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The call presented a strong operational and demand picture: robust bookings (+24%), record backlog ($10.7B), commercial HVAC and applied solutions significantly outperforming, and raised FY guidance for revenue and adjusted EPS. These positives are tempered by regional headwinds (China, Middle East), tariff/inflation pressures, and a weak transport market with near‑term timing volatility. Overall, the company appears well positioned with strong cash generation, active M&A and buyback capacity, and confidence in acceleration into the second half of the year.
Trane raised its 2026 outlook, increasing organic revenue growth guidance to ~7% (high end of prior 6–7%), reported revenue guidance to ~9.5% (including ~2 pts M&A and ~50 bps favorable FX), and boosting adjusted EPS to $14.75–$14.95 (≈13–15% growth, up from $14.65–$14.85); Q2 guidance calls for roughly 5% organic revenue growth and adjusted EPS of $4.20–$4.25 (Dave also cited ~10% Q2 revenue growth based on backlog), with revenues expected to accelerate to low‑teens in H2 and operating leverage moving from high‑teens in Q1 into the mid‑/high‑20s for the year. Management highlighted a record backlog of $10.7B (noted as >30% vs YE‑2025 and cited elsewhere as nearly +70% YoY), Q1 enterprise organic bookings +24%, book‑to‑bill ~150%, Americas Commercial HVAC bookings ~+40% (Applied Solutions >+160%), services (≈1/3 of revenue) growing double digits, transport market expected mid‑single‑digit decline for FY2026 (Q2 down ~mid‑teens), an EMEA Q2 headwind ≈$50M revenue/≈$0.05 EPS, APAC flattish, CapEx raised to ~2–3% of revenue, and capital deployment of $2.8–$3.3B in 2026 including ~$900M dividends (12% increase to $4.20/sh), ~$340M M&A YTD and ~$300M buybacks YTD with ~$4.4B remaining authorization.
Enterprise organic bookings up 24% in Q1; record backlog of $10.7 billion (noted as >30% vs year-end 2025) with management also citing backlog up nearly 70% year-over-year; Q1 book-to-bill approximately 150%, providing strong revenue visibility.
Enterprise organic revenue growth of 3% in Q1 led by services; adjusted EPS grew 7% in the quarter. Company raised 2026 guidance: organic revenue growth to ~7% (up from prior 6%–7% range), reported revenue guidance to ~9.5%, and adjusted EPS guidance to $14.75–$14.95 (~13%–15% growth). CFO expects Q2 adjusted EPS of $4.20–$4.25.
Americas Commercial HVAC bookings ~+40% year-over-year and revenues up high single digits; Applied Solutions bookings up >160% (third consecutive quarter of >100% applied bookings growth). Combined Americas and EMEA backlog rose roughly $2.7 billion vs year-end 2025 (includes ~ $1 billion from Stellar).
Services (≈1/3 of enterprise revenue) grew double digits in Q1 and have delivered a low‑teens compound annual growth rate since 2020, providing stable recurring revenue and supporting enterprise organic leverage in the high teens.
Acquisition of Stellar Energy added modular data-center cooling capability and ~ $1 billion to backlog; management expects ~ $500 million in revenue from Stellar in 2026 (base was ~$350M at acquisition) and is investing to scale it toward a multi‑hundred‑million to $1B business over 2–3 years. LiquidStack acquisition expanded CDUs and advanced technology exposure.
Planned deployment of $2.8B–$3.3B in 2026 including ~ $900M dividends (annualized dividend up 12% to $4.20/share). Year-to-date: ~$340M committed to M&A/strategic investments and ~$300M in share repurchases with ~$4.4B remaining authorization, maintaining a balanced allocation approach.
Operating margins in Americas and Asia improved by ~10 basis points and ~90 basis points, respectively; management cites business operating system driving high-teens enterprise organic leverage and effective conversion of growth into adjusted EPS (+7%). CapEx guidance raised to ~2%–3% of revenue to support growth.
Good morning. Welcome to the Trane Technologies Q1 2026 Earnings Conference Call. My name is Lisa, and I will be your operator for the call. The call will begin in a few moments with the speaker remarks and the Q&A session. [Operator Instructions] I will now turn the call over to Zac Nagle, Vice President of Investor Relations. Please go ahead, sir.
Thanks, operator. Good morning, and thank you for joining us for Trane Technologies First Quarter 2026 Earnings Conference Call. This call is being webcast on our website at tranetechnologies.com where you'll find the accompanying presentation. We are also recording and archiving this call on our website. Please note that statements made today are forward-looking and may differ materially from actual results as detailed in our SEC filings. This presentation also includes non-GAAP measures explained in our news release and presentation appendix. Joining me today are Dave Regnery, Chair and CEO and Chris Kuehn, Executive Vice President and CFO. With that, I'll turn the call over to Dave.
Dave?
Thanks, Zac and everyone, for joining today's call. Please turn to Slide #3. I'll start with a few thoughts on how our purpose-driven strategy continues to fuel strong performance over time. The dynamic global environment and rising demand for power is pushing customers to think differently about energy. With our leading innovation, Trane Technologies is uniquely positioned to win. Our high-efficiency systems and smart controls help customers save energy, lower operating cost and increased resiliency proving that sustainability and performanc...