Core Insights - Trane Technologies reported strong financial results for Q4 and full-year 2025, with significant growth in earnings per share and revenues, alongside a record backlog [1][2][3] Financial Performance - Q4 2025 GAAP continuing EPS was $2.74, with adjusted continuing EPS at $2.86, reflecting a 10% increase year-over-year [1] - Full-year 2025 GAAP continuing EPS reached $13.14, while adjusted continuing EPS was $13.06, marking a 16% increase compared to 2024 [2] - Total revenues for Q4 2025 were $5.1 billion, up 6% from Q4 2024, with organic revenues increasing by 4% [1][2] - For the full year, reported revenues were $21.3 billion, a 7% increase, with organic revenues up 6% [2][3] Bookings and Backlog - The company achieved a record backlog of $7.8 billion, up 15% from year-end 2024, with significant contributions from the Americas Commercial HVAC segment, which saw a 25% increase [1][2] - Organic bookings for Q4 2025 were up 22%, driven by a 35% increase in the Americas Commercial HVAC segment [1][2] Segment Performance - In the Americas segment, bookings increased by 27% year-over-year, with net revenues up 6% [2][3] - The EMEA segment reported a 12% increase in revenues, with bookings up 19% [2][3] - The Asia Pacific segment experienced a 5% decline in revenues, but bookings were up 2% [2][3] Cash Flow and Balance Sheet - The company reported strong free cash flow conversion of 98% for the year, with free cash flow amounting to $2.9 billion [2][3] - Cash from continuing operating activities for 2025 was $3.2 billion, an increase from $3.18 billion in 2024 [2][3] Future Outlook - For full-year 2026, Trane Technologies expects GAAP and adjusted continuing EPS to be in the range of $14.65 to $14.85, with reported revenue growth projected at approximately 8.5% to 9.5% [2][3]

Financial Performance - Fourth-quarter 2025 diluted EPS from continuing operations was $2.74, with adjusted continuing EPS at $2.86, reflecting a 10% increase year-over-year [2]. - The company reported net revenues of $5.14 billion for the fourth quarter, a 6% increase compared to the same period in 2024, with organic revenues up 4% [4]. - Full-year 2025 reported revenues were $21.32 billion, up 7%, with organic revenues increasing by 6% [19]. - For the quarter ended December 31, 2025, net revenues were $5,144.5 million, with an operating income of $819.0 million, resulting in an operating margin of 15.9% [49]. - For the year ended December 31, 2025, net revenues totaled $21,321.9 million, with an operating income of $3,967.4 million, leading to an operating margin of 18.6% [49]. - The company reported net earnings attributable to Trane Technologies plc of $591.3 million for Q4 2025, down from $604.3 million in Q4 2024 [63]. - For the full year 2025, net earnings attributable to Trane Technologies plc were $2,918.6 million, an increase from $2,567.9 million in 2024 [66]. - Adjusted EBITDA for the full year 2025 was $4,276.0 million, compared to $3,846.3 million in 2024, indicating a strong year-over-year performance [66]. Bookings and Backlog - Total bookings for the fourth quarter reached $5.76 billion, up 24% year-over-year, with organic bookings increasing by 22% [3]. - Full-year 2025 bookings totaled $22.65 billion, representing a 12% increase, with a record backlog of $7.8 billion, up 15% from year-end 2024 [19]. - The Americas Commercial HVAC segment saw bookings increase by more than 35%, contributing significantly to the overall growth in bookings [10]. Margins and Operating Income - The GAAP operating margin for the fourth quarter was 15.9%, down 70 basis points from the previous year, while the adjusted operating margin remained flat at 16.3% [3]. - The company achieved a GAAP operating margin of 18.6% for the full year, an increase of 100 basis points, and an adjusted EBITDA margin of 20.1%, up 70 basis points [19]. - Adjusted operating income for Q4 2025 was $819.0 million, compared to $807.6 million in Q4 2024, reflecting a slight increase [46]. - Total Company operating income for 2025 was $3,967.4 million, with a margin of 18.6%, compared to $3,500.1 million and 17.6% in 2024 [58]. Cash Flow and Capital Expenditures - Free cash flow for full-year 2025 was $2.89 billion, equating to 98% of adjusted net earnings [21]. - Free cash flow for 2025 was $2,887.3 million, compared to $2,789.0 million in 2024, reflecting a growth of 3.5% [74]. - Net cash provided by operating activities was $3,194.5 million in 2025, an increase from $3,145.6 million in 2024, showing a rise of 1.6% [71]. - Capital expenditures increased to $383.0 million in 2025 from $370.6 million in 2024, a rise of 3.5% [74]. Assets and Equity - Total assets increased to $21,420.7 million in 2025 from $20,146.7 million in 2024, representing a growth of 6.3% [69]. - Total equity grew to $8,600.9 million in 2025, up from $7,486.9 million in 2024, indicating an increase of 14.9% [69]. Debt and Efficiency - The company’s long-term debt decreased to $3,922.1 million in 2025 from $4,318.1 million in 2024, a reduction of 9.2% [69]. - The company’s free cash flow conversion rate was 98% in 2025, down from 109% in 2024, indicating a decrease in efficiency [74]. - Days Sales Outstanding improved slightly to 57.4 days in 2025 from 57.9 days in 2024, indicating better receivables management [74]. Future Outlook - For full-year 2026, the company expects reported revenue growth of approximately 8.5% to 9.5% and GAAP and adjusted continuing EPS of $14.65 to $14.85 [22]. - Future performance will be assessed using both GAAP and non-GAAP financial measures to provide a comprehensive view of financial health [41]. Strategic Focus - Trane Technologies aims to enhance its market position through strategic brands and environmentally responsible products [27]. - The company is focused on organic revenue growth, which excludes the impact of currency and acquisitions [38].

Core Insights - Trane Technologies plc (TT) is expected to report fourth-quarter 2025 earnings on January 29, with an estimated earnings per share of $2.82, reflecting an 8.05% year-over-year increase, and revenues projected at $5.08 billion, indicating a 4.2% rise from the previous year [1]. Group 1: Earnings Expectations - The earnings surprise history for TT has been positive, with the company beating earnings estimates in the last four quarters, averaging a 4.9% surprise [2]. - The robust demand for innovative products and services in the Americas Commercial HVAC segment is anticipated to enhance the company's revenue for the December-end quarter of 2025, with revenues from the Americas estimated at $3.98 billion, a 4.7% increase year-over-year [3]. Group 2: Growth Drivers - The collaboration with AWS–Amazon and the acquisition of Stellar Energy Digital are expected to contribute to revenue growth and margin quality by expanding high-margin digital services and scaling AI-driven energy efficiency solutions [4]. Group 3: Earnings Prediction Model - The earnings prediction model indicates a potential earnings beat for Trane Technologies, with an Earnings ESP of +0.54 and a Zacks Rank of 3 (Hold), suggesting moderate confidence in the earnings outcome [5].

Core Insights - Trane Technologies (TT) is expected to report quarterly earnings of $2.82 per share, reflecting an 8.1% increase year-over-year, with revenues projected at $5.08 billion, a 4.2% increase from the previous year [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 1.4% in the last 30 days, indicating a reassessment by analysts [2] - Revisions to earnings projections are crucial for predicting investor behavior and stock price performance [3] Revenue Projections - Analysts project 'Net Revenues- Americas' to reach $3.98 billion, marking a 4.7% increase year-over-year [5] - 'Net Revenues- EMEA' is expected to be $747.10 million, reflecting an 8.2% increase from the prior year [5] - 'Net Revenues- Asia Pacific' is forecasted at $362.67 million, indicating a 4.9% decrease year-over-year [5] Bookings and EBITDA Estimates - 'Total Bookings' are anticipated to be $4.98 billion, compared to $4.66 billion in the same quarter last year [6] - The consensus estimate for 'Adjusted EBITDA- Americas' is $789.68 million, up from $741.40 million year-over-year [6] - 'Adjusted EBITDA- EMEA' is projected at $133.88 million, an increase from $130.40 million in the previous year [6] - 'Adjusted EBITDA- Asia Pacific' is expected to be $91.63 million, down from $100.90 million year-over-year [7] Stock Performance - Trane Technologies shares have decreased by 1.6% over the past month, while the Zacks S&P 500 composite has increased by 0.2% [7] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [7]

Core Viewpoint - Trane, a strategic brand under Trane Technologies, has launched the DCDA series cooling liquid distribution units (CDUs) specifically designed for data centers in the Asia-Pacific region, addressing the challenges of heat dissipation in high-density computing environments [1][3]. Group 1: Product Features - The DCDA series is the first self-developed liquid cooling product by Trane tailored for the Asia-Pacific market, offering high system flexibility, excellent energy efficiency, and strong integration capabilities [1][3]. - The product features a compact design that matches server cabinets, supporting both "In-Row" and "In-Room" layouts, which can save up to 20% of data center floor space [3][4]. - It includes a modular platform design that allows for various sensor options to monitor and adjust the cooling liquid's status, ensuring optimal performance [4]. Group 2: Performance and Efficiency - The DCDA series offers three models with cooling capacities of 400kW, 800kW, and 1350kW, with customization options extending up to 1700kW, catering to the needs of large data centers [6]. - The system can achieve a Power Usage Effectiveness (PUE) as low as 1.1, significantly reducing overall energy consumption and providing substantial operational cost savings [6][5]. Group 3: Market Position and Recognition - The launch of the DCDA series marks a significant milestone in Trane's strategy to penetrate the high-growth data center market in the Asia-Pacific region [3][7]. - The product has already received widespread market attention and secured initial orders in China, with deliveries expected in the first quarter of 2026, indicating strong market recognition of Trane's liquid cooling technology [7].

Core Insights - Fenimore Asset Management's Q4 2025 investor letter indicates a solid yet volatile stock market, influenced by AI enthusiasm, economic uncertainty, and monetary policy concerns [1] - The firm anticipates mixed market conditions in 2026, with many AI-related stocks appearing expensive while high-quality companies are trading at multi-year lows, presenting potential investment opportunities [1] Performance Summary - The S&P 500 Index rose by 2.66% in Q4 2025, with large-cap technology and communication services sectors leading the market [1] - Fenimore Small Cap Strategy returned -4.12%, underperforming the Russell 2000 Index, which returned 2.19% [1] - Fenimore Dividend Focus Strategy declined by -4.41% compared to the Russell Midcap Index's 0.16% return [1] - Fenimore Value Strategy saw a decline of -1.17% in Q4, also underperforming against the Russell Midcap Index [1] Company Focus: Trane Technologies plc - Trane Technologies plc (NYSE:TT) was highlighted as a key performance detractor in the Fenimore Dividend Focus Strategy [2] - As of January 15, 2026, Trane Technologies plc's stock closed at $387.27, with a one-month return of -0.66% and a 52-week loss of 0.49% [2] - The company has a market capitalization of $86.174 billion [2] - Despite challenges in the residential HVAC business due to industry changes, Trane Technologies plc's earnings and backlog remain strong, with AI data center cooling contributing positively [3]

Core Insights - Trane Technologies (TT) has a Growth Score of B, indicating a solid quality and sustainability of its growth [1] - The company's earnings for the fourth quarter of 2025 are projected to increase by 8% year over year, with earnings expected to rise by 16.1% in 2025 and 13.5% in 2026 [1][9] - Revenues are anticipated to grow by 7.1% in 2025 and 7.4% in 2026 [1][9] Market Drivers - The commercial HVAC market primarily drives Trane Technologies' business, supported by favorable government policies in the U.S. and Europe that enhance demand for energy-efficient products and decarbonization efforts [2][9] - The acquisition of Brainbox AI significantly enhances HVAC services, enabling measurable reductions in energy consumption and improvements in sustainability [3][9] Regional Performance - The Collective International HVAC business is performing well, with notable growth in EMEA and Asia, particularly in China [4] - The company's expert workforce in direct sales and service teams provides a competitive edge in capturing growth opportunities across various markets [4] Financial Health - Trane Technologies' current ratio improved to 1.21 in Q3 2025 from 1.1 in Q2 2025, indicating better liquidity due to increased cash reserves [5] - A current ratio above 1 suggests the company can efficiently meet short-term obligations [5] Competitive Landscape - The company faces competition from major players like Honeywell International, Siemens, Carrier, and Daikin Industries, which complicates the balance between growth and profitability [6] - Rising commodity prices, particularly for steel and non-ferrous metals, add to the challenges of maintaining cost efficiency while innovating [6]

Core Viewpoint - Trane Technologies (TT) is positioned well to continue its trend of beating earnings estimates, supported by a solid history of performance and positive earnings expectations [1][5]. Earnings Performance - In the most recent quarter, Trane Technologies reported earnings of $3.88 per share, exceeding the expected $3.80 per share, resulting in a surprise of 2.11% [2]. - For the previous quarter, the company also surpassed expectations, reporting $3.88 per share against a consensus estimate of $3.76 per share, achieving a surprise of 3.19% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Trane Technologies, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating potential for another earnings beat [5][8]. - The current Earnings ESP for Trane Technologies is +0.54%, suggesting that analysts have recently become more optimistic about the company's earnings prospects [8]. Zacks Rank and Success Rate - The stock holds a Zacks Rank of 3 (Hold), which, when combined with a positive Earnings ESP, indicates a high likelihood of beating consensus estimates, with a success rate of nearly 70% for stocks with this combination [6][8].

Group 1 - Melius Research analyst Scott Davis upgraded Trane (TT) to Buy from Hold with a price target of $490, influenced by recent comments from Nvidia (NVDA) regarding future cooling architectures [1] - The analyst believes that the current applied HVAC "supercycle" is driven by factors that extend beyond just data centers, indicating a broader market potential for cooling suppliers [1] - Johnson Controls (JCI) was also upgraded to Buy based on similar reasoning regarding the HVAC market dynamics [1]

Core Viewpoint - Trane Technologies plc will host a conference call to discuss its fourth quarter 2025 financial results on January 29, 2026, at 10 a.m. ET [1] Group 1 - The company will issue its fourth quarter earnings release and earnings presentation prior to the call [1] - Both documents will be available on the Trane Technologies website [1] - A real-time, listen-only webcast of the conference call will be broadcast live over the internet [1]