Trane Technologies plc ( TT ) raised its full-year guidance Tuesday after posting better-than-expected second-quarter earnings, bolstered by strong demand in its Americas Commercial HVAC segment and record bookings. Despite the upbeat earnings report, the company’s shares experienced an 8% decline in morning trading.

The climate solutions company reported adjusted earnings of $3.88 per share, an increase of 18% from a year earlier and above the Wall Street consensus of $3.79. Net revenue was $5.75 billion, up 8% year-over-year but just short of analysts’ estimates of $5.76 billion.

Bookings reached a record $5.63 billion, up 5% from the same quarter last year. This was fueled by more than 60% growth in applied solutions orders within the Americas Commercial HVAC unit. Total enterprise backlog ended the quarter at $7.1 billion, up 6% from the end of 2024.

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Adjusted EBITDA rose 12% to $1.25 billion, with margins improving 70 basis points to 21.8%. Adjusted operating income rose 14% and margin expanded by 90 bps to 20.3%.

“Our performance continues to be led by Americas Commercial HVAC, with strong demand for our sustainable solutions across a broad base of highly complex projects,” said Chair and CEO Dave Regnery. “We’re confident in raising our full-year revenue and EPS guidance.”

Americas revenue grew 9% to $4.69 billion, with bookings up 8%. The unit posted a 130-basis-point gain in adjusted operating margin, driven by robust demand and price realization.

EMEA revenue climbed 10% to $707.9 million, but organic growth slowed to 3% and margins contracted 150 basis points due to inflation and reinvestments.

Asia Pacific saw bookings fall 16% and revenue drop 7% amid continued volume weakness, with margins down across the board.

Through the first half of 2025, Trane ( TT ) generated $1.04 billion in operating cash flow and $841 million in free cash flow. The company deployed or committed approximately $1.8 billion, including $1 billion in share repurchases, $420 million in dividends, and $275 million in M&A.

Outlook

Trane Technologies ( TT ) raised its full-year 2025 adjusted EPS guidance to approximately $13.05, up from the prior $12.70-$12.90 range and above the $12.93 consensus estimate.

GAAP EPS guidance was also increased to $13.30, compared to the previous $12.95-$13.15 range and ahead of the $13.03 Street view.

Full-year revenue is now expected to reach $21.62 billion, topping both the prior guidance range of $21.33-$21.52 billion and the consensus estimate of $21.53 billion.

Trane ( TT ) expects ~9% reported revenue growth for fiscal year 2025, including ~8% organic growth and a 100 basis-point contribution from M&A.

The company reaffirmed its commitment to margin discipline, projecting adjusted EPS growth of 16% year over year despite a ~15-cent EPS headwind from acquisitions and $140 million in expected tariff-related costs.

Trane ( TT ) also anticipates 25%+ organic leverage and continued strategic investment in digital, automation, and innovation.

For the third quarter, the company guided ~6% organic revenue growth and adjusted EPS of ~$3.80+, including a ~3-cent M&A-related impact versus $3.78 Street View.

Price Action: TT shares were trading lower by 7.22% to $436.98 at last check Wednesday.

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