Trane Technologies plcTT

Trane Technologies plc Leases Disclosure

10-KFiled Feb 5, 20263 min read
LEASES
The Company's lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the Company's leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based on information available at the commencement date.
The following table includes a summary of the Company's lease portfolio and Balance Sheet classification:
In millionsClassificationDecember 31,
2025		December 31,
2024
Assets
Operating lease right-of-use assets (1)
Other noncurrent assets$809.7 $602.6 
Liabilities
Operating lease currentOther current liabilities222.0 173.5 
Operating lease noncurrentOther noncurrent liabilities602.7 441.2 
Weighted average remaining lease term4.9 years5.0 years
Weighted average discount rate4.9 %4.6 %
(1) Prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $15.0 million and $12.1 million at December 31, 2025 and December 31, 2024, respectively.
The Company accounts for each separate lease component of a contract and its associated non-lease component as a single lease component. In addition, the Company utilizes a portfolio approach for the vehicle, information technology and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.
The following table includes lease costs and related cash flow information for the years ended December 31:
In millions20252024
Operating lease expense$244.1 $197.8 
Variable lease expense39.1 35.6 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases241.1 195.4 
Right-of-use assets obtained in exchange for new operating lease liabilities404.6 244.9 
Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred as variable lease expense.
Maturities of lease obligations were as follows:
In millionsDecember 31,
2025
Operating leases:
2026$259.8 
2027213.2 
2028166.7 
2029123.3 
203069.2 
After 2030118.0 
Total lease payments$950.2 
Less: Interest(125.5)
Present value of lease liabilities$824.7 

Historical Timeline

Fiscal YearFiled
2025Feb 5, 2026Showing above
2024Feb 6, 2025
2023Feb 8, 2024
2022Feb 10, 2023
2021Feb 7, 2022
2020Feb 9, 2021
2019Feb 18, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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