in connection with the resolution of Asbestos Claims by the trust. The committee representing current asbestos claimants (the ACC) is not a party to the agreement in principle. Any settlement and its implementation in a plan of reorganization is subject to the approval of the Bankruptcy Court, and there can be no assurance that the Bankruptcy Court will approve the agreement on the terms proposed.
On September 24, 2021, Aldrich and Murray filed the Plan with the Bankruptcy Court. The Plan is supported by, and reflects the agreement in principle reached with the FCR. On the same date, in connection with the Plan, Aldrich and Murray filed a motion with the Bankruptcy Court to create a $270.0 million trust intended to constitute a "qualified settlement fund" within the meaning of the Treasury Regulations under Section 468B of the Internal Revenue Code (QSF). The funds held in the QSF would be available to provide funding for the Section 524(g) Trust upon effectiveness of the Plan.
During the year ended December 31, 2021, in connection with the agreement in principle reached by Aldrich and Murray with the FCR and the motion to create a $270.0 million QSF, the Company recorded a charge of $21.2 million to increase its Funding Agreement liability to $270.0 million. The corresponding charge was bifurcated between Other income/ (expense), net of$7.2 million relating to Murray and discontinued operations of $14.0 million relating to Aldrich.
On January 27, 2022, the Bankruptcy Court granted the request to fund the QSF, which was funded on March 2, 2022, resulting in an operating cash outflow of $270.0 million reported in the Company's Consolidated Statements of Cash Flows, of which $91.8 million was allocated to continuing operations and $178.2 million was allocated to discontinued operations for the year ended December 31, 2022. On April 18, 2022, the Bankruptcy Court entered an order granting Aldrich and Murray's request to seek to estimate their aggregate liability for all current and future asbestos-related personal injury claims. Aldrich and Murray are pursuing discovery and related matters in connection with the estimation proceedings.
On October 18, 2021, the ACC filed a motion seeking standing to pursue and investigate on behalf of the bankruptcy estates of Aldrich and Murray, claims arising from or related to the 2020 Corporate Restructuring. Also on October 18, 2021, the ACC filed a complaint seeking to substantively consolidate the bankruptcy estates of Aldrich and Murray with certain of the Company's subsidiaries. On December 20, 2021, Aldrich, Murray and certain of the Company's subsidiaries filed motions to dismiss the ACC's substantive consolidation complaint. On April 14, 2022, the Bankruptcy Court granted the ACC's standing motion and denied the motions to dismiss the substantive consolidation complaint. On June 18, 2022, the ACC filed complaints against the Company and other related parties asserting various claims and causes of action arising from or related to the 2020 Corporate Restructuring. The Company is vigorously opposing and defending against these claims.
On April 6, 2023, certain individual claimants filed a motion to dismiss the Chapter 11 cases. Subsequently, on May 15, 2023, the ACC filed its own motion to dismiss the Chapter 11 cases. Aldrich, Murray and the FCR filed responses in opposition to each of these motions, and the Company filed papers joining in Aldrich and Murray's opposition. A hearing on the motions to dismiss was held on July 14, 2023. On December 28, 2023, the Bankruptcy Court entered an order denying the motions to dismiss the Chapter 11 cases. On January 11, 2024, the ACC and the individual claimants filed motions seeking leave to appeal the order denying the motions to dismiss and to certify the appeals directly to the Court of Appeals for the Fourth Circuit. Aldrich and Murray filed responses in opposition to these motions on January 31, 2024. It is not possible to predict how the Bankruptcy Court will rule on these pending motions, whether an appellate court will affirm or reverse the Bankruptcy Court order denying the motions to dismiss, whether the Bankruptcy Court will approve the terms of the Plan, what the extent of the asbestos liability will be or how long the Chapter 11 cases will last. The Chapter 11 cases remain pending as of February 8, 2024.
Furthermore, in connection with the 2020 Corporate Restructuring, Aldrich, Murray and their respective subsidiaries entered into several agreements with subsidiaries of the Company to ensure they each have access to services necessary for the effective operation of their respective businesses and access to capital to address any liquidity needs that arise as a result of working capital requirements or timing issues. In addition, the Company regularly transacts business with Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs. As of the Petition Date, these entities are
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considered related parties and post deconsolidation activity between the Company and them are reported as third party transactions and are reflected within the Company's Consolidated Statements of Comprehensive Income.Earnings. Since the Petition Date, there were no material transactions between the Company and these entities.entities other than as described above.
Environmental Matters
The Company continues to be dedicated to environmental and sustainability programs to minimize the use of natural resources, and reduce the utilization and generation of hazardous materials from our manufacturing processes and to remediate identified environmental concerns. As to the latter, the Company is currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former manufacturing facilities.
It is the Company's policy to establish environmental reserves for investigation and remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. Estimated liabilities are determined based upon existing remediation laws and technologies. Inherent uncertainties exist in such evaluations due to unknown environmental conditions, changes in government laws and regulations, and changes in cleanup technologies. The environmental reserves are updated on a routine basis as remediation efforts progress and new information becomes available.
The Company is sometimes a party to environmental lawsuits and claims and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state and international authorities. It has also been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all such sites, there are other PRPs and, inIn most instances at multi-party sites, the Company’s involvementCompany's share of the liability is minimal.not material.
In estimating its liability at multi-party sites, the Company has assumed it will not bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based on the Company's understanding of the parties’ financial condition and probable contributions on a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future.
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Reserves for environmental matters are classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on their expected term. As of December 31, 20202023 and 2019,2022, the Company has recorded reserves for environmental matters of $39.9$47.5 million and $40.2$42.4 million, respectively. Of these amounts, $37.5$38.9 million and $36.5 million, respectively, relate to investigation and remediation of properties and multi-waste disposal sites previously disposedrelated to businesses formerly owned by the Company.
Warranty Liability
Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available.
The changes in the standard product warranty liability for the yearyears ended December 31, were as follows:
In millionsIn millions20202019In millions20232022
Balance at beginning of periodBalance at beginning of period$251.4 $245.6 
Reductions for paymentsReductions for payments(130.5)(142.8)
Accruals for warranties issued during the current periodAccruals for warranties issued during the current period144.6 144.1 
Changes to accruals related to preexisting warrantiesChanges to accruals related to preexisting warranties14.9 5.1 
Changes to accruals related to preexisting warranties
Changes to accruals related to preexisting warranties
TranslationTranslation2.3 (0.6)
Balance at end of periodBalance at end of period$282.7 $251.4 
Standard product warranty liabilities are classified as Accrued expenses and other current liabilities, or Other noncurrent liabilities based on their expected term. The Company's total current standard product warranty reserve at December 31, 20202023 and December 31, 20192022 was $127.7$157.6 million and $124.9$120.4 million, respectively.
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Warranty Deferred Revenue
The Company's extended warranty liability represents the deferred revenue associated with its extended warranty contracts and is amortized into Net revenues on a straight-line basis over the life of the contract, unless another method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.
The changes in the extended warranty liability for the yearyears ended December 31, were as follows:
In millionsIn millions20202019In millions20232022
Balance at beginning of periodBalance at beginning of period$302.8 $290.6 
Amortization of deferred revenue for the periodAmortization of deferred revenue for the period(123.6)(120.9)
Additions for extended warranties issued during the periodAdditions for extended warranties issued during the period123.7 133.5 
Changes to accruals related to preexisting warrantiesChanges to accruals related to preexisting warranties(0.4)
TranslationTranslation1.5 
Balance at end of periodBalance at end of period$304.4 $302.8 
The extended warranty liability is classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on the timing of when the deferred revenue is expected to be amortized into Net revenues. The Company's total current extended warranty liability at December 31, 20202023 and December 31, 20192022 was $108.6$123.8 million and $107.3$110.5 million, respectively. For the years ended December 31, 2020, 20192023, 2022 and 2018,2021, the Company incurred costs of $61.0$54.3 million, $62.8$54.8 million and $63.8$58.5 million, respectively, related to extended warranties.
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