Financial Data and Key Metrics Changes - Q2 2025 marked record bookings and revenues, with an 18% growth in adjusted EPS and a 90 basis point expansion in adjusted operating margins [8][11] - The backlog increased to $7.1 billion, up 6% compared to year-end 2024, despite a sequential decline of approximately $125 million due to expected reductions in shorter cycle businesses [9][11] - Organic revenues increased by 7%, with adjusted EBITDA margins expanding by 70 basis points [18] Business Line Data and Key Metrics Changes - Americas commercial HVAC organic bookings reached all-time highs, with a 20% increase in Q2, while applied solutions orders surged over 60% [8][12] - The services business represented one-third of enterprise revenues, delivering low teens growth, maintaining a low teens compound annual growth rate since 2020 [10][18] - Residential HVAC revenues fell mid-single digits due to a shortage of refrigerant cylinders, but year-to-date revenues were up 3% [14][56] Market Data and Key Metrics Changes - In EMEA, commercial HVAC bookings were down low single digits against a tough prior year growth comp of 20%, but two-year stack bookings were strong, up high teens [15] - In Asia Pacific, revenue declined by high single digits, primarily due to lower volumes in China, but the region is expected to meet full-year 2025 expectations for flat revenues [20][70] Company Strategy and Development Direction - The company is focused on a purpose-driven strategy addressing energy waste in buildings, aiming for sustainable solutions and long-term shareholder value [6][7] - Strategic investments in channel and M&A integrations are being made to support growth, despite impacting margins in the short term [19] - The company anticipates a strong rebound in the Americas transport refrigeration markets for 2026 and 2027, projecting over 20% growth each year [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising full-year revenue and EPS guidance, citing strong performance in the Americas commercial HVAC business [11][22] - Temporary headwinds in residential HVAC are expected to improve in Q3, with a forecasted revenue impact of approximately $150 million for the second half [20][21] - The company remains committed to a balanced capital allocation strategy, targeting organic leverage of 25% or higher for the year [24][26] Other Important Information - The company has deployed approximately $1.5 billion through its capital allocation strategy year-to-date, including $900 million for share repurchases [27] - The M&A pipeline remains active, with a disciplined approach to enhance long-term returns [27] Q&A Session Summary Question: What is driving the acceleration in commercial HVAC orders? - Management noted broad-based growth across various verticals, including healthcare, government, and data centers, with applied solutions leading the charge [32][34] Question: What is the outlook for service revenue growth? - Management indicated that service revenue growth is expected to continue, driven by applied solutions and connected services, with a compounding effect from past equipment sales [41][45] Question: How is the company addressing the residential HVAC cylinder shortage? - Management confirmed that the issue is largely resolved, with expectations for inventory normalization and a return to GDP-plus growth in the long term [56][58] Question: What are the expectations for the second half of the year regarding organic sales growth? - Guidance for Q3 is approximately 6% organic revenue growth, with expectations for low double digits in commercial HVAC [50][52] Question: How does the company view pricing and demand in the residential market? - Management believes the residential market will return to a GDP-plus growth trajectory, emphasizing that current challenges are temporary and not indicative of structural issues [107][108]

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]