Trane Technologies plc

Good morning and welcome to the Trane Technologies fourth quarter 2025 earnings conference call. My name is Regina and I will be your operator for the call. The call will begin in a few moments with the speaker remarks and the Q&A session. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. We ask that you please limit your questions to one and one follow-up. I will now turn the call over to Zach Nagel, Vice President of Investor Relations. Please go ahead.

Thanks, Operator. Good morning, and thank you for joining us for Training Technologies' fourth quarter 2025 earnings conference call. This call is being webcast on our website at trainingtechnologies.com, where you'll find the accompanying presentations. We're also recording and archiving this call on our website. Please go to slide two. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause our actual results to differ materially from anticipated results. This presentation also includes non-GAAP measures which are explained in the financial tables attached to our news release. Joining me on today's call are Dave Rigneri, chair and CEO, and Chris Kuhn, executive vice president and CFO. With that, I'll turn the call over to Dave. Dave?

Thanks, Zach, and everyone for joining today's call. Please turn to slide number three. I'd like to begin with a few thoughts on our purpose-driven strategy, which continues to drive consistent outperformance over time. Demand for energy has never been greater. Digitalization, industrial growth, and new technologies are putting pressure on energy systems. Customers are looking for smarter, more efficient ways to run their operations. That's where Trane Technologies is uniquely positioned to win. Our solutions help customers save energy, lower operating costs, and create more balance and flexibility in how they use energy. It's proof that sustainability and performance go hand in hand. As we look ahead, our innovation and expertise continue to set us apart. With our exceptional backlog, robust demand, proven business operating system, and leading innovation, we're well positioned to continue delivering differentiated value well into the future. Please turn to slide number four. 2025 was a strong year for the company. Our global teams executed at a high level, enabling us to exceed adjusted EPS guidance despite softness in residential and transport refrigeration markets. Free cash flow remained robust, funding strategic M&A, a growing dividend, and significant share repurchases. Bookings were also exceptional. Our commercial HVAC businesses in Americas and EMEA added $1.3 billion in backlog versus year-end 2024. strengthening our visibility into strong growth in 2026 and beyond. Please turn to slide number five. Relentless investment in innovation, growth, people, culture, and our business operating system has delivered clear, sustained benefits reflected in our strong and consistent track record. Since 2020, we've achieved an 11% revenue compound annual growth rate, a 24% adjusted EPS compound annual growth rate, expanded adjusted EBITDA margins by 470 basis points, and delivered free cash flow conversion of 106%, while deploying over $15 billion through our balanced capital allocation strategy. Consistent reinvestment has been central to our long-term success. For more than a decade, we've steadily invested in high ROI initiatives, built a world-class direct sales and service organization, and developed cutting-edge solutions for our customers' most pressing challenges, driving sustained demand. We have a proven track record and all the essential ingredients to execute our strategy and continue delivering differentiated returns over the long term. Please turn to slide number six. We delivered strong fourth quarter performance, highlighted by exceptional enterprise organic bookings of 22%, driving record backlog of $7.8 billion. Organic revenue grew 4%, led by continued strength in our America's commercial HVAC businesses and our global services business. We also delivered 10% adjusted EPS growth and robust free cash flow. Exceptional bookings were led by our commercial HVAC businesses. America's commercial HVAC was again a standout, delivering record Q4 organic bookings, up more than 35% year over year. Applied solutions bookings were up more than 120%, with a record book-to-bill of 200%, marking the second consecutive quarter with applied bookings growth exceeding 100%. EMEA HVAC also delivered strong results, with its second straight quarter of mid to high teens organic bookings growth. Commercial HVAC backlog is substantially higher versus year end 2024, with backlog up approximately 25% in the Americas and nearly 40% in EMEA. And importantly, the backlog is predominantly applied, which carries a long higher margin services tail. As we enter 2026, we are well positioned for growth, especially in areas where disciplined execution to our business operating system is a key driver of success. In commercial HVAC, exceptional bookings growth and record backlog give us strong visibility to future revenues and market outgrowth. Projective pipelines remain robust and continue to build. even after two consecutive quarters of more than 100 applied growth in america's commercial hbac we continue to see substantial opportunities ahead our services business about one-third of enterprise revenue remains a durable and consistent growth engine with a low teens compound annual growth rate since becoming trained technologies in 2020 we continue to invest heavily in services and expand our digital capabilities to deliver advanced solutions with compelling value and attractive paybacks. We are confident services will remain a strong growth driver in 2026 and beyond. Two additional factors have the potential to accelerate growth in the back half of the year. Residential markets were a tale of two halves in 2025, with a significantly weaker second half. We expect 2026 to get progressively better. with tailwinds building later in the year as comps ease. Similarly, industrial forecasts, including from ACT, point to a transport market recovery beginning late in 2026 and extending into 2027 and beyond, a view we largely share. This should support growth in the fourth quarter and beyond. Our guidance reflects this backdrop, and Chris will elaborate shortly. Please turn to slide number seven. America's commercial HVAC continued its standout performance, with bookings up more than 35% and revenue up low double digits. Growth was broad-based across nearly all verticals and in both equipment and services. In residential, bookings were up mid-single digits, while revenues declined mid-teens, reflecting the normalization of channel inventory in the quarter. In America's transport refrigeration, bookings were down mid-single digits and revenues were down low single digits, outperforming transport markets that declined more than 20%. In EMEA, commercial HVAC bookings were again robust, up mid-teens, and revenues were up mid-single digits. EMEA transport bookings were down low single digits and revenues declined at a similar rate, outperforming in markets that were down mid-single digits. In Asia Pacific, China remained challenging with double digit declines in bookings and revenue. The rest of Asia performed as expected with bookings up low double digits and revenues down low single digits. Now, I'd like to turn the call over to Chris. Chris?