Trane Technologies plc

Trane Technologies plc is a global climate innovator that brings sustainable and efficient solutions to buildings, homes and transportation through its strategic brands, Trane and Thermo King, and its environmentally responsible portfolio of products, services and connected intelligent controls. The company generates revenue and cash primarily through the design, manufacture, sales and service of solutions for Heating, Ventilation and Air Conditioning (HVAC), transport refrigeration, and custom refrigeration solutions. As an industry leader with an extensive global install base, its growth strategy includes expanding recurring revenue through services and rental options. The company operates in highly competitive markets throughout the world, encountering a wide variety of competitors that vary by product line and services, including well-established regional or specialized competitors as well as larger U.S. and non-U.S. corporations or divisions of larger companies. The principal methods of competition relate to price, quality, delivery, service and support, technology and innovation. Approximately 25% of net revenues in 2025 were derived outside the U.S. and the company sold products in approximately 100 countries.

Trane Technologies is one of the leading manufacturers in the world of HVAC systems and services and transport temperature control products and services. The company has no single external customer that accounted for more than 10% of consolidated net revenues in 2025, 2024 or 2023, and no material part of the business is dependent upon a single customer or a small group of customers. The company's products are sold primarily under its tradenames including Trane and Thermo King. The company's unique business operating system, uplifting culture and highly engaged team around the world are central to its earnings and cash flow growth.

The company generates revenue and cash primarily through the design, manufacture, sales and service of solutions for HVAC, transport refrigeration, and custom refrigeration solutions. Revenue is recognized when control of a good or service promised in a contract is transferred to a customer, with a majority recognized at a point-in-time and a portion recognized over-time using the cost-to-cost input method. The company's growth strategy includes expanding recurring revenue through services and rental options. The company's products are distributed by a number of methods including branch sales offices, distributors and dealers across the U.S. and through numerous subsidiary sales and service companies with a supporting chain of distributors throughout the world.

The Americas segment innovates for customers in North America and Latin America, encompassing commercial heating, cooling and ventilation systems, building controls and solutions, energy services and solutions, residential heating and cooling, and transport refrigeration systems and solutions. This segment had 2025 net revenues of $17,168.8 million ¹. The EMEA segment innovates for customers in the Europe, Middle East and Africa region, encompassing heating, cooling and ventilation systems and services, energy services and solutions, and transport refrigeration systems and solutions. This segment had 2025 net revenues of $2,802.1 million ². The Asia Pacific segment innovates for customers throughout the Asia Pacific region, encompassing heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions. This segment had 2025 net revenues of $1,351.0 million ³. The company's principal products and services include air conditioners, chillers, heat pumps, furnaces, building management systems, container refrigeration systems, trailer refrigeration systems, truck refrigeration systems, data center HVAC systems, service agreements, rental services, and telematics solutions, among many others.

On January 2, 2025, the company completed the acquisition of BrainBox AI Inc., a building management platform for HVAC optimization using advanced AI technologies, with results reported within the Americas segment. In the first half of 2025, the company also acquired multiple distributors with sales and service businesses in Europe that are reported in the EMEA segment. Subsequent to the balance sheet date of December 31, 2025, the company completed multiple acquisitions, including two Transport refrigeration distributors that will be reported in the Americas and EMEA segments and a 49% interest in Kieback & Peter, a provider of building automation hardware, software and solutions, which will be reported as an equity method investment within the EMEA segment. During the year ended December 31, 2025, the company repurchased and canceled $1.5 billion ⁴ of ordinary shares, which exhausted the 2022 Authorization and left $4.8 billion ⁵ remaining under the 2024 Authorization. The company also paid all four 2025 quarterly dividends during the year. In February 2026, the Board of Directors declared an increase in the quarterly share dividend by 12%, from $0.94 to $1.05 per ordinary share, or $3.76 to $4.20 per share annualized starting in the first quarter of 2026.

Net revenues for the year ended December 31, 2025 increased by 7.5%, or $1,483.7 million ⁶, compared with the same period of 2024, driven by higher volumes as a result of stronger end-customer demand within the Americas and EMEA segments, realization of price increases and incremental revenue from acquisitions. Gross profit margin increased 50 basis points to 36.2% ⁷ compared to 35.7% ⁸ for the same period of 2024 primarily due to gross productivity and price realization, partially offset by inflation. Operating income was $3,967.4 million ⁹ compared to $3,500.1 million ¹⁰ in the prior year. Net earnings from continuing operations were $2,972.7 million ¹¹ compared to $2,614.2 million ¹² in 2024. Net cash provided by continuing operating activities was $3,220.4 million ¹³ compared to $3,177.7 million ¹⁴ in the prior year.

The company's growth strategy includes expanding recurring revenue through services and rental options, leveraging its extensive global install base. The company is investing substantial resources to innovate and develop new products and services which it expects to drive future growth. In Commercial HVAC markets in Americas and EMEA, conditions remain strong due to demand for differentiated customer driven solutions and the benefits of installing energy efficient products and decarbonizing the built environment. The company's 2030 Sustainability Commitments include the 'Gigaton Challenge' to reduce customer greenhouse gas emissions by a billion metric tons, which is expected to drive demand for sustainable products and services.

The company is focused on developing next generation products that utilize lower global warming potential solutions as regulations reduce the use and potential availability of the current class of widely used refrigerants. The company is on track with its climate commitment to offer a full line of next generation products by 2030 without compromising safety or energy efficiency. The company also committed to reducing embodied carbon in its products by 40% while also designing products for circularity. The company's 2030 emissions reduction targets have been validated by the Science Based Targets Initiative (SBTi), and it is one of very few companies worldwide with validated 2050 net-zero targets.

Gross profit margin for the year ended December 31, 2025 increased 50 basis points to 36.2% ¹⁵ compared to 35.7% ¹⁶ for the same period of 2024 primarily due to gross productivity and price realization, partially offset by inflation. Selling and administrative expenses as a percentage of Net revenues decreased 50 basis points from 18.1% to 17.6% ¹⁷. Excluding the effect of contingent consideration adjustments, Selling and administrative expenses were 17.8% ¹⁸ and 18.2% ¹⁹ of Net revenues for the years ended December 31, 2025 and December 31, 2024, respectively. The company expects to continue to make significant expenditures for research and development and sustaining activities to maintain and improve its competitive position.

The company's capital expenditure program for 2026 is estimated to be approximately 2.0% of revenues ²⁰, including amounts approved in prior periods. The company continues to invest in new information technology systems designed to improve its operations. The company's investments continue to improve manufacturing productivity, expand capacity, reduce costs, provide environmental enhancements, upgrade information technology infrastructure and security and advanced technologies for existing facilities. The company expects to contribute approximately $84 million ²¹ to its pension plans worldwide in 2026, a portion of which may be funded by assets held in an employer-owned trust.

In 2025, the company spent $347.6 million ²² on research and development, focused on product and system sustainability improvements such as increasing energy efficiency, developing products that allow for use of lower global warming potential refrigerants, reducing material content in products, and designing products for circularity. Capital expenditures were $383.0 million ²³ for the year ended December 31, 2025. In December 2024, the Board of Directors authorized the repurchase of up to $5.0 billion ²⁴ of ordinary shares (2024 Authorization). During the year ended December 31, 2025, the company repurchased and canceled $1.5 billion ²⁵ of ordinary shares, leaving $4.8 billion ²⁶ remaining under the 2024 Authorization. Since the launch of Trane Technologies in March 2020, the company has increased its quarterly dividend per share by 77%, from $0.53 to $0.94 per ordinary share, or $2.12 to $3.76 per share annualized ²⁷. In February 2026, the Board of Directors declared an increase in the quarterly share dividend by 12%, from $0.94 to $1.05 per ordinary share, or $3.76 to $4.20 per share annualized ²⁸ starting in the first quarter of 2026.

Transport refrigeration markets continue to experience weaker demand, particularly in the United States. Residential markets have weakened considerably throughout 2025 due to navigating a regulatory refrigerant transition and softer consumer demand, while uncertainties remain from economic risks and higher interest rates. The company continues to monitor macroeconomic indicators and uncertainties resulting from the tariffs announced and implemented by the United States in 2025, as well as the tariffs imposed by other countries in response, which may cause supply chain challenges, commodity cost volatility, and consumer and economic uncertainty. In Asia, markets remain dynamic with mixed macro-economic conditions across the region.

Geopolitical risks and macroeconomic developments, including changes in global trade policies, tariffs and other measures could cause disruptions to operations, supply chains, end markets, financial markets and overall economic conditions which could negatively impact the business. The company's performance may be impacted by future developments that are uncertain. The company faces risks from commodity and raw material shortages, supply chain risks and price increases that could adversely affect financial results. The company also faces risks from currency exchange rate fluctuations, with a hypothetical 10% unfavorable change in the average exchange rate used to translate Net revenues from either Euros or Chinese Yuan-based operations into U.S. dollars resulting in a decline of approximately $180 million ²⁹ and $50 million ³⁰, respectively.

The company faces significant risks from the ongoing Chapter 11 bankruptcy cases of its indirect wholly-owned subsidiaries Aldrich Pump LLC and Murray Boiler LLC, which seek to resolve asbestos-related claims through a plan of reorganization that would create a trust pursuant to section 524(g) of the Bankruptcy Code. A $270.0 million ³¹ qualified settlement fund was funded on March 2, 2022, and the first phase of the estimation hearing to determine the debtors' asbestos-related liabilities will commence the week of August 10, 2026. The company is exposed to commodity and raw material shortages, supply chain risks and price increases, particularly for steel and non-ferrous metals, which could adversely affect financial results. The company faces significant competition in highly competitive markets worldwide, with risks from consolidation, new entrants including non-traditional competitors, and disruptive technologies. Changes in U.S. or foreign trade policies, including tariffs on goods imported from several countries and retaliatory tariffs, could disrupt supply chains and increase product costs. The company's global operations are subject to currency exchange rate fluctuations, with a hypothetical 10% unfavorable change in the average exchange rate for Euros or Chinese Yuan-based operations resulting in a decline of approximately $180 million ³² and $50 million ³³, respectively.

Management's message emphasizes the company's position as a global climate innovator bringing sustainable and efficient solutions to buildings, homes and transportation through its strategic brands Trane and Thermo King. The company's purpose is to boldly challenge what's possible for a sustainable world, and its strategy focuses on meeting critical needs and growing global demand for innovation that reduces greenhouse gas emissions while enabling more efficient buildings and industry. Management highlights the company's 2030 Sustainability Commitments including the 'Gigaton Challenge' to reduce customer greenhouse gas emissions by a billion metric tons, 'Leading by Example' through reducing embodied carbon by 40% and designing products for circularity, and creating 'Opportunity for All' by investing in people and communities. The company's unique business operating system, uplifting culture and highly engaged team around the world are central to its earnings and cash flow growth. Management believes the company has a solid foundation of global brands that are highly differentiated in all major product lines, and its geographic mix, diverse portfolio, and large installed product base provide growth opportunities from replacement demand and within service revenue streams.