Prepared remarks
Good morning. Welcome to the Trane Technologies Q1 2026 Earnings Conference Call. My name is Lisa, 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. I will now turn the call over to Zac Nagle, Vice President of Investor Relations. Please go ahead, sir.
Thanks, operator. Good morning, and thank you for joining us for Trane Technologies First Quarter 2026 Earnings Conference Call. This call is being webcast on our website at tranetechnologies.com where you'll find the accompanying presentation. We are also recording and archiving this call on our website. Please note that statements made today are forward-looking and may differ materially from actual results as detailed in our SEC filings. This presentation also includes non-GAAP measures explained in our news release and presentation appendix. Joining me today are Dave Regnery, Chair and CEO, and Chris Kuehn, Executive Vice President and CFO. With that, I'll turn the call over to Dave. Dave?
Thanks, Zac and everyone, for joining today's call. Please turn to Slide #3. I'll start with a few thoughts on how our purpose-driven strategy continues to fuel strong performance over time. The dynamic global environment and rising demand for power is pushing customers to think differently about energy. With our leading innovation, Trane Technologies is uniquely positioned to win. Our high-efficiency systems and smart controls help customers save energy, lower operating cost and increase resiliency, proving that sustainability and performance go hand-in-hand. Our strategy is built on a strong foundation: our robust business operating system, a powerful cash flow engine and an uplifting, engaging culture. This formula positions us to deliver differentiated long-term value to our people, our customers, our shareholders and our communities. Please turn to Slide #4. Q1 was another strong quarter, marked by exceptional enterprise organic bookings, up 24% and a record backlog of $10.7 billion, up over 30% versus year-end 2025. We delivered organic revenue growth of 3%, led by our Americas Commercial HVAC business and double-digit global services growth. This strong performance translated to adjusted EPS growth of 7%. Our Commercial HVAC businesses delivered outstanding performance, particularly in the Americas, where our commercial HVAC bookings reached an all-time high, up approximately 40% year-over-year, with Applied Solutions bookings up over 160%. This was our third consecutive quarter of applied bookings growth of greater than 100%. The strength of our Commercial HVAC business is further underscored by our combined Americas and EMEA backlog, which is up approximately $2.7 billion over year-end 2025. This includes approximately $1 billion from our acquisition of Stellar Energy, a leader in modular data center cooling solutions. We are exceptionally well positioned for continued growth in 2026 and beyond. Our exceptional bookings and record backlog provide strong visibility to continued market outgrowth and revenue growth acceleration in the second half of the year. Our robust and rapidly growing Commercial HVAC pipeline across key verticals, including long-term capacity and master purchase agreements in data centers, bolsters our confidence in the long-term outlook. Our services business, which represents one-third of our enterprise revenue, continues to be a consistent and durable growth driver, boasting a low teens compound annual growth rate since 2020. Additionally, we anticipate residential market tailwinds in the second half of 2026 driven by improving market fundamentals and easier prior year comparisons. The Americas transport market also continued improvement in fundamentals, strengthening the outlook for a late 2026 and 2027 recovery. Operational excellence is core to everything we do, and we expect to mitigate tariff and inflationary pressures through our business operating system. Altogether, we are raising our full year revenue and EPS guidance, which Chris will cover shortly. Please turn to Slide #5. As discussed in our Americas segment, Commercial HVAC continued its standout performance with bookings up approximately 40% and revenues up high single digits. In high-growth verticals like data centers, customers expect innovative, highly engineered solutions tailored to their unique needs. This plays directly to our strengths, including leading innovation, system expertise, proven operational excellence and the capacity to grow with our customers as their needs rapidly expand. These factors and the expertise of our direct sales force enabled us to capture a significant share of these opportunities. Turning to residential: bookings were up low single digits, while revenues declined mid-single digits, exceeding our expectations entering the quarter. In Americas transport refrigeration, bookings were up double digits and revenues were up low single digits, significantly outperforming end markets, which saw truck, trailer and APU segments down double digits in Q1. EMEA results were solid and consistent with our expectations, excluding headwinds from geopolitical events in the region. In Asia Pacific, Commercial HVAC bookings were up high 20s and revenues grew low single digits in the quarter, led by the rest of Asia, where bookings were up approximately 50% and revenues were up low single digits. Now I'd like to turn the call over to Chris. Chris?
Thanks, Dave. Please turn to Slide #6. Dave covered many key points from this slide earlier, so I'll keep my comments brief. Organic revenue growth for the enterprise was solid, up 3%, led by services growth, up double digits. Enterprise organic leverage was in the high teens and adjusted EPS growth was 7%, demonstrating the effectiveness of our business operating system and driving operational excellence throughout the P&L. Please turn to Slide #7. Margins across the segments were largely in line with our expectations, with the Americas and Asia operating margins up 10 basis points and 90 basis points, respectively. EMEA margins were impacted by expected first-year acquisition and integration-related costs and lower revenues than forecast in the Middle East. We also maintained high levels of business reinvestment across the portfolio in the quarter, driving our flywheel of innovation and growth. Now I'd like to turn the call back over to Dave. Dave?
Thanks, Chris. Please turn to Slide #8. Our outlook for 2026 remains strong, supported by our record bookings and backlog. Our Americas Commercial HVAC business is executing at a very high level, significantly outperforming end markets. We expect continued strength in data centers and other core markets like higher education, government and health care, just to name a few. Our Q1 book-to-bill was approximately 150% and our backlog is up nearly 70% year-over-year, strengthening our visibility into 2026 and beyond. Based on our exceptional backlog and the timing of customer deliveries, we expect approximately 10% revenue growth in Q2 against a tough prior year comp of mid-teens growth. We expect revenues to accelerate to low teens growth as we move through the second half of the year. In residential, we had a strong start to the year. We expect Q2 to be flattish, pivoting to growth in the second half aided by easier prior year comps. At this early stage in the year, our outlook remains prudent with flat revenues expected for 2026. Turning to transport: market fundamentals continue to improve and are increasingly supportive of a recovery in late 2026 and healthy growth in 2027. Our market forecast remains largely unchanged, with a mid-single-digit decline expected for full year 2026. We expect Q2 to be down roughly mid-teens based on the timing of large customer deliveries within the year. As we've discussed previously, given our strong mix of large customers, orders and revenues can be uneven from quarter-to-quarter. We significantly outperformed the transport markets in the first quarter and expect to outperform for the year. Turning to EMEA: our results to date and expectations for the year are largely unchanged, excluding impacts related to the Middle East. First and foremost, we have prioritized the safety of our employees in the region. We do expect continued headwinds in the second quarter of approximately $50 million in revenues, representing an estimated $0.05 EPS impact in Q2. We continue to monitor the situation closely. In Asia Pacific, China remains challenging with dynamic macro conditions. We expect the rest of Asia to be stronger than China in 2026. Overall, our outlook for the region remains flattish for 2026. Now I'd like to turn the call back over to Chris. Chris, over to you.
Thanks, Dave. Please turn to Slide #9. Our 2026 guidance reflects the market dynamics we've discussed, and operational excellence driven by our business operating system. It also incorporates our value creation flywheel, continued investment in innovation, market outgrowth, healthy leverage and strong free cash flow. We're increasing our organic revenue growth guidance to approximately 7%, the high end of our prior range of approximately 6% to 7%. Our reported revenue guidance moves to approximately 9.5% with unchanged estimates for approximately 2 points of M&A and 50 basis points of favorable FX. We're also increasing our adjusted EPS guidance range to $14.75 to $14.95, or approximately 13% to 15% of adjusted EPS growth, up from $14.65 to $14.85 prior. For Q2 2026, we expect approximately 5% organic revenue growth and adjusted EPS in the range of $4.20 to $4.25. For additional details, please refer to Slide 16. Please turn to Slide #10. We remain committed to our balanced capital allocation strategy, focused on deploying excess cash to maximize shareholder returns. First, we strengthened our core business through relentless reinvestment. Second, we maintain a strong balance sheet to ensure optionality as markets evolve. Third, we expect to deploy 100% of excess cash over time. Our approach includes strategic M&A to enhance long-term returns and share repurchases when the stock trades below our calculated intrinsic value. Please turn to Slide #11. We are on track to deploy between $2.8 billion to $3.3 billion in 2026 through our balanced capital allocation strategy. This includes approximately $900 million for dividends reflecting a 12% increase to $4.20 per share annualized in 2026. We deployed or committed approximately $340 million year-to-date for M&A and strategic investments. Our share repurchases year-to-date through April stand at approximately $300 million, and we still have approximately $4.4 billion remaining under our current share repurchase authorization, providing significant optionality. Our M&A pipeline remains active, and we will continue to be disciplined in our approach. Overall, our strong free cash flow, liquidity, balance sheet and substantial share repurchase authorization offer excellent capital allocation optionality as we move forward. Now I'd like to turn the call back over to Dave. Dave?
Thanks, Chris. Please turn to Slide #13. The Americas transport refrigeration market remains dynamic, but the long-term outlook is strong. ACT projects the market to bottom in the first half of 2026 and recover late in the second half. ACT also expects a sharp rebound beginning in 2027 and continued expansion through the end of the decade. We expect growth as well, but anticipate a more gradual slope to the recovery. We're managing the down cycle effectively, outperforming end markets and continuing to invest in innovation, so we're well positioned as the market strengthens. Please turn to Slide #14. In closing, our strategy is aligned to powerful secular tailwinds that position us to outperform. Megatrends around sustainability, digitalization, and rising energy demand are intensifying the need for our systems and services. Through breakthrough innovation and the strength of our people, we're delivering superior performance for our customers and advancing a more sustainable future. With our proven business operating system, record backlog and strong demand, we are well positioned to deliver differentiated shareholder value in 2026 and beyond. And now we'd be happy to take your questions. Operator?
Questions and answers
The first question today comes from Chris Snyder from Morgan Stanley.
I wanted to ask about the Americas applied orders. Just kind of keep getting better despite the bar already being very high. I think this quarter, you're up 160%. I guess my question is, are customers ordering with longer lead times than they were 6 or 12 months ago? When you guys look at this backlog, is the delivery schedule meaningfully different versus a year ago? I'm trying to figure out if part of the strength is due to some extension in those lead times.
A little bit of confusion. Let me try to clear it up. We have published lead times for all of our products. The published lead time on the unitary product can be relatively short; in many cases we have stocked products, so it could be next day, all the way up through our applied solutions where you could have lead times of, say, 30 weeks. From a lead time perspective, we're very, very competitive. In fact, we also offer a majority of our applied products via quick-ship programs, which, if a customer had an emergency, we'd be able to respond to at a premium. So that's the lead time side. Now if you're asking when customers are placing orders, that's a little bit different. In the past, we probably talked about averages, and averages can be misleading. We would often talk about a 6 to 9 month horizon. In some verticals, we are seeing that being extended. Could it be 12 months or 18 months in some cases? For sure, depending on the customer and how much visibility they want us to have to make sure our supply chain is ready as well. So the answer is: from a customer-planning standpoint, yes, it's a little bit longer. Customers want that security that their order is in our system and we're able to execute to it. From the published lead times that we actually meet for customers, that has been consistent.
I appreciate you highlighting that distinction between customer planning horizon and your published lead times because it does seem quite important. Maybe if I could just follow up on some of the cost and tariff changes that are in the market: any impact on your back half price expectations in response to that? More broadly, people talk about difficulty producing in the U.S. and others say it's uneconomical. You guys have proved the opposite. Can you talk about the advantages of producing in the United States, and how you've been able to compete effectively while facing higher labor costs from domestic production?
Yes, Chris, thanks for the questions. I'll kick off and I think Dave will jump in. Tariffs and inflation are certainly a dynamic environment with many changes since our last earnings call in January. On a net basis, we are expecting more inflation, including from raw materials and tariffs, in the year than was estimated 90 days ago. We do expect inflation will put some near-term pressure on price-costs. However, we expect to manage this for the full year and it's baked into our guide. I'm not going to size the dollar impact for competitive reasons. Let me share some helpful context. We've had an in-region, for-region manufacturing strategy for well over a decade at Trane Technologies. At the end of 2025, we had 21 factories in the Americas; of that, 20 of those factories are in the U.S. and one factory is in Mexico. Since then, we've acquired Stellar Energy, which added production in Florida, which we're expanding, and we're expanding capacity with a new site to open later this year in Texas. One more thing to add: over 95% of our products sold in the U.S. are manufactured and/or assembled in the U.S. We've had a strong track record managing through inflation and tariffs. There may be some short-term pressure, but that is managed in our guide. We'll continue to leverage our business operating system to mitigate the impact of inflation, including tariffs, over time. We'll work with suppliers to mitigate cost, look at alternative sources of supply, and price where necessary to offset that cost. I won't get ahead of our businesses on price for the year. Our guide in January included around 1.5 points of pricing; it's probably a little higher now, closer to 2 points at the enterprise level, but we'll continue to leverage the business operating system and mitigate the cost where we can and price where we need to.
Yes, Chris, just a follow-up on how we stay competitive. I'll brag about our operating system: we are great operators at Trane Technologies. We like our plants in the United States. We like creating jobs here, and we do it in a very competitive way. Every time I go to one of our plants, I see the improvements the teams have made since my last visit and I get excited about the future for our company. As Chris said, we have over 21 plants in the Americas and we are very competitive, which you can see in our results.
The next question comes from Julian Mitchell from Barclays.
Just wanted to start off with a question on operating leverage. I think organically it was high teens in the first quarter and you've got that mid-20s sort of baseline for the year. Walk us through how we should think about operating leverage playing out through the balance of the year organically. And I suppose the inorganic headwind to that shrinks progressively? Is that a fair way to look at it?
In the first quarter, leverage was consistent with our expectations. We did a little bit better in the residential business and had a headwind from the impact in the Middle East due to the conflict. It was around high teens organic leverage in Q1. We do see that improving as we move through the year. You can think of the second quarter being in that mid-20s kind of range, and then in the second half we're in the mid- to high-20s. In terms of organic leverage, we continue to see an acceleration in the top line and then conversion to the bottom line in the second half of the year, consistent with our January guide. We have even more conviction about the second half of the year and the guide for the year. There are also easier comps in residential, growing top line and improving transport. We expect to have strong discipline in the second half with the Americas Commercial HVAC executing on the backlog when customers want products.
The only thing I would add, Julian, is in our residential business — and we talked about this on our fourth quarter earnings call — we're level loading. In the past, we would ramp up our factory and overproduce in the first five months of the year and then work through the peak season. We've changed our playbook and are level loading. So we are taking a bit of an absorption impact in the first half of the year, but that will come back in the back half of the year.
That's helpful. Maybe a follow-up on the residential HVAC side: any big differences you're seeing on one-step versus two-step movement there? What's your confidence in inventory levels in the channel? Any early reads on the summer selling season as it starts soon?
We're very happy with our first quarter in residential. It came in a bit better than we anticipated, down mid-single digits. Regarding inventory: as we said on our fourth quarter call, we thought inventory was set properly in the independent wholesale distributor channel, and at the end of the first quarter it's still set properly. No change to that. We have desired inventory levels and are optimistic. At the end of Q4 we felt we could be down 5% on residential; we've now modified that to expect a flattish year. We're only in Q1, but early signs are we're executing well and we're more bullish than we have been for a while in residential. The team there is executing strongly, and we'll see how the rest of the year plays out.
The next question comes from Scott Davis at Melius Research.
Last quarter you talked about applied orders widening beyond just data centers. Can you give a little color on that? With orders up 160% this quarter, is that broad-based? What non-data center verticals were strong for you?
Yes, it was broad-based, which is very encouraging. Data centers were very strong, but from a revenue standpoint we had growth in the majority of the verticals we track in the Americas. Nine of the fourteen verticals had positive growth, so you can see this is broad-based. I want to make sure everyone knows we have not lost focus on the core even though data centers are very strong. More than 95% of our account managers or sales force do not call on data centers; they have deep domain expertise in these verticals, which allows us to win. Mega projects continue to grow, data centers continue to grow, our order rates continue to grow, and it's going to be a great year for Trane Technologies.
On the backlog: growth in the first quarter was about $3 billion. Of that $3 billion, about $1.2 billion was from acquisitions, roughly $1 billion of which was Stellar Energy. So we had about $1.7 to $1.8 billion of backlog growth from the core, from organic growth. That's a very strong quarter in terms of backlog growth. Historically, we've seen plus or minus a couple hundred million change in backlog in any quarter over the last few years, so this shows very strong momentum in orders, backlog and pipeline.
Are you operating at full capacity in your factories and applied facilities now? Or do you still have some flex?
There's flex in some factories. We're operating at a very high level, but capacity depends on the definition. The majority of our factories were only running two shifts, and some were only running one shift. So we have the ability to add shifts. We've expanded capacity over the last three years and have plans to continue that expansion. We're making investments as we speak — Stellar, which Chris mentioned earlier, and expansions into some of our applied factories as well.
We did raise our CapEx target for the year. Historically it's been around 1% to 2% of revenue; we raised it to 2% to 3% of revenue to capture expanded production in Florida and Texas for Stellar and to stay ahead of where we see growth, especially in our applied commercial HVAC business. We're still targeting greater than or equal to 100% conversion of free cash flow even with the higher CapEx spend for the year.
The next question comes from Andy Kaplowitz from Citi.
Data centers remain strong, but globally markets like Asia Pacific are still tough. You had 50% growth ex-China in bookings there. Do you see that led by data centers in places like Asia or Europe as well?
Data centers are strong globally. Outside the U.S., they tend to be smaller in size, but they're strong everywhere. Our Asia team is still calling Asia flat for the year, but outside of China we saw nice growth and orders. The team has a robust pipeline and we're optimistic we could do a little better than flattish in Asia Pacific for the year. In Europe, results were relatively strong in Q1 — orders were up as expected and revenue was up, so Europe is in good shape. The Middle East is the area with the notable headwind we've discussed; our priority remains the safety of our employees in the region.
On Americas transport — you continued to outperform the market in Q1. Why do you continue to outperform, and how do you view the outlook going forward?
We continue to invest in innovation even in down markets. Our products' efficiency and quality are strong and recognized in the market. Thermo King is a gold standard for a reason, and the team executes well. We expect the market to turn around, likely in the back half of the year, with 2027 looking like a stronger year. ACT expects a rebound as well; we expect recovery but perhaps a more gradual slope. We're well positioned and I'm proud of the team's execution in Q1.
The next question comes from Amit Mehrotra from UBS.
Dave, can you talk about your TAM within data centers and how Stellar changes that? When I think of Trane and data centers I think of large applied chillers, but Stellar is modular. How does Stellar affect your competitive offering within data centers and what does it do for your TAM?
Let me start with Stellar. It's a great business and we're excited to have it in the Trane Technologies family. Today Stellar specializes in building modular chiller plants for data centers. Think of this as a business that in two to three years could be a $1 billion business with mid-teens plus EBITDA, serving many verticals, not just data centers. Skilled labor scarcity is not unique to data centers and Stellar's modular solutions help alleviate some of those shortages. Today it has about $1 billion in backlog, roughly half of which ships in 2026. We expect modest accretion in 2026 as we invest heavily and deploy our operating system to scale the business. LiquidStack was another addition that expands our offering in CDUs and brings some advanced cooling technology. Regarding our position in data centers, we like it: we're thermal management experts, working with hyperscalers and other influencers, designing reference designs and data centers of the future. Our TAM keeps expanding as data centers evolve and innovate, and we expect to be an important part of that growth.
Maybe a follow-up for Chris: can you talk about data center service revenue and when you expect that to ramp? Services are one-third of the business mix today — how much of that is already data center-related and how should we think about data center service revenue ramping as that vertical grows?
The service opportunity from recent growth in data centers is still ahead of us. We've been in the data center vertical for decades, but until recently it was just one of many verticals. Complex applied systems require OEM connection for service and maintenance, and data centers are especially sensitive to uptime. Stellar adds a significant opportunity; from a modeling perspective we expect about $500 million of revenue this year from Stellar. The base business we acquired was about $350 million of revenue, which was part of our January guide as around 2 points of revenue contribution from M&A. We anticipated growth off of that base in January; in April we captured $500 million in our guide, which added roughly $50 million incremental revenue captured in April. The pipeline in Stellar remains strong and we expect to scale the business from roughly $350 million to over $1 billion in two to three years with investments.
One more comment on services: we invested in a training facility in North Carolina, the largest of its kind. I recently spoke to a class of technicians getting certified in data center commissioning. I was impressed with their talent and enthusiasm. We are preparing our service organization for the growth in data center services and the adoption of more complex, mission-critical systems. We're making sure we're ready, and it's going to be an exciting journey.
I think you will make a great technician, by the way.
I was okay with being a technician, but I'll leave it to the professionals for now.
Next we have Andrew Obin from Bank of America.
There's a lot of conversation about behind-the-meter power and resulting changes in HVAC infrastructure in data centers. Can you talk about absorption chiller technology at Trane? Do you need to add capacity? Does the technology need to evolve to support behind-the-meter needs?
Behind-the-meter needs are not unique to data centers — they will happen in many buildings. Absorption chillers are a technology that has been around for a while and they're getting renewed attention in data centers. We're also working with other technologies that may have lower water usage and similar benefits, including adiabatic cooling-type solutions. There's conversation around direct current in data centers; we're doing work there too. Many chip manufacturers publish reference designs that guide some of these decisions. Our philosophy is that buildings will become smarter and more resilient. Our agentic AI software tools will make buildings much smarter and capture energy savings — most buildings waste roughly 30% of the energy they pay for. Solving that is good for the planet and produces strong paybacks for customers: it's green for green — environmentally beneficial and cost-saving. Data centers are one part of this broader trend; do not overlook the core building markets where the same concepts will take hold.
On Stellar and your data center engagement: how has dialogue changed with customers since these acquisitions? Specifically, how does it increase your service presence inside data centers and how should we think about that?
Our dialogue with end customers hasn't fundamentally changed: we lead with deep domain expertise and direct relationships. We have the broadest portfolio in the industry and think at a system level, not just product level. When customers see our service organization capacity, their eyes light up — they see the depth of expertise and training and their concerns about uptime are alleviated. Stellar enhances our portfolio and service reach in data centers, enabling us to offer modular solutions and stronger service engagement.
Next is Noah Kaye from Oppenheimer.
On transport and the outlook: can you give more insight on what drives your conservatism for the back half versus ACT? Anything you see in the pipeline that drives that view, or should we treat your view as conservative with upside possible?
We use several models, including ACT, but don't rely on any single source. We think the market will uptick in the back half of the year. The fleet is quite old — perhaps the oldest in decades — so replacement demand is a structural tailwind. Spot rates exceeding contract rates is a positive sign. We're bullish that the market will strengthen and that 2027 will be better. ACT may be a bit aggressive on inflection timing; we expect a recovery but perhaps a more gradual slope as supply chains and OEMs respond. We believe it will trough around Q2 and then show upside later in the year and into 2027 and beyond. We've been successful in transport and will continue to execute.
On reference designs and improvements for large-scale data center deployments: are you starting to see benefits from heat recovery integration, larger air-cooled chillers, and other innovations reflected in orders or pipeline? How far ahead of the market is this innovation trend?
Reference designs evolve; you could argue timelines of 12 to 24 months for adoption. We're working on systems that enable smarter chillers and smarter facility operations — chillers that know when to run in free cooling mode or when to run vapor compression, understanding weather patterns and microgrid impacts, and optimizing which units to cycle. There's complexity around water flow, closed-loop systems, velocity, pressure and other system characteristics. Small changes can have big impacts on efficiency and the bottom line for a data center. We're engaged with hyperscalers and chip manufacturers on these conversations. These innovations are part of our engagement and will increasingly be reflected in reference designs and eventual orders.
Next up is Nigel Coe from Wolfe Research.
A couple of guidance points: residential outlook flat for the year and flat for Q2. The back half looks conservative. Also, ACT raised reefer builds for the full year while you didn't raise your market outlook. Can you explain that disconnect?
On the Thermo King side, we felt ACT's December estimate may have been off; their April increase didn't change our outlook much. We use ACT and other sources including internal models. We're pleased ACT's revision is not negative, but it didn't materially change our view. We're happy with the start to the year in Thermo King, which we haven't been able to say for a long time — the team executed well in Q1.
Nigel, on residential we raised the full-year guide to flattish versus flat to down 5% in January. We had a strong start but it's only Q1. We called Q2 around flattish and the second half around mid-single-digit growth. Inventory in the channel remains in a good spot just like 90 days ago. We're confident in the full-year outlook but will monitor the year as it unfolds.
Nigel, if you need a unit, let us know.
On the AI reference design you mentioned and DC power: when you say DC power, do you want to be a DC power equipment provider or are you talking about aligning equipment to be DC-native? Also, to what extent is the reference design driving higher content for Trane, meaning more chillers or integrated systems rather than just components?
On DC power, we are not saying we'll become a DC power provider, but we want our systems to be able to work with DC power. Regarding reference designs: chillers remain core to many reference designs. We think at a system level and are not wedded to any single component — it's about Trane Technologies providing the end-to-end solution. When we work with influencers and hyperscalers on reference designs we plug in a variety of products and derivatives that could be part of our NPD pipeline. We're comfortable with our position in data centers and believe the vertical will be strong for the foreseeable future, with Trane being a major participant.
This concludes the question-and-answer session. I'd like to turn the call back to Zac Nagle for any additional or closing remarks.
I'd just like to thank everyone for joining today's call and wanted to let folks know we'll be around for questions, as always. So please feel free to give us a call. Also we're looking forward to seeing many of you on the road here in the second quarter, and we'll speak to you at the end of the second quarter on our earnings call. Thanks again. Bye.
Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.