Trane Technologies plc (NYSE:TT)

The financial data reveals several notable trends in the company's operational performance and profitability over the observed periods.

Revenue Composition

The proportion of net revenues derived from products remained relatively stable between 2020 and 2022, fluctuating slightly around 67% to 68%. Services constituted the complementary portion, maintaining a share close to one-third of net revenues. This balance suggests a consistent revenue mix without major shifts between product sales and services.

Cost Structure

The cost of goods sold consistently accounted for about 69% of net revenues across the years, indicating steady production and procurement costs relative to sales. Breaking down costs further, the cost of products sold hovered near 49%, while the cost of services sold slightly decreased from about 20% to 19.3%. These trends suggest some improvement in service cost efficiency, while product costs remained relatively stable.

Profitability Metrics

Gross profit margins remained broadly steady, fluctuating in a narrow band around 30.5% to 31.6%. Importantly, selling and administrative expenses as a percentage of net revenues steadily declined from 18.53% in 2018 to 15.92% in 2022, reflecting improved cost management or operational efficiencies in administrative areas. This reduction positively impacted operating income, which increased from approximately 12.2% to 15.1% of net revenues over the period, indicating a stronger operating performance.

Financial Income and Expenses

Interest expense as a percentage of net revenues decreased from 2% in 2020 to 1.4% in 2022, reducing financial burden and potentially reflecting lower debt costs or improved capital structure management. Interest income remained minimal but showed a slight increase, while foreign currency exchange losses and other periodic benefit costs remained relatively minor and stable contributors to expenses. Other non-operating income elements fluctuated but did not significantly influence overall profitability trends.

Taxation and Earnings

The provision for income taxes remained consistent near 2.3% of net revenues, suggesting stable tax obligations relative to earnings. Earnings before income taxes improved from approximately 10.6% in 2018 to 13.6% in 2022, supporting the trend of enhanced operational profitability. Correspondingly, earnings from continuing operations and net earnings attributable to the parent company showed significant improvements, rising from around 8.5% and 8.5% respectively in 2018 to approximately 11.2% and 11.0% in 2022. Discontinued operations had minimal and inconsistent impact on net earnings.

Overall, the data reflects steady revenue composition, consistent cost controls with some improvements in service cost efficiency, and enhanced profitability underpinned by lower operating expenses and interest costs. These factors culminate in improved earnings performance over the analyzed period.