[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Trane Technologies reported strong Q2 2025 results with record bookings and revenue, achieving an 18% increase in adjusted EPS to **$3.88** and raising full-year guidance Financial & Operational Highlights Summary | Financial Metric | Q2 2025 | Q2 2024 | Y-O-Y Change | Organic Y-O-Y Change | | :--- | :--- | :--- | :--- | :--- | | Bookings | $5,626M | $5,340M | 5% | 4% | | Net Revenues | $5,746M | $5,307M | 8% | 7% | | GAAP Operating Margin | 20.3% | 19.5% | +80 bps | | | Adjusted Operating Margin | 20.3% | 19.4% | +90 bps | | | GAAP Continuing EPS | $3.87 | $3.33 | 16% | | | Adjusted Continuing EPS | $3.88 | $3.30 | 18% | | - Record enterprise bookings reached **$5.6 billion**, up **5%** (**4%** organically), and the enterprise backlog grew to **$7.1 billion**, up **6%** from year-end 2024[6](index=6&type=chunk) - Performance was led by Americas Commercial HVAC, with orders for bespoke applied solutions up **over 60%**, enhancing visibility for future revenues[5](index=5&type=chunk) [Segment Performance Review](index=2&type=section&id=Segment%20Performance%20Review) This section reviews segment performance, highlighting strong growth in Americas, modest organic growth with margin contraction in EMEA, and declines in Asia Pacific [Americas Segment](index=2&type=section&id=Americas%20Segment) The Americas segment delivered strong performance with **9%** revenue growth and a **130 basis point** expansion in adjusted operating margin, driven by robust Commercial HVAC demand Americas Segment Performance | Americas Segment | Q2 2025 | Q2 2024 | Y-O-Y Change | Organic Change | | :--- | :--- | :--- | :--- | :--- | | Bookings | $4,543.5M | $4,221.9M | 8% | 7% | | Net Revenues | $4,692.3M | $4,290.9M | 9% | 9% | | GAAP Operating Margin | 22.4% | 21.3% | +110 bps | | | Adjusted Operating Margin | 22.4% | 21.1% | +130 bps | | - Bookings strength was led by Americas Commercial HVAC, which was up **over 20%**[11](index=11&type=chunk) - Margin expansion was driven by strong volume growth, positive price realization, and productivity, which more than offset inflation and business reinvestment[11](index=11&type=chunk) [Europe, Middle East and Africa (EMEA) Segment](index=3&type=section&id=Europe%2C%20Middle%20East%20and%20Africa%20%28EMEA%29%20Segment) The EMEA segment saw reported revenue growth of **10%** (3% organic), but organic bookings declined by **2%**, and adjusted operating margin contracted by **150 basis points** due to reinvestment and inflation EMEA Segment Performance | EMEA Segment | Q2 2025 | Q2 2024 | Y-O-Y Change | Organic Change | | :--- | :--- | :--- | :--- | :--- | | Bookings | $704.7M | $669.4M | 5% | -2% | | Net Revenues | $707.9M | $645.3M | 10% | 3% | | GAAP Operating Margin | 17.3% | 18.7% | -140 bps | | | Adjusted Operating Margin | 17.3% | 18.8% | -150 bps | | - Margin pressure resulted from high levels of business reinvestment and inflation, which offset volume growth and productivity gains[16](index=16&type=chunk) [Asia Pacific Segment](index=3&type=section&id=Asia%20Pacific%20Segment) The Asia Pacific segment experienced challenges with organic bookings and revenues declining by **17%** and **8%**, respectively, leading to a **250 basis point** drop in adjusted operating margin Asia Pacific Segment Performance | Asia Pacific Segment | Q2 2025 | Q2 2024 | Y-O-Y Change | Organic Change | | :--- | :--- | :--- | :--- | :--- | | Bookings | $377.7M | $448.8M | -16% | -17% | | Net Revenues | $346.2M | $371.2M | -7% | -8% | | GAAP Operating Margin | 21.3% | 24.1% | -280 bps | | | Adjusted Operating Margin | 21.6% | 24.1% | -250 bps | | - The decline in margins was attributed to continued high levels of business reinvestment, lower volumes, and inflation that offset productivity efforts[17](index=17&type=chunk) [Financial Position and Cash Flow](index=4&type=section&id=Financial%20Position%20and%20Cash%20Flow) The company generated **$841 million** in year-to-date free cash flow, maintaining a solid balance sheet with **$774 million** cash and **$4.6 billion** total debt, while deploying approximately **$1.8 billion** in capital Financial Position and Cash Flow Summary | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash From Continuing Operating Activities Y-T-D | $1,044M | $959M | | Free Cash Flow Y-T-D | $841M | $810M | | Cash Balance | $774M | $1,326M | | Debt Balance | $4,615M | $5,268M | - Year-to-date through July, the company deployed or committed approximately **$1.8 billion** of capital[24](index=24&type=chunk) - Capital deployment included **~$420 million** for dividends, **$275 million** for M&A, **$1 billion** for share repurchases, and **$150 million** for debt retirement[24](index=24&type=chunk) [Full-Year 2025 Guidance](index=4&type=section&id=Company%20Raises%20Full-Year%202025%20Guidance) Trane Technologies raised its full-year 2025 guidance, now expecting approximately **9%** reported revenue growth and adjusted continuing EPS of approximately **$13.05** - Full-year 2025 reported revenue growth is now expected to be approximately **9%**, with organic revenue growth of approximately **8%**[24](index=24&type=chunk) - The company expects full-year 2025 GAAP continuing EPS of approximately **$13.30** and adjusted continuing EPS of approximately **$13.05**[24](index=24&type=chunk) [Financial Statements and Reconciliations](index=7&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents detailed unaudited financial statements for Q2 and H1 2025, including income statement, balance sheet, and cash flow, along with GAAP to non-GAAP reconciliations [Condensed Consolidated Income Statement](index=7&type=section&id=Condensed%20Consolidated%20Income%20Statement) For Q2 2025, Net Revenues reached **$5,746.4 million**, Operating Income increased to **$1,164.2 million**, and Diluted EPS from continuing operations rose to **$3.87** Condensed Consolidated Income Statement (Q2) | Income Statement (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | Net revenues | $5,746.4M | $5,307.4M | | Operating income | $1,164.2M | $1,034.2M | | Earnings from continuing operations | $876.0M | $766.8M | | Diluted EPS (Continuing ops) | $3.87 | $3.33 | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section details adjustments from GAAP to non-GAAP measures, showing pre-tax adjustments of **$2.0 million** for Q2 2025 and **$(7.1) million** for Q2 2024 - For Q2 2025, GAAP operating income of **$1,164.2 million** was adjusted by **$2.0 million** (for restructuring and M&A costs) to arrive at an adjusted operating income of **$1,166.2 million**[47](index=47&type=chunk) - For Q2 2024, GAAP operating income of **$1,034.2 million** was adjusted by **$(7.1) million** to arrive at an adjusted operating income of **$1,027.1 million**[50](index=50&type=chunk) [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$20.99 billion**, total equity **$7.86 billion**, cash **$774.2 million**, and total debt **$4.615 billion** Condensed Consolidated Balance Sheets | Balance Sheet | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $7,506.2M | $7,337.8M | | Total assets | $20,990.5M | $20,146.7M | | Total current liabilities | $6,799.3M | $6,068.9M | | Total equity | $7,855.2M | $7,486.9M | [Condensed Consolidated Statement of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from continuing operating activities was **$1.04 billion**, with significant cash usage in investing and financing activities Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Cash Flow (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from continuing operating activities | $1,043.5M | $958.6M | | Net cash used in investing activities | ($486.0M) | ($626.6M) | | Net cash used in financing activities | ($1,480.9M) | ($504.3M) | | Net decrease in cash | ($815.9M) | ($220.7M) | [Balance Sheet Metrics and Free Cash Flow](index=14&type=section&id=Balance%20Sheet%20Metrics%20and%20Free%20Cash%20Flow) For the six months ended June 30, 2025, free cash flow increased to **$841.4 million**, with key working capital metrics remaining relatively stable year-over-year Free Cash Flow (Six Months Ended June 30) | Free Cash Flow (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flow from continuing operating activities | $1,043.5M | $958.6M | | Capital expenditures | ($208.8M) | ($156.7M) | | Other adjustments | $6.7M | $8.2M | | **Free cash flow** | **$841.4M** | **$810.1M** |

Core Insights - Trane Technologies plc (TT) is expected to report second-quarter 2025 earnings on July 30, with an earnings estimate of $12.92 per share, reflecting a 15.2% year-over-year growth, and revenues estimated at $21.57 billion, indicating an 8.7% increase from the previous year [1][9] Earnings Performance - TT has a strong earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.4% [2] Q2 Expectations - Robust demand for innovative products and services in the Americas Commercial HVAC segment is anticipated to positively impact revenues, with Americas revenues expected to increase by 10.1% year-over-year to $4.7 billion, while EMEA revenues are projected to grow by 5% to $677.5 million [3][9] - Bottom-line growth is likely supported by improved operational efficiency [3] Earnings Prediction Model - The Zacks model predicts an earnings beat for Trane Technologies this reporting cycle, with an Earnings ESP of +0.54% and a Zacks Rank of 3, indicating a favorable outlook for earnings performance [4][9]

Company Performance - Trane Technologies (TT) closed at $442.48, reflecting a -1.08% change from the previous day, underperforming the S&P 500's gain of 0.14% [1] - The stock has increased by 6.58% over the past month, which is lower than the Construction sector's gain of 8.47% and higher than the S&P 500's gain of 5.35% [1] Upcoming Earnings - The earnings report for Trane Technologies is anticipated on July 30, 2025, with projected earnings of $3.76 per share, indicating a year-over-year growth of 13.94% [2] - Revenue is expected to reach $5.76 billion, reflecting an 8.56% increase compared to the same quarter last year [2] Full Year Estimates - For the full year, earnings are projected at $12.92 per share and revenue at $21.57 billion, showing increases of +15.15% and +8.71% respectively from the previous year [3] - Recent adjustments to analyst estimates suggest a positive outlook for the company's business and profitability [3] Valuation Metrics - Trane Technologies has a Forward P/E ratio of 34.62, which is higher than the industry average Forward P/E of 31 [6] - The company has a PEG ratio of 2.91, compared to the industry average PEG ratio of 2.11 [6] Industry Context - The Building Products - Air Conditioner and Heating industry, part of the Construction sector, currently holds a Zacks Industry Rank of 177, placing it in the bottom 29% of all industries [7] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, indicating that higher-ranked industries tend to outperform lower-ranked ones [7]

Company Performance - Trane Technologies (TT) closed at $437.41, reflecting a +1.18% increase from the previous day, outperforming the S&P 500's daily gain of 0.52% [1] - Over the last month, TT's shares increased by 0.47%, lagging behind the Construction sector's gain of 1.98% and the S&P 500's gain of 4.27% [1] Upcoming Financial Results - Trane Technologies is expected to report an EPS of $3.76, which represents a 13.94% increase from the prior-year quarter [2] - The consensus estimate for revenue is $5.76 billion, indicating an 8.49% increase compared to the year-ago quarter [2] Full-Year Estimates - The Zacks Consensus Estimates for TT's full-year earnings are $12.89 per share and revenue of $21.51 billion, reflecting year-over-year changes of +14.88% and +8.41%, respectively [3] - Recent changes to analyst estimates suggest a positive outlook for the company's near-term business trends [3] Valuation Metrics - Trane Technologies is currently trading at a Forward P/E ratio of 33.55, which is a premium compared to the industry average Forward P/E of 30.74 [6] - The company has a PEG ratio of 2.84, higher than the industry average PEG ratio of 2.09 [6] Industry Context - The Building Products - Air Conditioner and Heating industry, which includes Trane Technologies, has a Zacks Industry Rank of 192, placing it in the bottom 22% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Market Overview - The United States HVAC Equipment Market is projected to grow from USD 22.44 billion in 2024 to USD 41.22 billion by 2033, with a compound annual growth rate (CAGR) of 6.99% from 2025 to 2033 [1][20]. Growth Drivers - The demand for smart and energy-efficient HVAC systems is increasing due to urbanization, population growth, and climate change, making climate control systems essential in both residential and commercial sectors [2][4]. - Technological advancements such as automation, eco-friendly refrigerants, and IoT integration are driving innovation in the HVAC market, with major companies investing in high-performance systems [3][4]. - The focus on health and air quality, especially post-pandemic, is boosting the HVAC sector as air filtration systems become standard in building designs [4][10]. - The U.S. government's initiatives to enhance energy efficiency through building rehabilitation programs are reducing energy costs and greenhouse gas emissions, further supporting market growth [5][6]. Market Trends - The rise in consumer awareness regarding sustainability and energy efficiency is propelling the adoption of smart home technologies, which is expected to sustain market growth [7][8]. - The increasing emphasis on indoor air quality has led to a surge in demand for HVAC systems with advanced filtration and purification capabilities [10][11]. - Rapid urbanization and construction growth are driving the need for reliable and energy-efficient HVAC systems in metropolitan areas [12][13]. Challenges - The HVAC market faces intense competition, with established players and new entrants vying for market share, necessitating continuous innovation and investment in R&D [15][16]. - A significant shortage of skilled labor in the HVAC sector is impacting installation and maintenance services, potentially leading to project delays and increased costs [17][18]. Key Players - Major companies in the HVAC market include Carrier, Trane, Lennox, Rheem, and Mitsubishi Electric, which are focusing on developing energy-efficient and sustainable solutions [3][22].

Group 1 - Trane Technologies closed at $426.61, with a +1.24% increase, outperforming the S&P 500's gain of 0.94% [1] - The company had previously experienced a loss of 1.79%, which was less than the Construction sector's loss of 2.43% [1] Group 2 - The upcoming EPS for Trane Technologies is projected at $3.76, indicating a 13.94% increase year-over-year, with quarterly revenue expected to be $5.76 billion, up 8.49% from the previous year [2] - For the fiscal year, earnings are projected at $12.89 per share and revenue at $21.51 billion, reflecting increases of +14.88% and +8.41% respectively [3] Group 3 - Recent analyst estimate revisions for Trane Technologies suggest positive short-term business trends, which are correlated with near-term share price momentum [3][4] - The Zacks Rank system, which assesses estimate changes, currently ranks Trane Technologies at 3 (Hold) [5] Group 4 - Trane Technologies has a Forward P/E ratio of 32.71, which is higher than the industry average of 30.42 [6] - The company's PEG ratio stands at 2.77, compared to the industry average PEG ratio of 2 [7] Group 5 - The Building Products - Air Conditioner and Heating industry, which includes Trane Technologies, has a Zacks Industry Rank of 95, placing it in the top 39% of over 250 industries [8]

Financial Performance & Guidance - Trane Technologies reported strong Q1 2025 performance with organic revenue up 11%[53], adjusted EBITDA margins up 130 basis points[53], and adjusted EPS up 26%[53] - The company expects organic revenue growth of 7%-8%[52] and adjusted EPS of $12.70-$12.90 for FY 2025[52], performing towards the higher end of the guidance - Q1 2025 bookings reached $5.3 billion, a 4% increase[54], resulting in a book-to-bill ratio of 113%[52] and a backlog of $7.3 billion, up approximately $500 million from year-end 2024[52] - The company anticipates capital deployment of approximately $2.5 billion to $3.0 billion in 2025[75], including ~$0.8B in dividends[76] and ~$1.5B to ~$2.0B in share repurchases[76] Segment Results - Americas segment revenue increased by 13%[62], with adjusted EBITDA up 170 basis points[62] - EMEA segment revenue increased by 6%[62], but adjusted EBITDA decreased by 190 basis points[62] due to higher business reinvestment - Asia Pacific segment revenue decreased by 3%[62], but adjusted EBITDA increased by 90 basis points[62] Market Outlook - The company expects the commercial HVAC market to remain strong, particularly in services, data centers, education, and healthcare[63] - The residential HVAC market is expected to follow a GDP+ market framework, with tailwinds from low GWP mix[64] - The transport market is expected to rebound in 2026, with ACT forecasting over 20% trailer growth in 2026-2027[67] Sustainability - Trane Technologies aims to reduce customer carbon footprint by 1 gigaton of CO2e by 2030[16] - The company is committed to achieving carbon neutral operations and zero waste to landfill[86] - Sustainability is integrated into the company's business model, driving innovation and creating value for shareholders, customers, and employees[23]

Core Viewpoint - Trane Technologies (TT) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance Indicators - Trane Technologies is projected to earn $12.88 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 14.8% [8]. - Over the past three months, the Zacks Consensus Estimate for Trane Technologies has risen by 0.5%, indicating a positive trend in earnings expectations [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Only the top 20% of Zacks-covered stocks receive a 'Strong Buy' or 'Buy' rating, highlighting their superior earnings estimate revision characteristics [9][10].

Summary of Trane Technologies (TT) FY Conference Call - May 21, 2025 Company Overview - **Company**: Trane Technologies (TT) - **Industry**: Commercial HVAC and related technologies Key Financial Performance - **Revenue Growth**: Reported a 12% CAGR over the last four years [4] - **EPS Growth**: Achieved over 20% EPS growth each year for the past four years [5] - **Free Cash Flow**: Average of 108% free cash flow as a percentage of net income over the last four years [5] - **2025 Guidance**: Expected revenue growth of 78% and EPS between $12.70 to $12.90, with a strong outlook for free cash flow [5] Business Segments and Market Trends - **Americas Focus**: The Americas is the largest and most important region for Trane, with a strong emphasis on customer service and innovation [8][9] - **Commercial HVAC Growth**: Significant growth in the commercial HVAC sector, with applied business growth of 200% over the last four years [10] - **Product Innovation**: Launched 190 new products last year, indicating a strong innovation pipeline [10] - **Residential Market**: Experienced high teens growth in the first quarter, but expects mid-single digits for the total year due to market conditions [14][16] - **Tariff Impact**: Estimated unmitigated impact from tariffs at $250 to $275 million, with recent changes potentially reducing this amount [21][22] Competitive Advantages - **Manufacturing Strategy**: 95% of products sold in the U.S. are manufactured domestically, providing a competitive edge over competitors reliant on imports [25][32] - **Supply Chain Resilience**: Focus on regional manufacturing and a robust supply chain strategy to mitigate tariff impacts and ensure operational flexibility [23][24] Market Dynamics - **Transport Market**: Anticipated decline of 20% in the transport market, with expectations of recovery in 2026 and 2027 [39][40] - **Applied Systems**: Strong growth in applied systems, with a healthy pipeline and a focus on diverse verticals [46][48] - **K-12 Education**: Stable environment in K-12 education, with ongoing opportunities despite reduced funding from ESSER [52][54] Technology and Future Outlook - **Brainbox AI Acquisition**: Acquisition of Brainbox AI enhances building automation capabilities, expected to save customers up to 25% on energy costs [80][81] - **Cloud-Based Solutions**: Introduction of cloud-based building management systems to improve operational efficiency [82] - **Long-Term Growth**: Confidence in continued growth across various verticals, with a focus on innovation and customer service [46][60] Additional Insights - **Market Divergence**: Notable divergence in market performance across different sectors, with some experiencing growth while others face challenges [13] - **Data Center Growth**: Data centers remain a strong vertical, with normalized order rates providing better visibility for future growth [61] This summary encapsulates the key points discussed during the Trane Technologies FY Conference Call, highlighting the company's financial performance, market dynamics, competitive advantages, and future growth strategies.

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Trane Technologies (TT) - Trane Technologies currently holds a Momentum Style Score of B, indicating a positive momentum outlook [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - Over the past week, TT shares have increased by 14.83%, outperforming the Zacks Building Products - Air Conditioner and Heating industry, which rose by 7.6% [5] - In a longer timeframe, TT's monthly price change is 18.8%, compared to the industry's 9.38% [5] - Over the last quarter, TT shares have risen by 12.6%, and over the past year, they have increased by 24.31%, while the S&P 500 has seen declines of -6.34% and a modest increase of 9.94%, respectively [6] Trading Volume - The average 20-day trading volume for TT is 1,585,443 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, 5 earnings estimates for TT have been revised upwards, while only 1 has been revised downwards, leading to an increase in the consensus estimate from $12.81 to $12.88 [9] - For the next fiscal year, 7 estimates have moved upwards with no downward revisions, indicating a positive earnings outlook [9] Conclusion - Considering the positive momentum indicators and earnings revisions, TT is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [11]