Trane Technologies delivered exceptional Q4 2025 commercial HVAC bookings, with applied solutions up 120% YoY and a record backlog of $7.8 billion. Management guided to 6-7% organic revenue growth and 12-14% adjusted EPS growth for 2026, expecting residential and transport to recover in H2. The company is confident in the durability of HVAC demand, including data centers, and is actively investing in capacity and acquisitions like Stellar Energy. Q4 organic bookings up 22% enterprise-wide, with Americas commercial HVAC up 35%+ and applied bookings up 120%+.
Trane Technologies delivered exceptional Q4 2025 commercial HVAC bookings, with applied solutions up 120% YoY and a record backlog of $7.8 billion. Management guided to 6-7% organic revenue growth and 12-14% adjusted EPS growth for 2026, expecting residential and transport to recover in H2. The company is confident in the durability of HVAC demand, including data centers, and is actively investing in capacity and acquisitions like Stellar Energy. Q4 organic bookings up 22% enterprise-wide, with Americas commercial HVAC up 35%+ and applied bookings up 120%+.
Management expressed strong confidence in the business, citing record backlog, robust pipelines, and proven strategy, while acknowledging some end-market softness.
Guidance · revenue to 6.5%
Management sees AI and data centers as a strong and expanding demand driver, with record bookings and a robust pipeline, and expects chillers to remain integral in future data center designs.
Guidance · revenue to 6.5%
Management sees AI and data centers as a strong and expanding demand driver, with record bookings and a robust pipeline, and expects chillers to remain integral in future data center designs.
Commercial HVAC bookings grew 35% and applied orders doubled. Management expressed strong confidence in the business, citing record backlog, robust pipelines, and proven strategy, while acknowledging some end-market softness.
Capital expenditure remains light at 1.5-2% of sales and has funded capacity expansions, including a four-fold increase in chiller capacity, with M&A also adding capacity.
Management expressed strong confidence in the business, citing record backlog, robust pipelines, and proven strategy, while acknowledging some end-market softness.
“Applied solutions bookings were up more than 120%, with a record book-to-bill of 200%, marking the second consecutive quarter with applied bookings growth exceeding 100%.”
“We were very, very intentional in the fourth quarter to get the inventory right. And you heard in our prepared remarks, we took a third of the production days out”
“commercial HVAC enters 2026 following a significant investment year and strong 2025 bookings that lifted backlog nearly 40% year over year.”
“I have not seen a reference design or data center of the future that does not include chillers, just to be very clear.”
“Our outlook for the market for 2026 is prudent, flat to modestly lower, with Q1 expected to be the trough. down about 20% given the high teens growth we saw in Q1 2025.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 | $14.65–$14.85 | $14.75 | GUIDED |
| EPS | FY2026 Q1 | $2.50 | $2.50 | GUIDED |
| Free cash flow | FY2026 | 100% | 100% | GUIDED |
| Revenue | FY2026 | 6%–7% | 6.5% | GUIDED |
| Revenue | FY2026 Q1 | 0% | 0% | GUIDED |
| Revenue | FY2026 | 8.5%–9.5% | 9% | GUIDED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q1 | EPS | FY2026 Q2 | $4.20–$4.25 | $4.31 | Met / beat |
Trane aligns with ACT's trailer market forecast for 2026, expecting a trough in H1 and a gradual recovery, which impacts its Americas transport refrigeration segment.
“ACT forecast the trailer market down about 7% in 2026, bottoming in the first half and improving in the back half.”
Thanks, Chris. Please turn to slide number 15. The Americas transport refrigeration market remains dynamic. but the long-term outlook is strong. ACT forecast the trailer market down about 7% in 2026, bottoming in the first half and improving in the back half. ACT also expects a sharp rebound beginning in 2027, including roughly 50% growth and continued expansion to the end of the decade. We expect growth as well, but anticipate a more measured gradual slope to the recovery. We're managing the down cycle effectively, outperforming in markets, and continuing to invest in innovation. So we're well positioned as the market strengthens. Please turn to slide number 16. In closing, I'm incredibly proud of our global team. Their talent has powered our consistent outperformance and leading financial results over the past five years. And we see tremendous opportunities ahead. With our exceptional backlog, strong demand, proven business operating system, and leading innovation, we're confident in our ability to deliver differentiated long-term value and advance a more sustainable world. And now we'd be happy to take your questions. Operator?
Trane is directly involved in designing 'data centers of the future' with NVIDIA/hyperscalers and sees chillers remaining part of the design for 2-4 years out, but is modeling higher innovation in thermal management that may affect service intensity. — This is a direct rebuttal to liquid-cooling disruption fears for chiller OEMs, but implies ongoing thermal system design changes that could impact maintenance/service recurring revenue.
“we're working very closely with many influencers in the data center vertical. So think of hyperscalers, think of chip manufacturers like NVIDIA and others, okay? And we're helping them design data centers of the future”
From Kristin and Dave, maybe you could talk a little more about your positioning in the data center market. I think the stellar acquisition is going to help you a lot. But how is Trane adapting in thermal management as it adapts to maybe a little more liquid cooling? And then obviously there were some comments a few weeks ago from one of your data center partners. So you could opine on their comments, water chillers versus air chillers and so on.
Yeah, well, hey, thanks for the question, Andy. Look, at the end of the day, we've been very strong in the data center vertical for decades, and we're going to be very strong in the future. And the short answer to your question is, is we see chillers in the data center vertical, you know, well into the future. But let me take a step back. Look, we're working very closely with many influencers in the data center vertical. So think of hyperscalers, think of chip manufacturers like NVIDIA and others, okay? And we're helping them design data centers of the future, or you may have heard them referred to as reference designed data centers. And think of these data centers as the data centers that will be built, you know, maybe two to four years out. And when we're sitting with these customers, we're bringing our expertise around the thermal management system to the discussion. And I have not seen a reference design or data center of the future that does not include chillers, just to be very clear. Now, I think that when we talk about some of these future designs, you're going to see a lot of innovation around the thermal management system, specifically around the chiller, that is really exciting. I won't talk about in too much detail here for obvious reasons. This is, I mean, this is fun. I mean, when you sit down in these rooms and our engineers are very detailed on this, but it's just, you get really creative ideas. We have a lot of these new innovations in the pipeline. Some of them are actually still being in the modeling stage because they're so futuristic and thought process. But I want everyone to realize that, you know, train technologies is at the forefront of this innovation. and we're helping our customers think through what's possible. And I'll conclude with we've been very strong in the data center vertical for decades, and we're going to continue to be very, very strong well into the future.
Trane is directly involved in designing 'data centers of the future' with NVIDIA/hyperscalers and sees chillers remaining part of the design for 2-4 years out, but is modeling higher innovation in thermal management that may affect service intensity. — This is a direct rebuttal to liquid-cooling disruption fears for chiller OEMs, but implies ongoing thermal system design changes that could impact maintenance/service recurring revenue.
From Kristin and Dave, maybe you could talk a little more about your positioning in the data center market. I think the stellar acquisition is going to help you a lot. But how is Trane adapting in thermal management as it adapts to maybe a little more liquid cooling? And then obviously there were some comments a few weeks ago from one of your data center partners. So you could opine on their comments, water chillers versus air chillers and so on.
Yeah, well, hey, thanks for the question, Andy. Look, at the end of the day, we've been very strong in the data center vertical for decades, and we're going to be very strong in the future. And the short answer to your question is, is we see chillers in the data center vertical, you know, well into the future. But let me take a step back. Look, we're working very closely with many influencers in the data center vertical. So think of hyperscalers, think of chip manufacturers like NVIDIA and others, okay? And we're helping them design data centers of the future, or you may have heard them referred to as reference designed data centers. And think of these data centers as the data centers that will be built, you know, maybe two to four years out. And when we're sitting with these customers, we're bringing our expertise around the thermal management system to the discussion. And I have not seen a reference design or data center of the future that does not include chillers, just to be very clear. Now, I think that when we talk about some of these future designs, you're going to see a lot of innovation around the thermal management system, specifically around the chiller, that is really exciting. I won't talk about in too much detail here for obvious reasons. This is, I mean, this is fun. I mean, when you sit down in these rooms and our engineers are very detailed on this, but it's just, you get really creative ideas. We have a lot of these new innovations in the pipeline. Some of them are actually still being in the modeling stage because they're so futuristic and thought process. But I want everyone to realize that, you know, train technologies is at the forefront of this innovation. and we're helping our customers think through what's possible. And I'll conclude with we've been very strong in the data center vertical for decades, and we're going to continue to be very, very strong well into the future.
Trane took one-third of its residential factory production days out in Q4 2025 to normalize channel inventory, causing ~60% deleverage in that segment, but management believes inventory is now right-sized. — Suggests the residential HVAC destocking cycle is largely over for Trane but may indicate market-wide pricing/discounting pressure, especially for peers like Carrier that have heavier resi exposure.
That's helpful, thank you. And then just my second question on US Resi HVAC, maybe help us understand the confidence in that leaning out of inventory having largely already happened and any update you could give on, pricing in that market. We keep being fed anecdotes from people every day about discounting. We didn't seem to hear that from an OEM peer yesterday. Just wondered your perspectives on that, please.
Yeah, I'll let Chris talk to the pricing side of it. But on the inventory side, look, we were very, very intentional in the fourth quarter to get the inventory right. And you heard in our prepared remarks, we took a third of the production days out So we knew that was going to cost us on the bottom line as we deleveraged over 60% in that particular business. But we also believe that we have inventory size right as we enter 2026. So 2025 is behind us. We're looking forward and see how the year plays out. And remember, for the full year, we believe that, you know, Resi will be, you know, flat to down up to 5%. We'll see how the year plays out. But we believe that inventory is in the position we want it to be, and we were very, very intentional in getting there. Do you want to talk about pricing?
Trane expects Q1 2026 to be a trough for residential, with market revenue expected down ~20% YoY due to very tough comps (Q1 2025 was up high-teens), while overall company Q1 organic growth is expected flat. — Residential HVAC market participants face a very weak Q1 2026 comp, which could pressure near-term earnings for OEMs until H2 recovery takes hold.
… especially in applied solutions. As noted earlier, our exceptional bookings, record backlog, and rapidly expanding pipeline give us a high level of confidence that 2026 will be another strong year. Based on customer delivery timing and year-over-year comparisons, we expect solid growth in the first half and even stronger growth in the back half. In residential, we believe channel inventory is largely normalized as we enter Q1. Our outlook for the market for 2026 is prudent, flat to modestly lower, with Q1 expected to be the trough. down about 20% given the high teens growth we saw in Q1 2025. We expect the market to return to growth in the second half. In the Americas transport markets, ACTS forecast trailers down about 7% in 2026, and our view is generally aligned. Market indicators are improving, and we expect the sector to turn positive late in 2026 and into 2027. We expect to again outperform the market. In EMEA, commercial HVAC enters 2026 following a significant investment year and strong 2025 bookings that lifted backlog nearly 40% year over year. We expect a softer start with mid-single-digit growth improving to high single-digit growth in the second half as backlog …