Q2 FY2026
Filed Jul 30, 2026Trane Technologies Reports Strong Second Quarter Results; Raises Full-Year Revenue and EPS Guidance
Record bookings, a record backlog, double-digit reported and organic revenue growth, adjusted continuing EPS growth, strong year-to-date cash flow, and raised full-year revenue and EPS guidance outweighed lower enterprise operating margins and weakness in EMEA.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Bookingsother | $7,818 million | – | 39% |
| Organic bookingsnon-GAAP | 37% | – | 37% |
| Net RevenuesGAAP | $6,354 million | – | 11% |
| Organic revenuesnon-GAAP | 9% | – | 9% |
| GAAP Operating IncomeGAAP | $1,224 million | – | 5% |
| GAAP Operating MarginGAAP | 19.3% | – | (100) bps |
| Adjusted Operating Incomenon-GAAP | $1,253 million | – | 7% |
| Adjusted Operating Marginnon-GAAP | 19.7% | – | (60) bps |
| Adjusted EBITDAnon-GAAP | $1,340 million | – | 7% |
| Adjusted EBITDA Marginnon-GAAP | 21.1% | – | (70) bps |
| GAAP Continuing EPSGAAP | $4.20 | – | 9% |
| Adjusted Continuing EPSnon-GAAP | $4.31 | – | 11% |
| Pre-Tax Non-GAAP Adjustments, netnon-GAAP | $28.4 million | – | $26.4 million |
| Book-to-billother | 123 percent | – | – |
| Backlogother | $12.1 billion | – | 70 percent |
| Cash From Continuing Operating Activities Y-T-DGAAP | $1,735 million | – | $691 million |
| Free Cash Flow Y-T-Dnon-GAAP | $1,603 million | – | $762 million |
| Working Capital/Revenuenon-GAAP | 0.9% | – | (280) bps |
| Cash Balance June 30other | $1,318 million | – | $544 million |
| Debt Balance June 30other | $4,617 million | – | $2 million |
| Americas Bookingsother | $6,561.8 million | – | 44% |
| Americas GAAP Operating IncomeGAAP | $1,149.2 million | – | 9% |
| Americas GAAP Operating MarginGAAP | 21.8% | – | (60) bps |
| Americas Adjusted Operating Incomenon-GAAP | $1,165.1 million | – | 11% |
| Americas Adjusted Operating Marginnon-GAAP | 22.1% | – | (30) bps |
| Americas Adjusted EBITDAnon-GAAP | $1,236.3 million | – | 10% |
| Americas Adjusted EBITDA Marginnon-GAAP | 23.5% | – | (50) bps |
| EMEA Bookingsother | $753.0 million | – | 7% |
| EMEA GAAP Operating IncomeGAAP | $82.2 million | – | (33)% |
| EMEA GAAP Operating MarginGAAP | 11.8% | – | (550) bps |
| EMEA Adjusted Operating Incomenon-GAAP | $91.4 million | – | (26)% |
| EMEA Adjusted Operating Marginnon-GAAP | 13.1% | – | (420) bps |
| EMEA Adjusted EBITDAnon-GAAP | $102.2 million | – | (21)% |
| EMEA Adjusted EBITDA Marginnon-GAAP | 14.7% | – | (360) bps |
| Asia Pacific Bookingsother | $502.9 million | – | 33% |
| Asia Pacific GAAP Operating IncomeGAAP | $80.8 million | – | 10% |
| Asia Pacific GAAP Operating MarginGAAP | 21.0% | – | (30) bps |
| Asia Pacific Adjusted Operating Incomenon-GAAP | $80.8 million | – | 8% |
| Asia Pacific Adjusted Operating Marginnon-GAAP | 21.0% | – | (60) bps |
| Asia Pacific Adjusted EBITDAnon-GAAP | $84.0 million | – | 4% |
| Asia Pacific Adjusted EBITDA Marginnon-GAAP | 21.8% | – | (150) bps |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AmericasBookings strength led by Commercial HVAC, up 50 percent, with applied equipment bookings up 130 percent. Reported revenues included approximately 1 percentage point related to acquisitions. | $5,271.3 million | – | 12% |
| Europe, Middle East and Africa (EMEA)Reported revenues included approximately 2 percentage points of positive foreign exchange impact; organic revenues were down 4 percent. | $697.6 million | – | (1)% |
| Asia PacificReported revenues included approximately 1 percentage point of positive foreign exchange impact; organic revenues were up 10 percent. | $384.6 million | – | 11% |
full-year 2026 outlook
- Revenuereported revenue growth of approximately 11.5 percent and organic revenue growth of approximately 9 percent versus full-year 2025
- NoteGAAP continuing EPS of approximately $15.00 to $15.10, including $0.20 for non-GAAP adjustments.
- NoteAdjusted continuing EPS of $15.20 to $15.30.
Capital returns
- Year-to-date through July, the Company deployed or committed approximately $1.9 billion of capital.
- Approximately $690 million for dividends.
- $340 million for M&A.
- $840 million for share repurchases.
- The Company expects to pay a competitive and growing dividend and to deploy 100 percent of excess cash to shareholders over time.
What drove it
- Organic bookings were up 37 percent and total bookings were $7,818 million.
- Book-to-bill was 123 percent and was greater than 100 percent in all segments.
- Record backlog was $12.1 billion, up 70 percent.
- Americas Commercial HVAC bookings were up 50 percent, and applied equipment bookings were up 130 percent.
- Americas organic revenues were up 11 percent.
- Asia Pacific organic bookings were up 31 percent and organic revenues were up 10 percent.
- Management cited heightened demand for sustainable, energy-efficient solutions and improving residential and transport dynamics.
Concerns
- Enterprise GAAP operating margin declined (100) bps to 19.3%.
- Enterprise adjusted operating margin declined (60) bps to 19.7%, while adjusted EBITDA margin declined (70) bps to 21.1%.
- EMEA organic revenues were down 4 percent.
- EMEA GAAP operating income declined (33)% and GAAP operating margin declined (550) bps to 11.8%.
- Asia Pacific adjusted EBITDA margin declined (150) bps to 21.8%.
What to watch
- Conversion of the $12.1 billion record backlog into revenue.
- Sustainability of Commercial HVAC bookings strength, including Americas applied equipment bookings.
- Whether EMEA organic revenue and margins recover after the reported declines.
- Enterprise operating-margin trends as revenue growth continues.
- Execution against full-year 2026 reported revenue growth of approximately 11.5 percent, organic revenue growth of approximately 9 percent, and adjusted continuing EPS of $15.20 to $15.30.
- Capital deployment across dividends, M&A and share repurchases.
Balance sheet and cash flow
- Cash From Continuing Operating Activities Y-T-D: $1,735 million, compared with $1,044 million in Q2 2025.
- Free Cash Flow Y-T-D: $1,603 million, compared with $841 million in Q2 2025.
- Working Capital/Revenue: 0.9%, compared with 3.7% in Q2 2025.
- Cash Balance June 30: $1,318 million, compared with $774 million in Q2 2025.
- Debt Balance June 30: $4,617 million, compared with $4,615 million in Q2 2025.
Analysis
Trane Technologies reported a strong second quarter of 2026, led by bookings of $7,818 million, up 39%, and organic bookings growth of 37%. Net revenues were $6,354 million, up 11%, with organic revenues up 9%. Book-to-bill of 123 percent, greater than 100 percent in all segments, supported a record backlog of $12.1 billion, up 70 percent. GAAP continuing EPS was $4.20, while adjusted continuing EPS was $4.31, up 11%.
Americas was the principal growth engine. Its bookings were $6,561.8 million, up 44%, and net revenues were $5,271.3 million, up 12%, including approximately 1 percentage point related to acquisitions. Commercial HVAC bookings rose 50 percent and applied equipment bookings rose 130 percent. Asia Pacific also produced broad growth, with bookings up 33 percent and revenue up 11 percent. EMEA was the exception: reported revenue declined approximately 1 percent despite approximately 2 percentage points of positive foreign exchange impact, and organic revenue declined 4 percent.
Profit growth trailed revenue growth. GAAP operating income increased 5% to $1,224 million, but GAAP operating margin declined (100) bps to 19.3%. Adjusted operating income increased 7% to $1,253 million, while adjusted operating margin declined (60) bps to 19.7%. EMEA was the largest margin pressure point, with GAAP operating margin down (550) bps to 11.8% and adjusted operating margin down (420) bps to 13.1%. Americas also saw margin declines despite its higher revenue and bookings.
Cash generation and capital deployment were substantial. Year-to-date cash from continuing operating activities was $1,735 million and free cash flow was $1,603 million. Working capital/revenue was 0.9%, compared with 3.7% in Q2 2025. Through July, the company deployed or committed approximately $1.9 billion of capital, including approximately $690 million for dividends, $340 million for M&A and $840 million for share repurchases.
Management raised full-year 2026 guidance to reported revenue growth of approximately 11.5 percent and organic revenue growth of approximately 9 percent versus full-year 2025. It expects GAAP continuing EPS of approximately $15.00 to $15.10, including $0.20 for non-GAAP adjustments, and adjusted continuing EPS of $15.20 to $15.30. The principal reported issues to monitor are the enterprise margin declines and EMEA's organic revenue and profitability weakness against otherwise strong bookings, backlog and cash-flow indicators.
Management, verbatim
We delivered another outstanding quarter, driven by strong execution of our strategy and the dedication of our global team.
Dave Regnery, Chair and CEO of Trane Technologies
We continue to see heightened demand for our sustainable, energy-efficient solutions, resulting in strong organic revenue growth, exceptional bookings strength, and a record backlog of $12.1 billion.
Dave Regnery, Chair and CEO of Trane Technologies
Accordingly, we are raising our full-year revenue and EPS guidance and remain confident in our ability to deliver continued market outperformance and long-term shareholder value.
Dave Regnery, Chair and CEO of Trane Technologies
Not in the filing
stated, not guessed- GAAP net income or net earnings for Q2 2026 and Q2 2025 were not included in the provided filing text.
- Gross profit and gross margin were not included in the provided filing text.
- Income tax expense and tax rate were not included in the provided filing text.
- Operating expenses were not included in the provided filing text.
- Prior-quarter comparisons for reported metrics were not included in the provided filing text.
- A prior outlook section was not provided, so comparison of actual results with prior guidance is unavailable.
- Forward guidance for gross margin, operating expenses and tax rate was not included in the provided filing text.
- The referenced accompanying financial tables and the full non-GAAP reconciliation definitions were not included in the provided filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.