Trane Technologies — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net revenues for Q3 2026 were $6.76 billion, an 18% year-over-year increase, with organic revenue growth of 16%.
• GAAP continuing EPS was $4.79, and adjusted continuing EPS was $4.86, both representing a 25% increase from Q3 2025.
• GAAP operating income was $1.343 billion (19.9% margin), while adjusted operating income was $1.364 billion (20.2% margin).
• Adjusted EBITDA was $1.447 billion (21.4% margin), up 16% year-over-year.
• Year-to-date free cash flow through September 30, 2026, was $2.828 billion, up approximately 60% compared to the prior year.
• Cash from continuing operating activities year-to-date was $3.060 billion.
• Debt balance as of September 30, 2026, was $4.218 billion, down $398 million from the prior year.
• Working capital as a percentage of revenue improved to 0.3% from 3.9% in the prior year.

Guidance and Future Outlook:

• Full-year 2026 reported revenue growth is expected to be approximately 13.5%, with organic revenue growth of approximately 11% versus 2025.
• Full-year 2026 GAAP continuing EPS guidance is set at $15.00 to $15.10.
• Full-year 2026 adjusted continuing EPS guidance is reaffirmed at $15.20 to $15.30.
• Management expects to deploy 100% of excess cash to shareholders over time and maintain a competitive and growing dividend.

Business Segments and Product Lines:

• Americas: Net revenues were $5.648 billion (up 21%), with organic growth of 19%. Bookings were $5.681 billion (up 18%), resulting in a book-to-bill ratio of 101%. Adjusted operating margin improved 50 basis points to 22.3%.
• EMEA: Net revenues were $755.8 million (up 1%), with organic growth of 2%. Bookings were $1.109 billion (up 40%), resulting in a book-to-bill ratio of 147%. Adjusted operating margin decreased 250 basis points to 17.2%.
• Asia Pacific: Net revenues were $356.0 million (up 8%), with organic growth of 7%. Bookings were $457.1 million (up 22%), resulting in a book-to-bill ratio of 128%. Adjusted operating margin decreased 390 basis points to 18.6%.
• Total backlog reached $12.5 billion, up 73% year-over-year, with Americas Commercial HVAC backlog up approximately 80%.
• Organic bookings grew 20% across all segments, with a total book-to-bill ratio of 107%.

Market and Competitive Landscape:

• Sustainability and energy efficiency initiatives continue to drive customer demand and bookings growth.
• The company navigates supply chain and inflationary headwinds while maintaining strong momentum.
• The backlog growth indicates strong demand across commercial HVAC, residential, and transport refrigeration sectors.

Risks and Challenges:

• Forward-looking statements are subject to risks including global economic conditions, inflation, interest rate volatility, and foreign exchange fluctuations.
• Potential risks include trade protection measures, tariffs, geopolitical conflict, commodity shortages, and price increases.
• Specific risks involve the Chapter 11 proceedings for deconsolidated subsidiaries Aldrich Pump LLC and Murray Boiler LLC, cybersecurity threats, and climate change impacts.

Management Commentary and Tone:

• Dave Regnery, Chair and CEO, stated the company delivered strong performance with record operating income and 25% earnings-per-share growth.
• Management expressed confidence in the company's ability to deliver differentiated, long-term shareholder value due to strong momentum, leading innovation, and a talented team.
• The tone reflects optimism regarding the backlog and bookings despite macroeconomic headwinds.

Other Key Points:

• Year-to-date through October, the company deployed or committed approximately $3.4 billion in capital, including $930 million for dividends, $1.08 billion for M&A, and $1.4 billion for share repurchases.
• The company raised its full-year revenue guidance while reaffirming its EPS guidance.
• Non-GAAP financial measures used include adjusted operating income, adjusted EBITDA, free cash flow, and organic revenue/bookings, with definitions provided in the release footnotes.
• The company reported a book-to-bill ratio greater than 100% in all segments.