TT · Q2 2026 Earnings

Bullish

Trane Technologies

Reported July 30, 2026

30-second summary

Q2 revenue grew 11% YoY to $6.35B (beating consensus $6.19B by 2.7%) and adjusted EPS of $4.31 beat both consensus $4.26 and the $4.20–$4.25 guide, with organic revenue growth of 9% blowing past the ~5% guide by 4 points on 37% organic bookings growth and a 123% book-to-bill. Backlog stepped up to a record $12.1B (from $10.7B at Q1), and management raised FY2026 reported revenue growth to ~11.5% (from ~9.5%), organic to ~9% (from ~7%), and adjusted EPS to $15.20–$15.30 (from $14.75–$14.95). Americas Commercial HVAC bookings +50% with applied equipment bookings +130% underscore an applied-driven order flywheel, and the H2 low-teens acceleration framing from Q1 is de-risked — the debate shifts to whether the raised FY leverage now implicit in the guide is durable.

Headline numbers

EPS

Q2 FY2026

$4.31

+1.2% vs est.

Revenue

Q2 FY2026

$6.35B

+11.0% YoY

+2.7% vs est.

Gross margin

Q2 FY2026

35.5%

Operating margin

Q2 FY2026

19.3%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$6.35B	$5.75B	+10.6%	$4.97B	+27.9%
EPS	$4.31	$3.88	+11.1%	$2.63	+63.9%
Gross margin	35.5%	37.6%	-210bps	34.8%	+70bps
Operating margin	19.3%	20.3%	-100bps	15.6%	+370bps

Guidance

Company raised full-year FY2026 revenue growth guidance to 11.5% and organic growth to 9% (from 9.5% and 7%), with full-year adjusted EPS raised to $15.20-$15.30 (from $14.75-$14.95), following Q2 beats across revenue, organic growth, and EPS.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted EPS	Q2 FY2026	$4.20 to $4.25	$4.31	+$0.06-0.11 above guide	Beat
Organic Revenue Growth	Q2 FY2026	approximately 5%	9%	+4 percentage points above guide	Beat

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue Growth	FY2026	approximately 9.5%	approximately 11.5%	+2.0 percentage points	Raised
Organic Revenue Growth	FY2026	approximately 7%	approximately 9%	+2.0 percentage points	Raised
Adjusted Continuing EPS	FY2026	$14.75 to $14.95	$15.20 to $15.30	+$0.25 to $0.55	Raised
GAAP Continuing EPS	FY2026	approximately $14.75 to $14.95	approximately $15.00 to $15.10	+$0.25 to $0.35	Raised

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Americas	$5.271B	$4.692B	+12.3%
EMEA	$0.698B	—	-1.0%
Asia Pacific	$0.385B	$0.346B	+11.3%
Americas Commercial HVAC Bookings Growth	50%	—	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Organic Revenue Growth	9%	—	—
Organic Bookings Growth	37%	—	—
Book-to-Bill Ratio	123%	—	—
Backlog	$12.1B	—	—
Adjusted Operating Margin	19.7%	20.3%	—
Adjusted EBITDA Margin	21.1%	21.8%	—
Free Cash Flow YTD	$1.6B	—	—

Management tone

Prior-quarter tonal framing carried through prior briefs anchored on residential reset (Q3 FY2025), applied bookings dominance (Q4 FY2025), and explicit H2 acceleration (Q1 FY2026); this quarter delivers acceleration in the print itself, with 9% organic growth against a mid-teens prior-year comp well ahead of the ~5% guide. From the release: "With continued strength across commercial HVAC and improving residential and transport dynamics, we are carrying solid momentum into the second half of the year." The tonal shift from "will accelerate" (per Q1 prepared remarks captured in TRUSTED PRIOR GUIDANCE: "we expect revenues to accelerate to low teens growth as we move through the second half of the year") to "carrying momentum" retires one of the highest-conviction watch items — the low-teens H2 framing is no longer a bet, it's a run rate.

Residential language moved from the cautious Q1 framing (per TRUSTED PRIOR GUIDANCE: "our outlook remains prudent with flat revenues expected for 2026 in residential" and "market fundamentals continue to improve and are increasingly supportive of a recovery in late 2026") to explicitly constructive in this release, which names "improving residential and transport dynamics" as a positive factor in the raised guide. Last quarter residential was a controlled reset with a late-2026 recovery; today it's a tailwind alongside commercial HVAC.

The transport story quietly turned. The release calls out "improving transport dynamics" as part of the second-half thesis — a directionally more constructive tone than the "recovery in late 2026" framing that anchored the Q1 prepared remarks. If this holds, transport improvement is being flagged earlier than the late-2026 timing management previously referenced.

The framework silence continues. The FY2026 guide once explicitly included 25%+ organic leverage and 100%+ FCF conversion; last quarter both disappeared without comment; this quarter, despite raising every top-line and EPS line, management still did not restore either. Given Q2 YTD FCF of $1.6B and adjusted EPS being raised $0.25–$0.55 on a 2pp revenue-growth midpoint bump, the implied incremental leverage on the raise is well north of 25%. The disclosure absence is now conspicuously inconsistent with the underlying numbers.

Answers to last quarter's watch list

Whether the 25%+ organic leverage and 100%+ FCF conversion framework lines return to the FY2026 guide — Neither returned to this release. The FY2026 guide raises revenue growth by 2pp and EPS by $0.25–$0.55 at the range endpoints without republishing either framework line. Given Q2 YTD FCF of $1.6B and the magnitude of the EPS raise vs. the revenue raise, implied leverage on the incremental is materially above 25% — making the continued silence harder to read as anything other than a deliberate disclosure change.

Not resolved

Q2 FY2026 organic growth landing at ~5% as guided — Blew past. Q2 organic growth of 9% beat the ~5% guide by 4 points against the mid-teens Q2 FY2025 comp, which was the toughest comparison in the FY2026 sequence. The H2 low-teens framing that Q1 introduced is now de-risked; the debate shifts from "can they accelerate" to "how durable is the applied bookings step-up.".

Resolved positively

Backlog progression from $10.7B — Backlog stepped up to a record $12.1B with book-to-bill of 123% (down from 135% in Q1 but still well above the 110% durability threshold). Bookings +37% organic, Americas Commercial HVAC bookings +50%, and applied equipment bookings +130% confirm the order flywheel is structural, not a Q1 pull-forward.

Resolved positively

Gross margin trajectory to 36%+ — Q2 gross margin of 35.5% is +70bps sequentially from Q1's 34.8% and marks a second consecutive quarter of recovery, but the print remains ~130bps below the FY2025 H1 ~36–37% range. The trajectory is right, the level is not yet back. A third consecutive quarter of ~70bps recovery would put Q3 near 36% — the diagnosis of residential-mix compression rather than structural pressure is holding.

Continue monitoring

Stellar Energy revenue and EBITDA disclosure — The company did not isolate Stellar in segment reporting in this release. The Americas segment consolidates the contribution and no standalone platform disclosure appeared. Given the $1B+ / mid-teens+ EBITDA framing that anchored publicly on the Q1 call, the absence of any disclosure update is a mild negative on transparency.

Continue monitoring

Transport refrigeration trough timing — The release cites "improving transport dynamics" as part of the H2 momentum, which is a constructive shift versus the "recovery in late 2026" framing from Q1. This is a directional positive but no specific segment numbers were disclosed to confirm timing pull-in.

Resolved positively

What to watch into next quarter

Whether Q3 FY2026 organic growth prints above the implied ~9% FY run rate — the FY organic guide of ~9% with H1 running at ~6% (Q1) and ~9% (Q2) mathematically requires H2 organic growth of ~10–11%. A Q3 print below 9% would either force an implicit downward revision of Q4 expectations or the FY guide itself, and would call into question the "low-teens acceleration" framing that survived this quarter.

Whether the 25%+ organic leverage and 100%+ FCF conversion framework lines return, or the release explicitly acknowledges their removal — three consecutive quarters of silent absence would confirm this is a permanent disclosure change. FY2025 landed at 98% FCF conversion; Q2 YTD FCF of $1.6B needs to imply FY conversion above 100% for the target to remain credible.

EMEA return to growth vs. the -1% reported / -4% organic Q2 print — the underlying organic contraction is the key data point, and a second consecutive quarter of negative organic growth would be the yellow flag for European commercial HVAC.

Gross margin recovery to 36%+ in Q3 — a third consecutive ~70bps sequential improvement would put the print at or above the FY2025 H1 range and confirm the residential-mix-compression diagnosis. A step-down or flat print at ~35.5% would suggest the tariff/inflation cost stack is settling at a new baseline.

Americas Commercial HVAC bookings sustain above 40% — Q2's +50% total commercial HVAC bookings and +130% applied equipment bookings have set a high bar. A step-down to sub-20% growth in Q3 would prompt legitimate questions about pull-forward given customer lead times extended to 12–18 months this year.

Stellar Energy standalone disclosure — whether management isolates the platform in segment reporting on the Q3 call, given the $1B+ / mid-teens+ EBITDA public framing that has now been anchored for two quarters.

Sources

Trane Technologies Q2 FY2026 earnings release, SEC filing (https://www.sec.gov/Archives/edgar/data/1466258/000162828026050743/exhibit991-q22026earningsr.htm)

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