Trane Technologies has announced a record backlog of $7.8 billion for the fourth quarter of 2025, driven by surging demand in its U.S. commercial HVAC business. The company’s performance was bolstered by a 22% increase in enterprise organic bookings, with commercial HVAC in the Americas showing remarkable growth of over 35% year-over-year.
A standout contributor to Trane’s success was its applied solutions segment, which saw bookings surge by over 120% and achieved a book-to-bill ratio of 200%. Company leadership highlighted that the backlog is heavily skewed toward applied systems, which typically offer higher margins and longer service lifespans.
"Based on customer delivery timing and year-over-year comparisons, we expect solid growth in the first half and even stronger growth in the back half [of the year]", said Dave Regnery, chairman and CEO, during the company’s Q4 earnings call.
Trane’s Q4 2025 organic revenue increased by 4%, underpinned by strong performance in commercial HVAC and services, while reported revenue climbed 6% to reach $5.1 billion. Looking ahead to 2026, the company projects organic revenue growth of 6%–7%, with total reported revenue growth expected to range from 8.5% to 9.5%, factoring in foreign exchange and acquisitions.
While commercial HVAC was a bright spot, Trane faced challenges in the residential HVAC market. Residential bookings in the Americas showed mid-single-digit growth in Q4, but revenues dropped by mid-teens as the company worked to reduce channel inventory. In a strategic move to normalize inventory, Trane reduced its factory production days by one-third, which affected margins.
"Margins were impacted by proactive measures taken to normalize residential inventory, which reduced factory production days by one-third and resulted in roughly 60% deleverage in that business", said Chris Kuehn, executive vice president and CFO.
Despite reports of increased discounting in the residential HVAC sector, Kuehn noted that pricing held steady. "We’ve not seen pricing fade in the business", he said, attributing the fourth-quarter softness primarily to lower volumes rather than price reductions.
Trane remains optimistic about its prospects for 2026, particularly in commercial HVAC. Regnery expressed confidence in the company’s growing backlog and robust project pipelines. "In commercial HVAC, exceptional bookings growth and record backlog give us strong visibility to future revenues and market outgrowth. Projected pipelines remain robust and continue to build", he said.
The services business, which accounts for approximately one-third of Trane’s enterprise revenue, continues to serve as a steady growth driver. Since the company’s rebranding to Trane Technologies in 2020, the services segment has maintained a low-teens compound annual growth rate. "We continue to invest heavily in services and expand our digital capabilities to deliver advanced solutions with compelling value and attractive paybacks", Regnery added.
For residential HVAC, Trane expects a challenging year ahead, with full-year performance anticipated to be flat or down as much as 5%. However, the company is optimistic about a rebound in the second half of 2026. "We expect the market to return to growth in the second half [of 2026]", said Regnery, though he acknowledged that Q1 would likely represent the low point for the year.
With a record-breaking commercial HVAC backlog and a disciplined approach to residential inventory, Trane is well-positioned to build on its momentum as 2026 unfolds.
