Trane Technologies plc (NYSE:TT)

Asset Turnover

Reported total asset turnover showed a decline from 0.87 in 2018 to 0.69 in 2020, followed by a recovery to 0.88 by the end of 2022. Adjusted total asset turnover followed a similar pattern, indicating reduced asset efficiency midway through the period with subsequent improvement.

Current Ratio

Both reported and adjusted current ratios increased from 2018 to peak in 2020 at 1.59 and 1.7 respectively, suggesting improved liquidity. However, after 2020 the ratios declined steadily, reaching 1.12 (reported) and 1.2 (adjusted) in 2022, indicating a decrease in liquidity position.

Debt Metrics

Reported debt to equity increased from 0.58 in 2018 to 0.82 in 2020, then slightly decreased to around 0.79 by 2022. Adjusted debt to equity followed a similar trend but remained marginally lower. Debt to capital ratios showed a gradual increase until 2020, then stabilized around 0.44 (reported) and 0.42 (adjusted) through 2022, reflecting consistent moderate leverage levels.

Financial Leverage

Reported financial leverage steadily rose from 2.55 in 2018 to 2.97 in 2022, indicating an increasing use of debt relative to equity. In contrast, adjusted financial leverage increased more moderately, leveling off at 2.45 from 2020 onwards.

Profitability Margins

Reported net profit margin decreased from 8.54% in 2018 to 6.86% in 2020, then improved significantly, reaching 10.98% by 2022. Adjusted net profit margin showed a contrary trend initially, rising from 6.84% to 10.5% between 2018 and 2020, and further increasing to 11.42% in 2022, demonstrating enhanced profitability after adjustment for specific items.

Return on Equity (ROE)

Reported ROE declined from 19.05% in 2018 to a low of 13.34% in 2020, before sharply increasing to 28.85% in 2022, suggesting improved earnings generation relative to shareholder equity. Adjusted ROE showed a steadier increase, moving from 13.26% to 24.53% over the period, reflecting stronger underlying performance.

Return on Assets (ROA)

Reported ROA followed a downward trend from 7.47% in 2018 to 4.71% in 2020, then rose to 9.71% by 2022. Adjusted ROA showed consistent improvement throughout, increasing from 5.77% to 10.01%, indicating better efficiency in asset utilization once adjustments are considered.

Net Revenues

Net revenues displayed a fluctuating trend over the five-year period. There was a growth from approximately $15.7 billion in 2018 to about $16.6 billion in 2019. This was followed by a significant decline in 2020, falling to around $12.5 billion. Subsequently, revenues recovered in 2021 and further increased in 2022, nearly reaching $16 billion, close to the level observed in 2019.

Total Assets

Total assets grew from roughly $17.9 billion in 2018 to approximately $20.5 billion in 2019. After the peak in 2019, total assets decreased in 2020 to about $18.2 billion and remained relatively stable through 2021 and 2022, ending near $18.1 billion. This indicates a contraction following the 2019 peak, stabilizing in later years.

Reported Total Asset Turnover

The reported total asset turnover ratio, which measures efficiency in generating revenues from assets, showed a declining pattern from 0.87 in 2018 to 0.69 in 2020. This decline corresponds with the drop in net revenues and the initial high asset base. However, turnover improved thereafter, rising to 0.78 in 2021 and reaching 0.88 in 2022, surpassing the 2018 level and suggesting improved asset utilization in recent years.

Adjusted Net Revenues

Adjusted net revenues followed a pattern similar to reported net revenues, growing modestly from about $15.7 billion in 2018 to $16.6 billion in 2019, declining sharply in 2020 to $12.5 billion, and then recovering through 2021 and 2022, reaching just under $16 billion. The close parity between adjusted and reported figures across all years indicates consistency in revenue adjustments.

Adjusted Total Assets

Adjusted total assets increased from approximately $18.6 billion in 2018 to $20.6 billion in 2019, then declined significantly in 2020 to around $18.2 billion. From 2020 onward, adjusted assets remained fairly constant, with slight increases through 2021 and 2022, reaching about $18.3 billion. This trend mirrors that observed with reported total assets, reflecting similar asset base adjustments.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio closely follows the trend of the reported turnover. It decreased from 0.84 in 2018 to a low of 0.68 in 2020, then increased in subsequent years to 0.78 in 2021 and 0.88 in 2022. This pattern highlights a dip in asset efficiency during 2020 followed by recovery and improvement, potentially indicating enhanced operational performance or better asset management.

The financial data over the five-year period reveals fluctuating trends in the company's liquidity position as reflected by various current asset and liability measures alongside corresponding current ratios.

Current Assets

These have generally increased from approximately $5.73 billion in 2018 to a peak of $6.91 billion in 2020, followed by a decline to about $6.38 billion by the end of 2022. This suggests some growth in liquid or near-liquid resources through 2020, with a slight contraction thereafter.

Current Liabilities

Current liabilities initially rose from around $4.32 billion in 2018 to approximately $4.86 billion in 2019, then decreased notably to about $4.34 billion in 2020. However, liabilities increased again in subsequent years reaching about $5.69 billion by the end of 2022, indicating rising obligations in recent periods.

Reported Current Ratio

Starting at 1.33 in 2018, the reported current ratio declined slightly in 2019 to 1.28, improved significantly to 1.59 in 2020, then decreased to 1.36 in 2021 and further to 1.12 in 2022. The highest ratio in 2020 points to the strongest liquidity that year, while the consistent decline afterwards suggests a weakening short-term liquidity position.

Adjusted Current Assets

The adjusted current assets presented an upward trend similar to current assets, increasing from approximately $5.85 billion in 2018 to a high of $6.99 billion in 2020, followed by a modest decline to about $6.55 billion in 2022. The adjustment presumably accounts for reclassification or valuation changes that slightly elevate asset figures relative to reported values.

Adjusted Current Liabilities

Adjusted current liabilities display a decrease from about $4.06 billion in 2018 to $4.10 billion in 2020, before climbing steadily to $5.46 billion in 2022. This pattern mirrors the reported liabilities but suggests somewhat lower liability values earlier on due to adjustments.

Adjusted Current Ratio

The adjusted current ratio similarly peaked in 2020 at 1.70, reflecting the highest liquidity during the period. Although it declined thereafter, it remained above 1.0 through 2022, indicating continued coverage of short-term obligations by current assets, albeit with reduced comfort compared to the peak year.

Overall, the data demonstrate an improvement in liquidity ratios up to 2020, driven by growth in current assets and reductions or stability in liabilities. After 2020, a decline in liquidity is evident, influenced by both shrinking asset bases and rising liabilities. Adjusted values convey a somewhat stronger liquidity profile than reported figures but reflect the same overall trend of declining current ratio toward the end of the period. This suggests increasing pressure on the company's short-term financial flexibility in recent years.

Total Debt

The total debt increased notably from 4,091,300 thousand USD at the end of 2018 to a peak of 5,573,400 thousand USD in 2019. It then showed a declining trend over the next two years, reducing to 4,842,100 thousand USD by the end of 2021, before stabilizing around 4,836,300 thousand USD in 2022.

Total Shareholders’ Equity

The total shareholders’ equity exhibited a downward trend over the five-year period. It started at 7,022,700 thousand USD in 2018, increased slightly in 2019 to 7,267,600 thousand USD, but then declined consistently to 6,087,600 thousand USD by the end of 2022.

Reported Debt to Equity Ratio

The reported debt to equity ratio rose from 0.58 in 2018 to a high of 0.82 in 2020, indicating an increasing leverage during this period. After 2020, the ratio moderated slightly to 0.77 in 2021 and edged up marginally to 0.79 in 2022, suggesting a somewhat stable but elevated leverage position compared to earlier years.

Adjusted Total Debt

The adjusted total debt followed a pattern similar to reported total debt. It increased from 4,637,219 thousand USD in 2018 to 6,139,800 thousand USD in 2019, then decreased over the next two years to 5,285,400 thousand USD in 2021, with a slight increase to 5,305,600 thousand USD in 2022.

Adjusted Total Equity

Adjusted total equity showed a slight growth from 8,083,500 thousand USD in 2018 to 8,493,600 thousand USD in 2019, followed by a decline to 7,516,100 thousand USD in 2020 and a relatively stable figure around 7,436,000 to 7,446,700 thousand USD in the subsequent two years.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio increased from 0.57 in 2018 to 0.76 in 2020, reflecting an overall increase in leverage. Subsequently, it declined to 0.71 in 2021 and remained steady at this level through 2022, indicating a reduction in leverage compared to the peak but maintaining a higher leverage level than at the start of the period.

Total Debt

Total debt increased significantly from 4,091,300 thousand USD in 2018 to a peak of 5,573,400 thousand USD in 2019. Subsequently, it declined to 5,272,100 thousand USD in 2020 and continued to decrease over the following years, reaching 4,836,300 thousand USD in 2022. This reflects a notable reduction in the company's borrowing after 2019.

Total Capital

Total capital showed an initial increase from 11,114,000 thousand USD in 2018 to 12,841,000 thousand USD in 2019. Afterward, the capital base declined steadily each year to 11,679,800 thousand USD in 2020, 11,098,000 thousand USD in 2021, and 10,924,900 thousand USD in 2022, indicating a contraction in the overall financial base or equity component after the 2019 peak.

Reported Debt to Capital Ratio

The reported debt to capital ratio rose from 0.37 in 2018 to 0.43 in 2019, marking an increase in leverage. The ratio reached its highest point of 0.45 in 2020 before slightly decreasing and stabilizing at 0.44 in both 2021 and 2022. This suggests moderate fluctuations in leverage with a tendency to stabilize in the recent years assessed.

Adjusted Total Debt

Adjusted total debt presents a pattern similar to total debt but with higher absolute values, possibly reflecting additional debt adjustments. It increased from 4,637,219 thousand USD in 2018 to 6,139,800 thousand USD in 2019. From 2019 onwards, it gradually decreased to 5,687,400 thousand USD in 2020, 5,285,400 thousand USD in 2021, and remained relatively flat at 5,305,600 thousand USD in 2022.

Adjusted Total Capital

Adjusted total capital also rose from 12,720,719 thousand USD in 2018 to 14,633,400 thousand USD in 2019, followed by a decrease in succeeding years: 13,203,500 thousand USD in 2020, 12,717,000 thousand USD in 2021, and a slight increase to 12,752,300 thousand USD in 2022. After the initial peak, adjusted capital experienced a downward trend with some stabilization towards the end of the period.

Adjusted Debt to Capital Ratio

This ratio moved upwards from 0.36 in 2018 to 0.42 in 2019, indicating increased leverage after adjustment. It reached 0.43 in 2020 and then showed a decline to 0.42 in 2021 and maintained this level in 2022. The ratio exhibits a similar trend to the reported figure, with a rise in leverage till 2020 followed by a modest improvement and stabilization.

Overall Analysis

The company experienced an increase in both debt and capital in 2019, which resulted in higher leverage ratios. After 2019, both debt and capital values decreased, but debt reduction was more pronounced than capital decline, leading to stabilization of leverage ratios around 0.42-0.44 levels through 2021 and 2022. The relatively stable leverage ratios in the latter years imply an effort to maintain a balanced capital structure following the peak borrowing in 2019 and 2020. The adjusted figures confirm these observations with similar patterns in both debt and capital components.

The analysis of the financial data over the five-year period reveals several noteworthy trends regarding the company's assets, equity, and financial leverage ratios.

Total Assets

Total assets increased from approximately US$17.9 billion in 2018 to a peak of about US$20.5 billion in 2019, representing significant growth during that year. However, in subsequent years, total assets decreased and stabilized around US$18.1 billion from 2020 through 2022, indicating a retrenchment following the earlier expansion.

Total Shareholders’ Equity

Shareholders’ equity exhibited a declining trend throughout the period. After increasing slightly from US$7.0 billion in 2018 to roughly US$7.3 billion in 2019, equity consistently decreased in the following years, reaching approximately US$6.1 billion by 2022. This decline suggests that the company retained less earnings or experienced equity reductions despite stable asset levels in later years.

Reported Financial Leverage

The reported financial leverage ratio steadily increased from 2.55 in 2018 to 2.97 in 2022, indicating a gradual rise in the company's reliance on debt financing relative to equity. The consistent upward trajectory implies that the company’s capital structure has become more leveraged over time.

Adjusted Total Assets

The adjusted total assets showed a pattern similar to the unadjusted figures, rising to just over US$20.6 billion in 2019 before declining and stabilizing around US$18.3 billion towards 2022. This confirms the overall asset base expansion and contraction observed with reported values, accounting for adjustments made.

Adjusted Total Equity

Adjusted total equity also mirrored the downward trend of reported equity, growing from about US$8.1 billion in 2018 to US$8.5 billion in 2019, then declining to approximately US$7.4 billion in 2021 and maintaining a similar level in 2022. The adjusted figures suggest that after accounting for certain corrections, the erosion in equity is still evident but slightly less pronounced.

Adjusted Financial Leverage

The adjusted financial leverage ratio increased from 2.3 in 2018 to 2.45 by 2022, a more moderate growth compared to the reported financial leverage ratio. This indicates a stable but moderate increase in leverage when considering adjustments, reinforcing the observation of growing debt reliance over equity.

In summary, the financial data displays a phase of asset growth peaking in 2019, followed by a period of asset contraction and stabilization. Meanwhile, shareholders’ equity has decreased, contributing to increasing leverage ratios both on a reported and adjusted basis. The trends highlight a shift toward higher financial leverage, suggesting a strategic inclination to utilize more debt financing relative to equity during the observed period.

Net Earnings Attributable to Trane Technologies plc

The net earnings experienced fluctuations over the five-year period. Starting at approximately 1,337,600 thousand USD in 2018, earnings increased to 1,410,900 thousand USD in 2019 before decreasing sharply to 854,900 thousand USD in 2020. Thereafter, earnings rebounded to 1,423,400 thousand USD in 2021 and further increased to 1,756,500 thousand USD in 2022. This pattern indicates a significant dip likely related to external factors in 2020, followed by a strong recovery through to 2022.

Net Revenues

Net revenues followed a somewhat similar pattern to net earnings but with less volatility. Revenues rose from 15,668,200 thousand USD in 2018 to 16,598,900 thousand USD in 2019, then dropped substantially to 12,454,700 thousand USD in 2020. Revenues gradually climbed again to 14,136,400 thousand USD in 2021 and reached 15,991,700 thousand USD in 2022. The decline in 2020 reflects a downturn affecting sales, which was reversed over the next two years, though revenues in 2022 had not fully returned to the 2019 peak.

Reported Net Profit Margin

The reported net profit margin showed a decline from 8.54% in 2018 to 6.86% in 2020, marking the lowest point during the period. It rose to 10.07% in 2021 and improved further to 10.98% in 2022. This margin trajectory suggests efficiency gains and improved profitability in the latter years, especially after the 2020 nadir.

Adjusted Net Earnings

Adjusted net earnings exhibit a steadier trend than reported net earnings. Starting at 1,071,900 thousand USD in 2018, adjusted earnings increased to 1,393,300 thousand USD in 2019. Although there was a slight decrease to 1,307,400 thousand USD in 2020, the figure rose consistently thereafter, reaching 1,477,100 thousand USD in 2021 and peaking at 1,826,700 thousand USD in 2022. This indicates an overall positive trend with only a mild impact in 2020 when adjustments are considered.

Adjusted Net Revenues

Adjusted net revenues closely mirror the pattern seen in reported net revenues. Starting at 15,667,400 thousand USD in 2018, they increased to 16,610,800 thousand USD in 2019 before dropping to 12,456,300 thousand USD in 2020. Revenues then rose to 14,143,700 thousand USD in 2021 and to 15,997,700 thousand USD in 2022. The adjustments do not significantly modify the revenue trend but affirm the impact of the 2020 downturn followed by recovery.

Adjusted Net Profit Margin

The adjusted net profit margin demonstrated consistent improvement over the period. Beginning at 6.84% in 2018, the margin increased to 8.39% in 2019, then improved markedly to 10.5% in 2020 despite the downturn in raw earnings. The margin remained steady at 10.44% in 2021 and climbed further to 11.42% in 2022. This upward trend in adjusted margins suggests enhanced profitability and operational efficiency when excluding non-recurring or special items.

Summary of Trends

Overall, the financial data reflects a noticeable disruption in 2020, characterized by declines in both revenues and earnings. This disruption was followed by a robust recovery in subsequent years, with earnings and revenues increasing and margins improving. The adjusted figures, which smooth out certain impacts, show more stable profitability trends with consistent margin growth, indicating effective management of costs and operational improvements over time. The company appears to have strengthened its profitability and revenue base by 2022, recovering from the 2020 downturn.

Net earnings attributable to Trane Technologies plc

The net earnings showed a fluctuating pattern over the five-year period. Beginning at approximately 1.34 billion USD in 2018, earnings increased slightly in 2019. However, in 2020, there was a notable decline to around 854.9 million USD. This was followed by a strong recovery in 2021, reaching about 1.42 billion USD, and a further increase in 2022 to approximately 1.76 billion USD. This indicates resilience and growth after a temporary setback in 2020.

Total Trane Technologies plc shareholders’ equity

Shareholders’ equity experienced a gradual decline over the analyzed period. Starting from roughly 7.02 billion USD in 2018, it peaked slightly in 2019 at 7.27 billion USD before decreasing steadily in the subsequent years. By 2022, equity had dropped to about 6.09 billion USD, reflecting a possible return of capital to shareholders, increased liabilities, or other capital structure changes.

Reported Return on Equity (ROE)

The reported ROE exhibited variability but an overall upward trajectory towards the end of the period. It remained stable near 19% in 2018 and 2019, declined sharply to around 13.3% in 2020 during the same year net earnings dropped, and then improved significantly to 22.75% in 2021. This upward trend continued in 2022, reaching nearly 29%, demonstrating enhanced profitability relative to shareholders’ equity.

Adjusted net earnings

Adjusted net earnings followed a steadier upward trend compared to reported net earnings. With an initial value slightly above 1.07 billion USD in 2018, adjusted earnings climbed consistently to approximately 1.83 billion USD in 2022. Despite a minor deceleration in growth in 2020, the adjusted figures imply strong underlying operational performance, possibly excluding extraordinary items.

Adjusted total equity

Adjusted total equity reflected a pattern similar to the reported equity but with higher absolute figures and less pronounced decline. It rose from around 8.08 billion USD in 2018 to a peak of approximately 8.49 billion USD in 2019, followed by a reduction in the subsequent years to about 7.45 billion USD by 2022. This supports the observation of a moderate contraction in capital base when considering adjustments.

Adjusted Return on Equity (ROE)

The adjusted ROE demonstrated consistent improvement throughout the period. Starting at 13.26% in 2018, it increased steadily each year to reach 24.53% in 2022. This continuous rise indicates improving profitability on an adjusted basis, signifying strengthened earnings quality and efficient capital utilization over time.

Net Earnings Attributable to Trane Technologies plc

The net earnings showed a general upward trend over the five-year period. Beginning at approximately 1,337,600 thousand USD in 2018, earnings increased to 1,410,900 thousand USD in 2019 before declining sharply to 854,900 thousand USD in 2020. This drop was followed by a notable recovery in 2021 to 1,423,400 thousand USD and further growth in 2022 reaching 1,756,500 thousand USD, the highest value in the given period.

Total Assets

Total assets rose from 17,914,900 thousand USD in 2018 to a peak of 20,492,300 thousand USD in 2019. Subsequently, assets decreased to 18,156,700 thousand USD in 2020 and remained relatively stable through 2021 and 2022, hovering near 18,060,000 to 18,080,000 thousand USD.

Reported Return on Assets (ROA)

The reported ROA exhibited some fluctuations, starting at 7.47% in 2018 and declining to 6.89% in 2019, with a further significant decrease to 4.71% in 2020. A strong rebound occurred in 2021 with ROA increasing to 7.88%, followed by further improvement to 9.71% in 2022, representing the highest efficiency in asset utilization within the period.

Adjusted Net Earnings

Adjusted net earnings demonstrated an overall increasing trend, from 1,071,900 thousand USD in 2018 to 1,393,300 thousand USD in 2019, with a slight decline to 1,307,400 thousand USD in 2020. The adjusted figures then increased steadily, reaching 1,477,100 thousand USD in 2021 and peaking at 1,826,700 thousand USD in 2022. This pattern mirrors the net earnings trend but with less pronounced volatility.

Adjusted Total Assets

Adjusted total assets followed a trend similar to total assets, with a rise from 18,577,019 thousand USD in 2018 to 20,620,100 thousand USD in 2019. Thereafter, a decline was observed to 18,237,800 thousand USD in 2020, followed by stable figures in 2021 and 2022 at approximately 18,172,300 and 18,255,200 thousand USD respectively.

Adjusted Return on Assets (ROA)

Adjusted ROA showed consistent improvement over the period. Starting at 5.77% in 2018, it increased marginally to 6.76% in 2019 and further to 7.17% in 2020, despite the challenging environment indicated by net earnings. The upward trend accelerated in subsequent years, reaching 8.13% in 2021 and peaking at 10.01% in 2022, indicating increasingly effective asset utilization when adjusted for non-recurring items or anomalies.