Trane Technologies reported overall solid quarterly performance but with a stark split between its commercial and residential business lines. Commercial HVAC bookings jumped 30% year over year, led by its Americas region, while residential HVAC bookings declined by a similar amount. Still, the net result was a 15% increase in bookings across the enterprise.
Commercial HVAC revenue jumped around 20%. The quarterly revenue and bookings figures were both records, Trane said.
Overall company revenue increased 4% year over year. Trane’s services segment grew by low double digits, while its equipment segment grew by low single digits. Higher commercial volumes and “positive price realization” helped the company offset rising input costs and “continued high levels of business reinvestment,” the company said.
Growth driver
Commercial HVAC accounts for more than 90% of Trane’s order backlog. Along with what it called “exceptional bookings” in the third quarter, the long order book gives Trane “good visibility” into 2026, the company said in its third-quarter investor presentation.
Trane said the majority of its backlog is in its applied systems segment, which have longer replacement cycles and attract more services revenue. Services businesses account for about one-third of total company revenue and have grown by low double digit percentages annually since 2020, it said. Over the next three years, Trane expects applied revenues to increase by more than 125% in the commercial HVAC division.
Trane Technologies Chairman and CEO Dave Regnery said his company is investing heavily in training and technology tools to make technicians more efficient. That’s likely to show up in higher margins for Trane’s service activities over time, he said.
“All of our connected solutions, our training, it all adds up to technicians that are more productive,” he said. “And by the way, our service business is growing at a very nice rate as a result of that.”
Data center upside
Regnery spoke about the upside Trane sees from data center customers, which he described as a multi-year growth opportunity through at least the end of the decade.
He recalled a chance meeting with one of the company’s chiller portfolio managers that stretched far longer than expected as the employee detailed “all the robust demand that they're seeing in the pipeline, the orders we're receiving, the innovation that's going to be coming out” from data centers. The company booked several orders over $100 million in the quarter, he added, while cautioning analysts not to expect similar results every quarter due to the uneven pace of hyperscaler bookings.
Still, “I would tell you that Trane Technologies is doing a great job of capturing more than our fair share of that momentum,” Regnery said.
Late last month, Trane announced that it would develop a thermal management system reference design for gigawatt-scale data centers running on NVIDIA chips. Regnery expanded on the initiative on the company’s third-quarter investor call, saying that Trane and NVIDIA engineers were working together on “solutions that, in some cases, we didn’t think were possible just a very short time period ago.”
Regnery hinted that the work could inform Trane’s solutions for other industries but declined to share specifics. “More to come on that,” he said.
