Trane Technologies TT · USD

COMMITMENTS AND CONTINGENCIESThe Company is involved in various litigation, claims and administrative proceedings, including those related to the bankruptcy proceedings for Aldrich Pump LLC (Aldrich) and Murray and environmental and product liability matters. The Company 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 MattersCertain indirect wholly-owned subsidiaries and former companies of the Company have 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 (the Petition Date), Aldrich and Murray filed voluntary petitions for relief under Chapter 11 of 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 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 entered an order temporarily staying all asbestos-related claims against each of 200 Park, Inc.

DEBT AND CREDIT FACILITIESAt December 31, Short-term borrowings and current maturities of long-term debt consisted of the following:In millions20252024Debentures with put feature$293.1 $295.0 7.200% Debentures due June 2025— 7.5 6.480% Senior Notes due June 2025— 149.7 3.500% Senior Notes due March 2026399.9 — Total$693.0 $452.2 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, 2025 and 2024 was 4.7% and 6.4%, respectively.Commercial Paper ProgramThe 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, is $2.0 billion as of December 31, 2025. The Company may issue notes from time to time through Trane Technologies HoldCo Inc. or Trane Technologies 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 Financing Limited provided irrevocable and unconditional guarantees for any notes issued. The Company had no commercial paper outstanding at December 31, 2025 and December 31, 2024. Debentures with Put FeatureAt both December 31, 2025 and December 31, 2024, the Company had $293.1 million and $295.0 million of fixed rate debentures, respectively, 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 debentures plus accrued and unpaid interest. If these options are not exercised, the final contractual maturity dates would range between 2027 and 2028. Holders had the option to elect to exercise puts up to $37.2 million for settlement in February 2025 and $256.0 million for settlement in November 2025. During the year ended December 31, 2025, no material amount of puts were elected to be exercised. During the year ended December 31, 2024, no puts were exercised.

INCOME TAXESCurrent and deferred provision for income taxesEarnings before income taxes for the years ended December 31 were taxed within the following jurisdictions:In millions202520242023Ireland$793.3 $610.5 $199.2 United States2,155.7 1,871.9 1,690.7 Other729.6 759.4 677.4 Total$3,678.6 $3,241.8 $2,567.3 The components of the Provision for income taxes for the years ended December 31 were as follows:In millions202520242023Current tax expense (benefit):Ireland$134.0 $107.3 $42.1 U.S. Federal, State, and Local300.8 500.4 377.6 Other157.5 149.0 132.2 Total:592.3 756.7 551.9 Deferred tax expense (benefit):Ireland0.3 0.3 0.9 U.S. Federal, State, and Local136.4 (128.2)(18.8)Other(23.1)(1.2)(35.6)Total:113.6 (129.1)(53.5)Total tax expense (benefit):Ireland134.3 107.6 42.9 U.S. Federal, State, and Local437.2 372.2 358.8 Other134.4 147.8 96.7 Total$705.9 $627.6 $498.4 The Provision for income taxes differs from the amount of income taxes determined by applying the applicable Irish Statutory income tax rate to pretax income, as a result of the following differences:202520242023Amount PercentAmountPercentAmountPercentStatutory Irish rate$459.8 12.5 %$405.2 12.5 %$321.0 12.5 %Increase (decrease) in rates resulting from:Foreign tax effects:United StatesStatutory tax rate differences between Ireland and the U.S.183.2 5.0 %158.8 4.9 %138.6 5.4 %State and Local income tax, net of Federal income tax effect92.9 2.5 %75.8 2.4 %83.6 3.3 %Share based payment awards(43.6)(1.2)%(40.4)(1.2)%(31.2)(1.2)%Valuation allowance(41.2)(1.1)%(36.3)(1.1)%(9.8)(0.4)%Effect of cross-border tax laws:Foreign derived intangible income (7.2)(0.2)%(13.0)(0.4)%(18.4)(0.7)%Other effect of cross-border tax laws (U.S.)(1.0)0.0 %12.4 0.4 %0.5 0.0 %Tax credits(31.5)(0.9)%(20.1)(0.6)%(19.5)(0.8)%Other U.S.15.5 0.4 %12.9 0.4 %0.1 0.0 %Other foreign jurisdictions51.5 1.5 %57.8 1.7 %21.6 0.8 %Effect of cross-border tax laws16.3 0.4 %11.1 0.3 %— — %Nontaxable or nondeductible items11.1 0.3 %6.0 0.2 %11.7 0.5 %Changes in unrecognized tax benefits0.1 0.0 %(2.6)(0.1)%0.2 0.0 %Effective income tax rate$705.9 19.2 %$627.6 19.4 %$498.4 19.4 %On December 18, 2023, Ireland enacted legislation related to the 15% minimum tax element of the Organisation for Economic Co-operation and Development's tax reform initiative, commonly referred to as "Pillar Two," effective January 1, 2024.

SHARE-BASED COMPENSATIONThe Company accounts for share-based compensation plans under the fair-value-based method. 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 share plan, the total number of ordinary shares authorized by the shareholders is 23.0 million, of which 9.6 million remains available as of December 31, 2025 for future incentive awards.Compensation ExpenseShare-based compensation expense related to continuing operations is included in Selling and administrative expenses. The following table summarizes the expenses recognized:In millions202520242023Stock options$20.6 $17.9 $16.1 RSUs28.1 27.3 23.5 PSUs36.8 36.4 23.2 Deferred compensation2.6 3.9 4.3 Pre-tax expense88.1 85.5 67.1 Tax benefit(21.4)(20.7)(16.3)After-tax expense$66.7 $64.8 $50.8 Grants issued during the years ended December 31 were as follows:202520242023Number GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per awardNumber GrantedWeighted-average fair value per awardStock options251,510 $99.09 268,922 $79.09 425,444 $47.53 RSUs128,081 $374.65 112,227 $287.84 214,425 $184.35 Performance shares (1)141,862 $378.65 161,978 $332.85 208,046 $207.23 (1) The number of performance shares represents the maximum award level. Stock Options / RSUsEligible 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. Beginning with the 2024 grant year, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense over the period during which an employee is required to provide service in exchange for the award, which is generally 12 months. For awards granted to retirement eligible employees prior to 2024, the Company recognized 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 31:202520242023Dividend yield0.95 %1.11 %1.50 %Volatility27.26 %29.99 %29.37 %Risk-free rate of return4.30 %4.00 %3.62 %Expected life in years4.84.84.

Acquisitions Fiscal Year 2025On January 2, 2025, the Company completed the acquisition of BrainBox AI Inc., financed through cash on hand. BrainBox AI Inc. is a building management platform for HVAC optimization, using advanced artificial intelligence technologies. The results of operations of BrainBox AI Inc. are reported within the Americas segment from the date of acquisition.In the first half of 2025, the Company also acquired multiple distributors with sales and service businesses in Europe that are reported in the EMEA segment from the dates of acquisition.The intangible assets associated with these acquisitions totaled $73.9 million and primarily relate to developed technology. The excess of the consideration transferred over the fair value of net identifiable assets acquired was recognized as goodwill and the combined total was $190.0 million. The preliminary valuation of intangible assets was determined using an income approach methodology. The fair value of the developed technology intangible assets was determined using the multi-period excess earnings method based on discounted projected net cash flows associated with the net earnings attributable to the acquired identifiable assets. Key assumptions used in estimating future cash flows included revenue growth rates and margins, royalty rates, and discount rates attributable to the intangible asset. Fiscal Year 2024During the third quarter of 2024, the Company acquired two businesses, both reported within the Americas segment from the date of acquisition. One acquisition was a Commercial HVAC distributor with sales and service business in the United States. The second acquisition was a technology-focused acquisition that expands the Company's product offerings in the Transport refrigeration business. The aggregate cash paid, net of cash acquired, totaled $174.5 million and was financed through cash on hand. Intangible assets associated with these acquisitions totaled $51.6 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 $96.3 million. We expect the majority of the goodwill recognized for these acquisitions to be deductible for tax purposes. The values assigned to individual assets acquired and liabilities assumed are preliminary based on management's current best estimate and subject to change as certain matters are finalized.

CYBERSECURITYWe maintain a cybersecurity 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;•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; •Maintain an operational technology (OT) security program to address cyber risks that are inherent and unique to our industry and manufacturing environment; •Maintain a centralized product security program that unifies company-wide strategy to ensure our customer-facing products and services are secure by design; 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.

EQUITYThe 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 no Euro-denominated ordinary shares or preference shares outstanding at December 31, 2025 or 2024.The changes in ordinary shares issued and ordinary shares held in treasury for the year ended December 31, 2025 were as follows:In millionsOrdinary shares issuedOrdinary shares held in treasuryDecember 31, 2024249.0 24.5 Shares issued under incentive plans0.8 — Repurchase of ordinary shares(3.8)— Cancellation of shares(1.0)(1.0)December 31, 2025245.0 23.5 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 February 2022, the Company's Board of Directors authorized a share repurchase program of up to $3.0 billion of its ordinary shares (2022 Authorization) and in December 2024, the Board of Directors authorized a share repurchase program of up to an additional $5.0 billion of the Company's ordinary shares (2024 Authorization) upon the conclusion of the 2022 Authorization. During the year ended December 31, 2025, the Company repurchased and canceled $1.5 billion of its ordinary shares, which exhausted the 2022 Authorization and left $4.8 billion remaining under the 2024 Authorization. Additionally, during the period after December 31, 2025 through January 30, 2026 the Company repurchased approximately $89 million of its ordinary shares under the 2024 Authorization.Accumulated Other Comprehensive Income (Loss)The changes in Accumulated other comprehensive income (loss) were as follows:In millionsDerivative InstrumentsPension and OPEB ItemsForeign Currency TranslationTotalDecember 31, 2023$3.0 $(198.9)$(474.9)$(670.8)Other comprehensive income (loss) attributable to Trane Technologies plc(4.4)12.1 (201.0)(193.3)December 31, 2024$(1.4)$(186.8)$(675.9)$(864.1)Other comprehensive income (loss) attributable to Trane Technologies plc23.

GOODWILLThe changes in the carrying amount of goodwill are as follows: In millionsAmericasEMEAAsia PacificTotalNet balance as of December 31, 2023$4,675.3 $869.0 $551.0 $6,095.3 Acquisitions (1)102.4 — — 102.4 Measurement period adjustments(2.2)1.8 — (0.4)Currency translation(6.4)(49.2)(13.8)(69.4)Net balance as of December 31, 20244,769.1 821.6 537.2 6,127.9 Acquisitions (1)169.4 22.8 — 192.2 Measurement period adjustments(1.2)(1.8)— (3.0)Currency translation11.8 107.9 20.2 139.9 Net balance as of December 31, 2025$4,949.1 $950.5 $557.4 $6,457.0 (1) Refer to Note 17, "Acquisitions and Divestitures" for more information regarding acquisitions.The net goodwill balances at December 31, 2025, 2024 and 2023 include $2,496.0 million of accumulated impairment, primarily related to the Americas segment. The accumulated impairment relates entirely to a charge recorded in 2008.