Trane Technologies Plc ((TT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Trane Technologies’ recent earnings call conveyed a generally positive sentiment, driven by strong performance in the commercial HVAC sector and robust growth in services. The company reported increased revenue and EPS guidance, although challenges were noted in the residential HVAC segment due to supply shortages and margin pressures in EMEA and Asia Pacific, particularly influenced by market conditions in China.
Record Bookings and Revenue Growth
Trane Technologies achieved record bookings and revenues in the second quarter of 2025. The company reported a 90 basis point expansion in adjusted operating margins and an impressive 18% growth in adjusted EPS, showcasing its strong financial performance.
Americas Commercial HVAC Performance
The Americas Commercial HVAC segment experienced remarkable growth, with organic bookings reaching all-time highs and orders for Applied Solutions surging by over 60% in the quarter. This highlights the robust demand and strategic positioning of Trane Technologies in the commercial HVAC market.
Robust Services Business Growth
The services business continued its upward trajectory, delivering low teens growth in the quarter. This segment has maintained a low teens compound annual growth rate since 2020, underscoring its importance to the company’s overall revenue stream.
Strong Backlog and Project Pipeline
Trane Technologies’ backlog remains robust at $7.1 billion, reflecting a 6% increase compared to the end of 2024. The commercial HVAC book-to-bill ratio exceeded 100% in all regions, indicating a healthy pipeline of future projects.
Increased Revenue and EPS Guidance
The company raised its full-year revenue guidance to approximately 8% organic growth and adjusted EPS to approximately $13.05, marking a 16% year-over-year increase. This optimistic outlook reflects Trane Technologies’ confidence in its continued growth trajectory.
Residential HVAC Revenue Decline
Despite overall strong performance, the residential HVAC segment faced challenges, with revenues declining due to a near-term industry shortage of R-454B refrigerant cylinders. This resulted in a mid-single-digit decline in the quarter.
EMEA and Asia Pacific Margin Contraction
Trane Technologies experienced margin contraction in EMEA and Asia Pacific, with EMEA’s adjusted EBITDA margin declining by 200 basis points and Asia Pacific’s margin contracting by 220 basis points. These declines were primarily due to lower volumes in China.
Transport Refrigeration Market Challenges
The transport refrigeration market in the Americas faced challenges, with revenues down low single digits and end markets declining by over 30%. This indicates ongoing difficulties in this segment.
Forward-Looking Guidance
Trane Technologies provided a positive forward-looking guidance, with expectations of approximately 8% organic revenue growth and adjusted EPS projected at $13.05, a 16% year-over-year increase. The guidance reflects adjustments for FX impacts, with M&A contributions remaining unchanged at 100 basis points for the year.
In summary, Trane Technologies’ earnings call highlighted a strong overall performance, particularly in the commercial HVAC and services sectors. While challenges persist in the residential HVAC and transport refrigeration markets, the company’s increased revenue and EPS guidance reflect a confident outlook for future growth. Investors and stakeholders can remain optimistic about Trane Technologies’ strategic direction and market positioning.