Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Trane Technologies plc, income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
United States	180,400)	247,000)	168,300)	203,400)	231,900)
Non-U.S.	127,700)	111,700)	106,300)	133,500)	193,200)
Current tax expense	308,100)	358,700)	274,600)	336,900)	425,100)
United States	66,500)	(42,500)	11,200)	35,700)	(83,200)
Non-U.S.	1,300)	17,300)	11,000)	(18,900)	(60,600)
Deferred tax expense (benefit)	67,800)	(25,200)	22,200)	16,800)	(143,800)
Tax expense	375,900)	333,500)	296,800)	353,700)	281,300)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Current tax expense	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Trane Technologies plc current tax expense increased from 2020 to 2021 but then slightly decreased from 2021 to 2022 not reaching 2020 level.
Deferred tax expense (benefit)	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Trane Technologies plc deferred tax expense (benefit) decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Tax expense	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Trane Technologies plc tax expense increased from 2020 to 2021 and from 2021 to 2022.

Trane Technologies plc, effective income tax rate (EITR) reconciliation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
U.S. statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
Non-U.S. tax rate differential	-2.80%	-2.80%	-1.10%	-1.90%	-1.80%
Tax on U.S. subsidiaries on non-U.S. earnings	0.30%	-0.30%	0.30%	1.10%	0.70%
State and local income taxes	1.10%	2.00%	4.30%	3.10%	0.10%
Valuation allowances	-0.70%	-1.10%	-1.10%	-2.40%	0.70%
Change in permanent reinvestment assertion	0.00%	0.00%	0.00%	0.00%	-2.30%
Transition tax	0.00%	0.00%	0.00%	0.00%	1.50%
Remeasurement of deferred tax balances	0.00%	0.00%	0.00%	0.00%	0.30%
Stock based compensation	-0.80%	-1.80%	-1.70%	-1.50%	-0.90%
Expiration of carryforward tax attributes	0.00%	0.00%	1.10%	0.00%	0.00%
Other adjustments	-0.80%	1.60%	0.20%	0.90%	-2.40%
Effective tax rate	17.30%	18.60%	23.00%	20.30%	16.90%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Trane Technologies plc effective tax rate decreased from 2020 to 2021 and from 2021 to 2022.

Trane Technologies plc, components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Inventory and accounts receivable	11,200)	11,000)	11,700)	17,700)	20,300)
Fixed assets and intangibles	2,600)	5,600)	9,500)	35,300)	39,200)
Operating lease liabilities	112,000)	106,000)	101,000)	140,200)	—)
Postemployment and other benefit liabilities	254,600)	285,700)	323,500)	392,500)	386,100)
Product liability	5,500)	4,600)	4,800)	70,000)	95,100)
Funding liability	—)	73,700)	71,800)	—)	—)
Other reserves and accruals	181,500)	171,200)	164,800)	157,100)	153,900)
Net operating losses and credit carryforwards	346,000)	453,300)	509,000)	659,200)	589,900)
Other	40,700)	29,000)	58,500)	40,600)	28,600)
Gross deferred tax assets	954,100)	1,140,100)	1,254,600)	1,512,600)	1,313,100)
Deferred tax valuation allowances	(199,800)	(258,600)	(320,500)	(373,700)	(332,200)
Deferred tax assets net of valuation allowances	754,300)	881,500)	934,100)	1,138,900)	980,900)
Inventory and accounts receivable	(50,700)	(18,600)	(22,300)	(20,000)	(18,600)
Fixed assets and intangibles	(1,069,000)	(1,135,400)	(1,186,000)	(1,358,300)	(1,220,900)
Operating lease right-of-use assets	(110,400)	(104,400)	(99,500)	(140,200)	—)
Postemployment and other benefit liabilities	(15,700)	(21,300)	(14,100)	(11,000)	(9,700)
Other reserves and accruals	(5,500)	(5,200)	(7,200)	(12,500)	(11,800)
Product liability	—)	—)	(200)	—)	(1,200)
Undistributed earnings of foreign subsidiaries	(28,000)	(27,800)	(22,400)	(39,300)	(39,500)
Other	(1,600)	(6,900)	(3,200)	(22,200)	(10,600)
Gross deferred tax liabilities	(1,280,900)	(1,319,600)	(1,354,900)	(1,603,500)	(1,312,300)
Net deferred tax assets (liabilities)	(526,600)	(438,100)	(420,800)	(464,600)	(331,400)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Gross deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Trane Technologies plc gross deferred tax assets decreased from 2020 to 2021 and from 2021 to 2022.
Deferred tax assets net of valuation allowances	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Trane Technologies plc deferred tax assets net of valuation allowances decreased from 2020 to 2021 and from 2021 to 2022.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Trane Technologies plc net deferred tax assets (liabilities) decreased from 2020 to 2021 and from 2021 to 2022.

Trane Technologies plc, adjustments to financial statements

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Liabilities
Total liabilities (as reported)	11,976,400)	11,786,700)	11,729,600)	13,179,900)	10,850,100)
Less: Noncurrent deferred tax liabilities, net	526,600)	438,100)	420,800)	464,600)	331,400)
Total liabilities (adjusted)	11,449,800)	11,348,600)	11,308,800)	12,715,300)	10,518,700)
Adjustment to Total Trane Technologies Plc Shareholders’ Equity
Total Trane Technologies plc shareholders’ equity (as reported)	6,088,600)	6,255,900)	6,407,700)	7,267,600)	7,022,700)
Less: Net deferred tax assets (liabilities)	(526,600)	(438,100)	(420,800)	(464,600)	(331,400)
Total Trane Technologies plc shareholders’ equity (adjusted)	6,615,200)	6,694,000)	6,828,500)	7,732,200)	7,354,100)
Adjustment to Net Earnings Attributable To Trane Technologies Plc
Net earnings attributable to Trane Technologies plc (as reported)	1,756,500)	1,423,400)	854,900)	1,410,900)	1,337,600)
Add: Deferred income tax expense (benefit)	67,800)	(25,200)	22,200)	16,800)	(143,800)
Net earnings attributable to Trane Technologies plc (adjusted)	1,824,300)	1,398,200)	877,100)	1,427,700)	1,193,800)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Trane Technologies plc, Financial Data: Reported vs. Adjusted

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Trane Technologies plc, adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net Profit Margin
Reported net profit margin	10.98%	10.07%	6.86%	8.50%	8.54%
Adjusted net profit margin	11.41%	9.89%	7.04%	8.60%	7.62%
Financial Leverage
Reported financial leverage	2.97	2.89	2.83	2.82	2.55
Adjusted financial leverage	2.73	2.70	2.66	2.65	2.44
Return on Equity (ROE)
Reported ROE	28.85%	22.75%	13.34%	19.41%	19.05%
Adjusted ROE	27.58%	20.89%	12.84%	18.46%	16.23%
Return on Assets (ROA)
Reported ROA	9.71%	7.88%	4.71%	6.89%	7.47%
Adjusted ROA	10.09%	7.74%	4.83%	6.97%	6.66%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Trane Technologies plc adjusted net profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Trane Technologies plc adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Trane Technologies plc adjusted ROE improved from 2020 to 2021 and from 2021 to 2022.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Trane Technologies plc adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

Trane Technologies plc, Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net earnings attributable to Trane Technologies plc	1,756,500)	1,423,400)	854,900)	1,410,900)	1,337,600)
Net revenues	15,991,700)	14,136,400)	12,454,700)	16,598,900)	15,668,200)
Profitability Ratio
Net profit margin¹	10.98%	10.07%	6.86%	8.50%	8.54%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings attributable to Trane Technologies plc	1,824,300)	1,398,200)	877,100)	1,427,700)	1,193,800)
Net revenues	15,991,700)	14,136,400)	12,454,700)	16,598,900)	15,668,200)
Profitability Ratio
Adjusted net profit margin²	11.41%	9.89%	7.04%	8.60%	7.62%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Net profit margin = 100 × Net earnings attributable to Trane Technologies plc ÷ Net revenues
= 100 × 1,756,500 ÷ 15,991,700 = 10.98%

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to Trane Technologies plc ÷ Net revenues
= 100 × 1,824,300 ÷ 15,991,700 = 11.41%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Trane Technologies plc adjusted net profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	18,081,600)	18,059,800)	18,156,700)	20,492,300)	17,914,900)
Total Trane Technologies plc shareholders’ equity	6,088,600)	6,255,900)	6,407,700)	7,267,600)	7,022,700)
Solvency Ratio
Financial leverage¹	2.97	2.89	2.83	2.82	2.55
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Total assets	18,081,600)	18,059,800)	18,156,700)	20,492,300)	17,914,900)
Adjusted total Trane Technologies plc shareholders’ equity	6,615,200)	6,694,000)	6,828,500)	7,732,200)	7,354,100)
Solvency Ratio
Adjusted financial leverage²	2.73	2.70	2.66	2.65	2.44

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Total Trane Technologies plc shareholders’ equity
= 18,081,600 ÷ 6,088,600 = 2.97

² Adjusted financial leverage = Total assets ÷ Adjusted total Trane Technologies plc shareholders’ equity
= 18,081,600 ÷ 6,615,200 = 2.73

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Trane Technologies plc adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net earnings attributable to Trane Technologies plc	1,756,500)	1,423,400)	854,900)	1,410,900)	1,337,600)
Total Trane Technologies plc shareholders’ equity	6,088,600)	6,255,900)	6,407,700)	7,267,600)	7,022,700)
Profitability Ratio
ROE¹	28.85%	22.75%	13.34%	19.41%	19.05%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings attributable to Trane Technologies plc	1,824,300)	1,398,200)	877,100)	1,427,700)	1,193,800)
Adjusted total Trane Technologies plc shareholders’ equity	6,615,200)	6,694,000)	6,828,500)	7,732,200)	7,354,100)
Profitability Ratio
Adjusted ROE²	27.58%	20.89%	12.84%	18.46%	16.23%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net earnings attributable to Trane Technologies plc ÷ Total Trane Technologies plc shareholders’ equity
= 100 × 1,756,500 ÷ 6,088,600 = 28.85%

² Adjusted ROE = 100 × Adjusted net earnings attributable to Trane Technologies plc ÷ Adjusted total Trane Technologies plc shareholders’ equity
= 100 × 1,824,300 ÷ 6,615,200 = 27.58%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Trane Technologies plc adjusted ROE improved from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net earnings attributable to Trane Technologies plc	1,756,500)	1,423,400)	854,900)	1,410,900)	1,337,600)
Total assets	18,081,600)	18,059,800)	18,156,700)	20,492,300)	17,914,900)
Profitability Ratio
ROA¹	9.71%	7.88%	4.71%	6.89%	7.47%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings attributable to Trane Technologies plc	1,824,300)	1,398,200)	877,100)	1,427,700)	1,193,800)
Total assets	18,081,600)	18,059,800)	18,156,700)	20,492,300)	17,914,900)
Profitability Ratio
Adjusted ROA²	10.09%	7.74%	4.83%	6.97%	6.66%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net earnings attributable to Trane Technologies plc ÷ Total assets
= 100 × 1,756,500 ÷ 18,081,600 = 9.71%

² Adjusted ROA = 100 × Adjusted net earnings attributable to Trane Technologies plc ÷ Total assets
= 100 × 1,824,300 ÷ 18,081,600 = 10.09%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Trane Technologies plc adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

Trane Technologies plc (NYSE:TT)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Adjustments to Financial Statements: Removal of Deferred Taxes

Trane Technologies plc, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Trane Technologies plc, Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)