Trane Technologies plc (NYSE:TT)

The analysis of the financial data reveals several notable trends in the company's capital structure and leverage over the considered period.

Short-term borrowings and long-term debt

The debt levels show significant fluctuations across the years. Debt decreased from approximately 2.12 billion US dollars at the end of 2005 to about 1.45 billion in 2007, indicating a reduction in financial leverage during that period. However, in 2008, debt surged sharply to over 5.12 billion, marking a substantial increase in borrowing, likely reflecting a strategic financing decision or market condition impact. From 2009 to 2014, the debt levels remained elevated but relatively stable within a range of 3.2 to 4.2 billion. Post-2014, there was a slight decline and stabilization of debt around 4.0 to 4.1 billion until 2018, followed by a renewed upward movement peaking at over 5.57 billion in 2019. Subsequently, debt gradually decreased again, hovering around 4.8 billion by the end of 2022.

Total shareholders’ equity

Shareholders' equity also experienced variability during the period. Starting around 5.76 billion dollars in 2005, equity increased overall to peak at nearly 7.91 billion in 2007, coinciding with the period of lower debt. This was followed by a decline in 2008, with equity dropping to about 6.66 billion, reflecting possible impacts of increased debt or market conditions during that financial crisis period. Post-2008, equity fluctuated but remained in a general range between about 5.98 and 7.14 billion dollars through 2018. After a peak in 2019 above 7.26 billion, equity fell notably to approximately 6.09 billion by 2022, suggesting pressure on net assets in recent years.

Debt to equity ratio

The debt to equity ratio exhibits pronounced cyclical variations that parallel the movements in debt and equity levels. The ratio was fairly stable around 0.37 in 2005 and 2006, then dropped to a low of 0.18 in 2007, indicating conservative leverage. A sharp increase occurred in 2008 to 0.77, reflecting the surge in debt relative to equity during the financial crisis. Afterward, the ratio oscillated between approximately 0.45 and 0.73 through 2016, signifying moderate leverage with some fluctuations. From 2017 to 2022, the ratio stabilized around the mid to high 0.50s to 0.80s, underscoring a generally higher leverage position maintained in recent years compared to the early period.

Overall, the company’s financial leverage has shown sensitivity to market and operational conditions, with a clear peak in debt and leverage around the 2008 financial crisis and another increase near 2019. Shareholders’ equity trends reflect similar influences with some periods of growth offset by declines, particularly post-2019. The company's capital structure indicates episodes of elevated borrowing levels, balanced at times by equity strength but trending toward moderate to high leverage in the recent years analyzed.