Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 30, 2026 · Beat 7 of last 7 quarters
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Trane's record backlog and accelerating commercial HVAC bookings, particularly in applied systems, underscore the sustained demand for thermal management in AI data centers. The company's investments in capacity and innovation, including modular chiller plants and liquid cooling, position it to capture a significant share of the AI infrastructure buildout. The raised guidance reflects confidence in continued growth through 2027.
Q2 2026 revenue of $6,354M grew 9% organically, with adjusted EPS of $4.31 up 11%. Enterprise bookings grew 37% to a record backlog of $12.1B, up 70% YoY, with Americas Commercial HVAC bookings up 50% and Applied bookings up 130%. Services grew double digits, residential exceeded expectations with bookings up high-20s and revenue up low-teens, and Asia Pacific bookings grew 31%. EMEA was impacted by the Middle East conflict, with revenues down ~30% in the region, prompting cost actions. The company raised full-year guidance and expects accelerating growth in the second half.
Management raised full-year 2026 organic revenue growth guidance to approximately 9% (from ~7%) and adjusted EPS guidance to $15.20-$15.30 (from $14.75-$14.95). For Q3, they expect organic revenue growth of ~10% and adjusted EPS of ~$4.70. The raise reflects accelerating second-half growth driven by record backlog, robust pipeline, and strong execution, with commercial HVAC momentum broad-based across verticals and residential outlook raised to reflect strong year-to-date performance with modest second-half growth. Management expects margin expansion in the second half, with EMEA margins under pressure due to the Middle East conflict (revenues down ~30%). Americas transport market expected to recover late 2026 into a multiyear upcycle, and they continue to invest in capacity (CapEx 2-3% of revenue) to support growth without turning away orders.
“Enterprise organic bookings were up 37%, driving record backlog of $12.1 billion, up 70% year-over-year.”
on Bookings and backlog
“We are fueling robust growth for 2026 and beyond. Our exceptional bookings, record backlog and healthy pipeline provides strong visibility to accelerating revenue in the second half.”
on Growth outlook
“We are increasing our full year organic revenue growth outlook to approximately 9% and our adjusted EPS guidance to a range of $15.20 to $15.30.”
on Guidance raise
Has there been any change in the conversion of backlog versus a year or two ago, given the mix shift to data centers?
Backlog is up significantly, now 90% commercial HVAC. Applied revenue grew over 40% in Q2, showing backlog is flowing through, and we expect that to carry into the second half. Approximately $6 billion of backlog is for 2027 and beyond, providing strong momentum.
At what point do you start turning away orders because of capacity constraints?
We are not turning away orders. We've expanded applied capacity 4x over the last 3 years, and we continue to invest in brick-and-mortar expansions like Scalar and Grand Rapids. Our pipeline remains strong, and we are confident in our capacity to meet demand.
How do you think about running companies structurally in this high-growth inflationary environment?
We have a robust operating system for managing inflation and pricing. We work with suppliers on resiliency, drive internal productivity, and use strategic pricing when needed. We also have long-term capacity agreements with customers and share visibility with suppliers to manage demand.