Trane Technologies plc (TT) FY2025 10-K and Q2 FY2026 10-Q Summary

Business

From the FY2025 Form 10-K (fiscal year ended December 31, 2025), accession 0001628280-26-005731.

Trane Technologies designs, manufactures, sells and services heating, ventilation and air conditioning (HVAC) systems, transport refrigeration and custom refrigeration solutions for buildings, homes and vehicles. It sells under two strategic brands: Trane (commercial and residential HVAC, building controls, energy services) and Thermo King (truck, trailer, container, bus and rail temperature control). Revenue comes from equipment sales and from a large service, parts, controls and rental business built on its global installed base. The company's stated growth strategy is to expand that recurring service and rental revenue.

Segments (2025 net revenues):

• Americas: $17,168.8 million, about 80% of the $21,321.9 million total. Covers commercial HVAC, building controls and energy services, residential heating and cooling, and transport refrigeration in North and Latin America.
• EMEA: $2,802.1 million. HVAC systems and services, energy services and transport refrigeration in Europe, the Middle East and Africa.
• Asia Pacific: $1,351.0 million. Commercial-building HVAC systems, services and solutions, plus transport refrigeration.

Products. The range runs from chillers, air handlers, rooftop units, heat pumps, furnaces and ductless and variable-refrigerant-flow systems to building management systems and AI-enabled controls. It also includes data center HVAC, liquid cooling and facility controls; thermal and battery energy storage; truck, trailer and container refrigeration units (diesel, electric and hybrid); telematics; and service agreements, parts and rental.

How it sells. In the U.S., sales go through company branch sales offices, distributors and dealers. Outside the U.S., they go through subsidiary sales and service companies backed by distributors. About 75% of 2025 net revenues came from inside the U.S., and the company sold in roughly 100 countries. No customer accounted for more than 10% of revenue in 2025, 2024 or 2023.

Backlog and seasonality. Firm backlog was $7,769.4 million at December 31, 2025, up from $6,747.7 million a year earlier:

• Americas: $6,298.6 million
• EMEA: $775.9 million
• Asia Pacific: $694.9 million (down from $839.3 million)

Backlog counts only equipment and contracting/installation obligations. The company expected to ship most of it during 2026. HVAC sales are seasonally highest in the second and third quarters, the northern-hemisphere cooling season.

Operations and inputs.

• Plants and space: manufacturing runs in 38 principal plants, with about 31 million square feet owned or leased.
• People: about 44,000 employees in 62 countries at year-end 2025, more than 16,000 of them outside the U.S.
• Materials: principal commodities are steel, copper and aluminum, mostly bought within the region where products are made.
• R&D: spending was $347.6 million in 2025, focused on energy efficiency, lower-global-warming-potential refrigerants and reduced material content. R&D and sustaining engineering together run at about 2% of revenue.

Corporate profile. The parent is an Irish public limited company, incorporated in 2009 and headquartered in Swords, Co. Dublin. It has operated as a pure-play climate company since its launch as Trane Technologies in March 2020.

Legacy asbestos exposure. In June 2020, two deconsolidated subsidiaries, Aldrich Pump LLC and Murray Boiler LLC, filed for Chapter 11. They hold the legacy asbestos claims of predecessor businesses (pumps, boilers and railroad brake shoes). The aim is to channel current and future claims into a section 524(g) trust. See Risks and Subsequent events for the status.

Risk factors

From the FY2025 Form 10-K, accession 0001628280-26-005731. The Q2 2026 Form 10-Q (accession 0001628280-26-051117) reports no material changes to these risk factors.

• Asbestos / Aldrich and Murray Chapter 11. The outcome, timing and cost are uncertain. The agreement in principle with the futures representative (FCR) contemplates a trust funded with $545.0 million: $540.0 million in cash plus a $5.0 million note. A $270.0 million qualified settlement fund was already funded in March 2022. The committee of current claimants (ACC) is not party to the agreement. It is pursuing claims against the company that challenge the 2020 corporate restructuring and seek substantive consolidation. Under funding agreements, company subsidiaries must cover Aldrich's and Murray's costs and the trust funding to the extent their own assets fall short. The final amount could exceed the agreed figure.
• Trade policy and tariffs. U.S. tariffs and retaliatory measures could raise costs, disrupt supply chains and dampen customer demand. Restrictions can arrive with little notice.
• Commodities and supply chain. The business depends on steel, non-ferrous metals and electronic components, some from sole or limited sources. The company may be unable to pass on inflation. Hedges limit near-term volatility but not long-term price increases.
• Competition and technology. Industry consolidation and non-traditional entrants, including AI-driven disruption, could pressure pricing and share. Growth depends on developing and commercializing new products on time.
• Refrigerant and climate regulation. Rules phasing down high-global-warming-potential refrigerants could force costly redesigns or make existing products obsolete. Inconsistent climate legislation and changing efficiency incentives add uncertainty. Physical climate risks threaten facilities and supply chains.
• Geopolitical conflict. The Russia–Ukraine and Middle East conflicts bring risks of sanctions, energy shortages (particularly in Europe), cyberattacks and supply disruption.
• Cybersecurity. The company's IT systems, its vendors' systems, and connected and AI-enabled control products are exposed to attack. The company and some suppliers have already experienced cyberattacks.
• Acquisitions. Deals carry integration, diligence, key-employee and liability risks. Joint ventures and minority investments carry the risk of partners' interests diverging.
• Capital markets and currency. A ratings downgrade or market disruption could raise funding costs. Translation exposure is concentrated in the euro and the Chinese yuan. In the company's sensitivity analysis, a 10% adverse move would reduce 2025 revenue by about $180 million (euro) and $50 million (yuan).
• Tax and Irish domicile.
• The effective tax rate is exposed to OECD Pillar Two: Ireland enacted the 15% minimum tax effective January 1, 2024, and the company says this has already raised its rate.
• Other exposures are EU State Aid investigations and any law change that disregards the Irish reorganization.
• Irish company law gives shareholders fewer protections than U.S. law, including no direct equivalent of a U.S. class action.
• Some shareholders may be subject to Irish dividend withholding tax at 25%.
• Goodwill. Two reporting units, with combined goodwill of $355.0 million, had estimated fair values not significantly above carrying value at the 2025 test. They are at risk of impairment if conditions worsen.
• Talent, labor and catastrophic events. These include competition for skilled engineering and technical staff, work stoppages under collective bargaining, natural disasters and public-health crises.

Management's discussion, fiscal 2025

From the FY2025 Form 10-K, Item 7, accession 0001628280-26-005731. Bookings and adjusted EPS are from the Q4 2025 earnings release furnished on Form 8-K, accession 0001628280-26-003953.

Results.

• Net revenues rose 7.5% to $21,321.9 million: volume +3.2%, price +3.0% (organic +6.2%), acquisitions +0.8%, currency +0.5%.
• Gross margin widened 50 basis points to 36.2% on productivity and price realization, partly offset by inflation.
• Selling and administrative expense fell to 17.6% of revenue from 18.1%. Non-cash contingent-consideration adjustments reduced it by $61.2 million in 2025 and $25.0 million in 2024. Excluding them, the ratio was 17.8% versus 18.2%.
• Operating income rose 13.4% to $3,967.4 million, an 18.6% margin.
• Earnings from continuing operations were $2,972.7 million, up from $2,614.2 million. The effective tax rate was 19.2%.
• GAAP continuing EPS was $13.14 and adjusted continuing EPS was $13.06, each up 16%.
• Full-year bookings were a record $22.6 billion, up 11% organically.

By segment.

• The EMEA margin decline came mainly from acquisition integration costs, reinvestment and inflation.
• Total Segment Adjusted EBITDA was $4,549.6 million, a 21.3% margin.

Market conditions as the year closed.

• Commercial HVAC was strong in the Americas and EMEA.
• Transport refrigeration was weak, especially in the U.S.
• Residential weakened considerably through 2025 amid the regulatory refrigerant transition and softer consumer demand.
• Asia was mixed.

Cash flow and capital allocation.

• Continuing operating cash flow was $3,220.4 million and free cash flow (non-GAAP) $2,887.3 million. Capital expenditures were $383.0 million, and 2026 capex was planned at about 2.0% of revenue.
• The company repurchased $1,481.3 million of shares, paid $837.3 million in dividends, repaid $157.3 million of debentures and spent $276.0 million (net of cash acquired) on acquisitions.
• The main deal was BrainBox AI, an AI building-management platform acquired January 2, 2025, plus European distributors.
• Including deals expected to close in Q1 2026, about $720 million of capital was committed to acquisitions and equity investments in 2025 and through January 2026.
• At year-end, $4.8 billion remained under the $5.0 billion repurchase authorization approved in December 2024.
• In February 2026 the quarterly dividend was raised 12%, from $0.94 to $1.05.

Balance sheet.

• Cash was $1,763.3 million, $1,653.8 million of it held by non-U.S. subsidiaries.
• Total debt was $4,615.1 million, with maturities running to 2049, and the debt-to-total-capital ratio was 34.9%. No commercial paper was outstanding.
• S&P upgraded the company to A-/A-1 on December 22, 2025. Moody's rates it A3 with a positive outlook.

Current quarter, Q2 2026 (three and six months ended June 30, 2026)

From the Q2 2026 Form 10-Q, accession 0001628280-26-051117. Bookings, backlog, adjusted EPS and guidance are from the Q2 2026 earnings release furnished on Form 8-K, accession 0001628280-26-050743. Earlier guidance is from releases with accessions 0001628280-26-003953 (January 29, 2026) and 0001628280-26-028547 (April 30, 2026).

Demand. Q2 bookings reached a record $7.8 billion ($7,818 million), up 39% reported and 37% organically, for a book-to-bill of 123%. Backlog hit a record $12.1 billion, up 70% year over year and up from $7.8 billion at year-end 2025.

Americas bookings were an all-time high of $6.6 billion, up 44%. Commercial HVAC led, up 50%, with applied equipment bookings up 130%. Asia Pacific bookings rose 33% and EMEA 7%.

Revenue and margins (Q2 2026 vs. Q2 2025).

• Net revenues rose 10.6% to $6,353.5 million: volume +8.7%, price +0.3% (organic +9.0%), acquisitions +1.2%, currency +0.4%.
• Gross margin fell 200 basis points to 35.6%, which the company attributes mainly to inflation and investments, partly offset by productivity and price.
• Selling and administrative expense fell to 16.3% of revenue from 17.3%.
• Operating income rose to $1,224.3 million, but the operating margin narrowed to 19.3% from 20.3%.
• Earnings from continuing operations were $944.9 million versus $876.0 million, with an effective tax rate of 18.8% versus 19.8%.
• GAAP continuing EPS was $4.20 versus $3.87. Adjusted continuing EPS was $4.31, up 11%.

Segments (Q2).

• Americas. Revenue rose 12.3% to $5,271.3 million (organic +10.8%) on higher Commercial HVAC and Residential volumes. Services revenue was $1,706.0 million versus $1,566.5 million. Segment Adjusted EBITDA margin was 23.5% versus 24.0%, with inflation and investment outweighing productivity and pricing.
• EMEA. Revenue fell 1.5% to $697.6 million (organic −3.7%). Transport refrigeration volume was lower, and the company also cites the Middle East conflict; European Commercial HVAC volumes partly offset this. Segment Adjusted EBITDA margin dropped 360 basis points to 14.7%, mainly from acquisition integration costs, inflation and lower volume.
• Asia Pacific. Revenue rose 11.1% to $384.6 million (organic +10.0%) on volume. Margin was 21.8% versus 23.3%, reflecting inflation.

First half.

• Revenue was $11,322.9 million, up 8.5% (organic +6.5%). Operating income was $2,000.4 million versus $1,983.1 million.
• The comparison is affected by a non-cash contingent-consideration credit of $61.2 million that reduced selling and administrative expense in the first half of 2025.
• Other income included a $22.6 million gain on remeasuring a previously held interest in a business whose remaining ownership was acquired in Q1 2026.
• Amortization of acquired backlog intangibles was $21.9 million.
• Continuing operating cash flow was $1,734.6 million, up from $1,043.5 million. The company attributes the increase mainly to lower working capital and the timing of customer down payments. Current contract liabilities rose to $2,179.4 million from $1,374.1 million at year-end. Free cash flow (non-GAAP) was $1,602.7 million versus $841.4 million.

Trends cited by management.

• Commercial HVAC remains strong in the Americas and Europe.
• U.S. residential markets are improving, a reversal from the weakness described for 2025.
• Transport refrigeration demand remains weak.
• China is soft amid weak macro conditions, while the rest of Asia is strong.
• The Middle East conflict and U.S. trade measures are flagged as sources of supply-chain, commodity-cost and demand uncertainty.

Guidance. The full-year 2026 outlook was raised for the second time:

Portfolio moves in the first half of 2026 (Note 15 of the 10-Q).

• Stellar Energy Americas, Inc. (closed February 17, 2026). A provider of turnkey data center cooling solutions, reported in Americas.
• Gross purchase consideration was $553.4 million, excluding $185.4 million of cash acquired, and remains subject to post-closing adjustments.
• The preliminary allocation assigns $315.0 million to intangibles (customer relationships, developed technology, backlog) and $379.2 million to goodwill, which is not tax-deductible.
• When the deal was announced on December 2, 2025 (Form 8-K, accession 0001628280-25-054789), the business was described as making modular cooling plants and coolant distribution units for liquid-cooled data centers. It has two assembly operations in Jacksonville, Florida, and about 700 employees.
• Other acquisitions, $314.8 million combined (including $60.6 million of contingent consideration):
• the remaining interest in LiquidStack, a data center liquid-cooling provider in which the company previously held a minority stake (Americas);
• several Transport refrigeration distributors (Americas and EMEA);
• an exclusive sales channel for Trane products (EMEA).
• Kieback&Peter (Q1 2026). The company bought a 49% interest in this building-automation hardware, software and services provider. It is accounted for as an equity method investment in EMEA. The purchase price for this stake is not separately disclosed.
• Cash spent. Cash paid for acquisitions and equity method investments totaled about $742 million in the half.

Capital and liquidity at June 30, 2026.

• The company repurchased $756.4 million of shares in the half, including about $469 million in Q2 at an average of $465.01 per share, leaving $4.0 billion under the authorization. Dividends paid were $463.2 million.
• The $400.0 million 3.500% notes were repaid at maturity in March 2026. $400.0 million of commercial paper was outstanding at quarter-end.
• On April 23, 2026, a new $1.5 billion revolving credit facility maturing April 2031 replaced the $1.0 billion facility due April 2027 (Form 8-K, accession 0001628280-26-026988). Undrawn revolving capacity is now $2.5 billion.
• Cash was $1,318.3 million and total debt $4,616.8 million. Debt to total capital was 34.8%.
• During the quarter the IRS began examining the company's 2023 U.S. federal return. Unrecognized tax benefits rose to $78.3 million from $62.4 million.

Subsequent events

From the Q2 2026 Form 10-Q, accession 0001628280-26-051117 (filed July 30, 2026).

The Q2 2026 10-Q has no separate subsequent-events note. The post-June 30 developments it discloses are:

• Share repurchases. From July 1 through July 30, 2026, the company repurchased about $172 million of ordinary shares under the $5.0 billion authorization.
• Asbestos litigation. As of July 7, 2026, the Bankruptcy Court stayed the proceedings on the ACC's complaints against the company and related parties over the 2020 corporate restructuring. The stay lasts until the court rules on the first phase of the asbestos-liability estimation hearing, which was scheduled to begin the week of August 10, 2026. The Chapter 11 cases remained pending as of July 30, 2026.
• Upcoming debt put. In October 2026, holders of the puttable debentures may elect to put up to $256.0 million for settlement in November 2026.

The 10-Q discloses no acquisition, divestiture or new debt financing completed after June 30, 2026.

After the 2025 year-end (Note 21 of the FY2025 10-K, accession 0001628280-26-005731). The company reported buying two Transport refrigeration distributors (Americas and EMEA) and a 49% interest in Kieback&Peter. That note does not name the two distributors and discloses no price for any of the three transactions. These closings, along with Stellar Energy and LiquidStack, are covered in the first-half portfolio moves above.