Trane Technologies (TT) Q4 2025 earnings summary

Executive summary

• Achieved strong 2025 results, exceeding adjusted EPS guidance and bottom-line commitments, with robust bookings and record backlog for 2026 despite softness in residential and transport refrigeration markets.

• Maintained a focused strategy on innovation, digitalization, sustainability, operational excellence, and balanced capital deployment, supporting long-term growth.

• Compound annual revenue growth of 11% and adjusted EPS growth of 24% since 2020.

Financial highlights

• Q4 2025 organic bookings up 22% year-over-year, driving record backlog of $7.8 billion; full-year organic bookings up 11%.

• Organic revenue grew 6% in 2025; Q4 organic revenue up 4%; excluding residential, Q4 growth was 7%.

• Adjusted EPS grew 16% to $13.06 in 2025; Q4 adjusted EPS up 10% year-over-year.

• Free cash flow reached $2.9 billion in 2025, with 98% conversion; average conversion since 2020 is 106%.

• Adjusted EBITDA margin for 2025 at 20.1%, up 70 bps; Q4 adjusted EBITDA margin 17.9%.

Outlook and guidance

• 2026 guidance: 6%-7% organic revenue growth, adjusted EPS of $14.65-$14.85 (up 12%-14%).

• Reported revenue growth expected at 8.5%-9.5% including FX and M&A.

• Q1 2026 organic revenue expected to be flat, with adjusted EPS of ~$2.50.

• Residential market expected flat to down 5% for 2026, with Q1 as the trough and recovery in 2H 2026.

• Transport markets expected to decline 7% in 2026, with recovery late 2026 into 2027.