In this Research Note, we examine the commercial HVAC business of Trane Technologies, which includes their building automation and energy services portfolio. It is based on their 2021 annual results, investor presentations and related activities throughout 2021.
Trane Technologies was formed in 2020 following a spin-off from Ingersoll Rand’s Climate Division. As a vertically integrated enterprise, Trane offers commercial and residential HVAC equipment and aftermarket services as well as transport refrigeration solutions under the ThermoKing brand. Since becoming a public company, Trane Technologies has repositioned itself as a pure-play climate innovator, with an increased focus on energy efficiency, sustainability and decarbonization of buildings, homes and transportation, fuelling their growth.
The enterprise reported strong financial performance in 2021 with $14.1 billion revenues, up 13% from the prior year. The GAAP operating margin of 14.3% was up 200 basis points from 2020. The Americas segment accounted for 78% of revenues, reporting net sales of $10.9 billion.
The Commercial HVAC business unit provides heating and cooling systems, energy services and solutions and building controls for commercial buildings. Their building controls portfolio targets the Americas region and includes building management systems, building control products for factory and field installed HVAC equipment and controls contracting.
Trane does not disclose revenues for the Commercial HVAC business but the management team at the Q4 earnings call indicated that the Americas region performed very well in 2021, with broad-based strength across unitary and applied HVAC equipment and services and yielded a record backlog entering 2022.
Dave Regnery, CEO said “Demand remains strong in the data center, warehouse, education, and healthcare vertical markets. We're benefiting from increased demand across our K-12 customers with federal stimulus funds supporting both current and future growth. We see this as a multi-year tailwind for our business, given our strong position in the education market and our direct sales force with deep relationships in this vertical.”
Demand for comprehensive end-to-end indoor air quality solutions, encompassing equipment, controls and services, remained strong in 2021 and contributed to Q4 high single-digit organic revenue growth in Commercial HVAC Americas.
In February 2021, Trane joined forces with indoor air quality monitoring, reporting and ventilation management company Aircuity to provide automated, data-based indoor air quality monitoring and management solutions for building owners. The integrated Trane and Aircuity system, available in the United States and Canada, collects critical data about a building’s air quality and automatically monitors and adjusts air flow between indoors and outdoors, which is crucial to reducing airborne pathogens and contaminants and managing energy efficiency.

Data generated by the Aircuity sensors are accessible 24/7 through an online dashboard, to inform building owners of issues they need to resolve. The system’s sensors gather air quality samples from inside and outdoors, which are sent to a sensor suite where Aircuity evaluates the data to assess and monitor air quality. The system integrates with Trane controls and automatically decides whether to increase, decrease or sustain current ventilation levels to improve or maintain IAQ. Having these data points and knowing the building is automatically responding to room air flow needs gives greater peace of mind, especially during the global pandemic as people return to office complexes, university campuses, hotels and other indoor environments.
As an extension to Wellsphere, Trane’s holistic approach to creating healthier buildings, new offerings announced in December 2021 bring together Trane’s Indoor Air Quality Assessment services, remote monitoring services, and integrated controls and sensors to diagnose building performance issues; prescribe optimal air quality and efficiency solutions; and automatically adjust HVAC systems based on real-time air quality indicators.
In December 2021, Trane signed a collaboration agreement with Oilon, a Finnish manufacturer of industrial heat pumps. As part of the agreement, Trane will offer in Europe the Trane Exergy Series heat pumps designed and manufactured in collaboration with Oilon. These heat pumps can replace oil and gas boilers in industrial process, buildings and district heating applications. With heat pumps increasingly regarded as one of the most significant means of producing fossil-free energy in the process industry.
A new business, Trane Technologies Life Science Solutions, which will operate as part of the company’s Commercial HVAC Americas business unit was announced in September 2021 in parallel with the acquisition of Farrer Scientific, an early-stage business in ultra-low temperature control for biopharmaceutical and other life science Industries. Their solutions can provide an alternative to large-scale freezer farms or capital-intensive cold rooms used in manufacturing of drugs, vaccines and other biological products. The upfront transaction value is $250 million, with a total transaction value of up to $365 million inclusive of $115 million in additional payout potential in 2025 tied to the attainment of key financial targets.
Trane’s range of building management systems are well-known in the Americas region for use in small and medium-sized buildings. Their Tracer Ensemble Cloud BMS can integrate with the Trane Pivot smart thermostat system to offer an enterprise level building management system designed for light commercial buildings.
Trane are considered to be a very competitive second tier supplier in the world building controls market, behind Siemens, Honeywell, Johnson Controls and Schneider Electric.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.