Q3 2025 Trane Technologies PLC Earnings Call

October 30, 2025

Paul.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

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Speaker #1: Good morning . My name is Carrie , and I will be your conference operator today . At this time , I would like to welcome everyone to the Train Technologies Q3 2025 Earnings Conference Call .

Courtesy to all participants we ask that you limit yourself to one question and one follow up.

Now I'll turn the call over to Zac Nagle, Vice President of Investor Relations. Please go ahead.

Speaker #1: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .

Thanks, operator, good morning, and thank you for joining us for Trane technologies third quarter 2025 earnings Conference call.

Speaker #1: If you would like to ask a question during this time , simply press star . Then the number one on your telephone keypad .

This call is being webcast on our website at Trane technologies Dot com, where you'll find the accompanying presentation.

Speaker #1: If you would like to withdraw your question , please press star one again . As a courtesy to all participants , we ask that you limit one question and one follow up .

We are 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.

Speaker #1: I will now turn the call over to Zachary Nagle Vice President of Investor Relations . Please go ahead .

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.

Speaker #2: Thanks . Operator . Good morning , and thank you for joining us for Trane Technologies . Third quarter 2020 Earnings Conference Call . This call is being webcast on our website at Trane Technologies plc , where you'll find the accompanying presentation .

This presentation also includes non-GAAP measures, which are explained in the financial tables attached to our news release.

Speaker #2: 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

Joining me on today's call 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.

Speaker #2: and are made pursuant to the safe harbor provisions of federal securities law yourself to . 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 .

Zac and everyone for joining today's call. Please.

Please turn to slide number three.

I'd like to open the call with a few thoughts on our purpose driven strategy.

Fuels, our strong performance over time.

Speaker #2: 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 David Regnery chair and CEO .

The demand for sustainable resilient infrastructure has never been greater.

That's especially true here in the U S, where the AI Revolution and re shoring of industry are transforming how businesses operate at an unprecedented pace.

Speaker #2: And Chris Kuhn , executive vice president and CFO . With that , I'll turn the call over to Dave . Dave . Thanks , Zak .

Trane technologies is at the heart of this evolution, helping customers re imagine their operations for greater performance and sustainability.

Speaker #3: And thank you everyone for joining today's call. Please turn to slide number three. I'd like to open the call with a few thoughts on our purpose-driven strategy that fuels our strong performance over time.

Our high efficiency solutions help our customers save energy and reduce operational costs.

Speaker #3: The demand for sustainable , resilient infrastructure has never been greater . That's especially true here in the US , where the AI revolution and reshoring of industry are transforming .

We're proving that there is no trade off with <unk>.

For the environment, it's good for the bottom line.

As we look ahead, our innovation and expertise continue to set us apart.

With our elevated backlog robust customer demand and strong financial performance, we are well positioned to continue to deliver long term value to our employees customers shareholders and the planet.

Speaker #3: How businesses operate at an unprecedented pace . Trane technologies is at the heart of this evolution , helping customers reimagine their operations for greater performance and sustainability .

Speaker #3: Our high efficiency solutions help our customers save energy and reduce operational costs . We're proving that there is no trade off . What's good for the environment is good for the bottom line .

Please turn to slide number four.

Q3 was another strong quarter marked by record quarterly bookings of $6 billion representing.

Organic growth of 13% year over year.

Speaker #3: As we look ahead , our innovation and expertise continue to set us apart with our elevated backlog , robust customer demand and strong financial performance .

We delivered 170 basis points of adjusted operating margin expansion.

15% adjusted EPS growth and robust free cash flow.

Speaker #3: We are well positioned to continue to deliver long term value to our employees , customers , shareholders and the planet . Please turn to slide number four .

Our global commercial HVAC businesses delivered outstanding performance.

This was particularly true in the Americas, where commercial HVAC bookings reached an all time high surging, 30% year over year.

Speaker #3: Q3 was another strong quarter marked by record quarterly bookings of $6 billion , representing organic growth of 13% year over year . We delivered 170 basis points of adjusted operating margin expansion , 15% adjusted EPs growth and robust free cash flow .

With applied bookings more than doubling the.

The strength of our commercial HVAC business is further underscored by our Q3 ending backlog of $7 2 billion.

However, this total backlog figure does not tell the whole story.

Compared to year end 2020 for our Americas, and EMEA commercial HVAC backlog has grown substantially.

Speaker #3: Our global commercial HVAC businesses delivered outstanding performance . This was particularly true in the Americas , where commercial HVAC bookings reached an all time high , surging 30% year over year with applied bookings more than doubling the strength of our commercial HVAC business is further underscored by our Q3 ending backlog of 7.2 billion .

Increasing by over $800 million or approximately 15%.

Excluding residential revenue growth remains robust up approximately 10% in the third quarter.

We are well positioned for growth in 2026, given strong execution through our business operating system and our rapidly expanding pipeline of projects in data centers and core verticals.

Our leading innovation and direct sales force provide us with distinct competitive advantages.

Our services business, which constitutes approximately one third of our total enterprise revenues remains a durable and consistent growth driver up low double digits year to date and boasting a low teens compound annual growth rate since 2020.

Our guidance reflects the impact discussed during our September update, which Chris will elaborate on shortly.

Please turn to slide number five as discussed in our Americas segment commercial HVAC continues to deliver standout performance.

Team achieved its third consecutive quarter of record breaking bookings with approximately 30% growth.

We are winning in both core vertical markets and high growth verticals, such as data centers.

And high growth verticals customers demand innovative highly engineered solutions tailored to their specific requirements.

Need customer focused partners with the expertise and capacity to grow alongside them.

Which plays to our strengths.

Our direct sales strategy enables us to capture a significant share of these opportunities and consistently outgrow our end markets.

This is demonstrated by our applied solutions bookings growth of over 100% in the third quarter.

Commercial HVAC IC revenue growth was also robust increasing by low teens in equipment and low double digits in services.

Our consistent market outgrowth compounds revenues year after year.

For perspective in the third quarter are applied revenue growth on a three year stack was up more than 125%.

Turning to residential bookings and revenues declined approximately 30% and 20% respectively consistent with the update we provided in September.

And Americas transport refrigeration bookings were up low teens, while revenues were flat.

<unk> end markets being down over 25%, we continue to outperform.

Commercial HVAC strength was not limited to the Americas and EMEA commercial HVAC bookings increased by high teens, while revenues grew by mid single digits consistent with our expectations.

EMEA transport bookings rose by high single digits, while revenues declined by low single digits outperforming end markets, which were down mid single digits.

In Asia Pacific commercial HVAC bookings were up mid thirties, while revenues grew low teens in the quarter.

Growth was strongest in China rebounding from the anniversary of our credit tightening policy in the prior year.

The rest of Asia delivered solid performance.

Now I'd like to turn the call over to Chris Chris.

Thanks, Dave Please turn to slide number six.

Dave covered many key points from this slide earlier, so I'll keep my comments brief.

Our organic revenue growth of 4% aligns with our September update where we shared our expectations for $100 million revenue shortfall from our July guidance related to softer residential markets.

Despite the challenging residential markets, we achieved strong margin expansion and EPS growth driven by robust growth in our commercial HVAC and services businesses strong productivity levels and prudent cost controls implemented early in the third quarter.

Please turn to slide number seven.

In the Americas, we delivered 4% organic revenue growth driven by strong volume growth in our commercial HVAC business and positive price realization offset by a significant volume decline in our residential business.

Adjusted EBITDA margins rose by 90 basis points to over 23% supported by strong productivity and prudent cost management.

We also sustained high levels of business reinvestment.

In EMEA, we delivered 3% organic revenue growth primarily from volume growth in our commercial HVAC and transport businesses.

Adjusted EBITDA margins declined by 60 basis points as expected mainly due to year, one M&A related integration costs and improved sequentially from the second quarter.

We have intensified channel investments in M&A this year to support growth and future opportunities, which are impacting near term margins, but strengthening our business for the long term.

Also maintained high levels of business reinvestment.

In Asia Pacific organic revenue increased 9% due to strong volume growth and price realization.

Adjusted EBITDA margins improved by 230 basis points, driven by strong volume growth in China and productivity across the segment.

We also sustained high levels of business reinvestment.

Now I'd like to turn the call back over to Dave Dave.

We have intensified channel investments in M&A this year to support growth and future opportunities, which are impacting near term margins, but strengthening our business for the long term.

Adjusted Eva margins declined by 60 basis points as expected. Mainly due to year, 1 m&a related integration costs and improved sequentially from the second quarter.

Thanks, Chris Please turn to slide number eight 2025 is unfolding as expected for most of our businesses with the residential market slowdown being the most significant change impacting our outlook.

Also maintained high levels of business reinvestment.

In Asia Pacific organic revenue increased 9% due to strong volume growth and price realization.

Our commercial HVAC businesses globally are performing well meeting or exceeding our expectations for the full year.

Adjusted EBITDA margins improved by 230 basis points, driven by strong volume growth in China and productivity across the segment.

Our Americas commercial HVAC business is executing at a very high level significantly outperforming end markets.

We also sustained high levels of business reinvestment.

As mentioned earlier, both bookings and revenues are compounding at a high rate.

Now I would like to turn the call back over to Dave Dave.

Especially in applied solutions.

Thanks, Chris Please turn to slide number eight 2025 is unfolding as expected for most of our businesses with the residential market slowdown being the most significant change impacting our outlook.

Our Americas commercial HVAC C results are remarkably consistent with three year stack revenue growth of approximately 50% achieved in Q1 through Q3 of 2025 and expect it for Q4 as well.

Our commercial HVAC businesses globally are performing well meeting or exceeding our expectations for the full year.

Our residential business outlook remains unchanged from our September update with Q3 and expectations for Q4 revenue to be down approximately 20% each.

Our Americas commercial HVAC business is executing at a very high level significantly outperforming end markets.

As mentioned earlier, both bookings and revenues are compounding at a high rate.

Compared to our July guidance, the combined revenue impact is a reduction of approximately $250 million.

Especially in applied solutions.

Our Americas commercial HVAC IC results are remarkably consistent with three year stack revenue growth of approximately 50% achieved in Q1 through Q3 of 2025 and expect it for Q4 as well.

With a $100 million in Q3 and $150 million in Q4.

Channel inventory continues to normalize.

Turning to the Americas transport markets acts forecast for 2025 has softened incrementally with the fourth quarter, taking the brunt of the impact now down more than 30%. Despite this we expect to outperform in Q4 with revenues expected to be down approximately 10%.

Our residential business outlook remains unchanged from our September update with Q3 and expectations for Q4 revenue to be down approximately 20% each.

Compared to our July guidance, the combined revenue impact is a reduction of approximately $250 million.

Our outlook for EMEA and Asia remain unchanged.

Now I'd like to turn the call back over to Chris Chris.

With a $100 million in Q3 and $150 million in Q4 as channel inventory continues to normalize.

Thanks, Dave Please turn to slide number nine.

Our revised guidance anticipates, approximately 6% organic revenue growth for the year factoring in the headwinds from the residential and transport Americas markets as Dave mentioned earlier.

Turning to the Americas transport markets.

<unk> forecast for 2025 has softened incrementally with the fourth quarter, taking the brunt of the impact now down more than 30%. Despite this we expect to outperform in Q4 with revenues expected to be down approximately 10%.

In addition, our commercial HVAC Americas business saw the timing of some customer desire delivery dates move from Q4 into 2026.

Altogether. The total impact of these headwinds is approximately two percentage points on 2025 revenue growth.

Our outlook for EMEA and Asia remain unchanged.

Now I'd like to turn the call back over to Chris Chris.

Our 2025 adjusted EPS guidance range is now $12 95 to $13 five.

Thanks, Dave Please turn to slide number nine.

Our revised guidance anticipates, approximately 6% organic revenue growth for the year factoring in the headwinds from the residential and transport Americas markets as Dave mentioned earlier.

Up 15% to 16% year over year and incorporates the Q4 revenue headwinds previously discussed.

We expect organic leverage of 30% plus in 2025 and believe we are on pace for another year of a 100% or greater free cash flow conversion.

In addition, our commercial HVAC Americas business saw the timing of some customer desire delivery dates move from Q4 into 2026.

For the fourth quarter, we expect approximately 3% organic revenue growth driven by continued strong commercial HVAC growth.

Altogether. The total impact of these headwinds is approximately two percentage points on 2025 revenue growth.

Our 2025 adjusted EPS guidance range is now $12 95 to $13 five.

Excluding residential organic revenue growth is expected to remain robust at approximately 7%.

Up 15% to 16% year over year and incorporates the Q4 revenue headwinds previously discussed.

We're targeting organic leverage of approximately 30% in the fourth quarter, which includes strong business reinvestments for future market outgrowth.

We expect organic leverage of 30% plus in 2025 and believe we are on pace for another year of 100% or greater free cash flow conversion.

Consistent with our full year adjusted EPS guidance, we expect Q4 adjusted EPS to be in the range of $2 75 to $2 85.

For the fourth quarter, we expect approximately 3% organic revenue growth driven by continued strong commercial HVAC growth.

For additional details related to our guidance. Please refer to slide number 17.

Please turn to slide number 10.

Excluding residential organic revenue growth is expected to remain robust at approximately 7%.

We remain committed to a balanced capital allocation strategy focused on deploying excess cash to maximize shareholder returns.

We're targeting organic leverage of approximately 30% in the fourth quarter, which includes strong business reinvestments for future market outgrowth.

First we strengthened our core business through relentless reinvestment.

Second we maintain a strong balance sheet to ensure optionality as markets evolve.

Consistent with our full year adjusted EPS guidance, we expect Q4, adjusted EPS to be in the range of $2 75.

Third we expect to deploy 100% of excess cash over time.

To $2 85.

Our approach includes strategic M&A to enhance long term returns.

For additional details related to our guidance. Please refer to slide number 17.

Share repurchases when the stock trades below our calculated intrinsic value.

Please turn to slide number 10.

Please turn to slide number 11.

We remain committed to our balanced capital allocation strategy focused on deploying excess cash to maximize shareholder returns.

Year to date through October we have deployed or committed approximately $2 4 billion.

Through our balanced capital allocation strategy, including approximately $840 million of dividends $160 million of M&A.

First we strengthened our core business through relentless reinvestment.

Second we maintain a strong balance sheet to ensure optionality as markets evolve.

$125 billion to share repurchases and $150 million to debt retirement.

Third we expect to deploy 100% of excess cash over time.

These figures exclude $260 million from M&A and $100 million from share repurchases made early in the year, which were included in our fiscal year 2024 capital deployment targets as discussed during our fourth quarter earnings call.

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 number 11.

Year to date through October we have deployed or committed approximately $2 4 billion through our balanced capital allocation strategy, including approximately $840 million of dividends $160 million of M&A.

We have approximately $5 billion remaining under our share repurchase authorization, providing us with significant share repurchase optionality.

Our M&A pipeline remains active and we will continue to be disciplined in our approach.

$125 billion to share repurchases and $150 million to debt retirement.

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 number 13, the Americas transport refrigeration markets have been dynamic, but the long term outlook remains strong.

We have approximately $5 billion remaining under our share repurchase authorization, providing us with significant share repurchase optionality.

Act projects the trailer market to bottom in the first half of 2026 improve in the second half and grow over 20% for the full year.

Our M&A pipeline remains active and we will continue to be disciplined in our approach.

In 2027.

Overall, our strong free cash flow liquidity balance sheet and substantial share repurchase authorization offer excellent capital allocation optionality as we move forward.

Anticipates, another significant increase with growth exceeding 40%.

Navigating the down cycle, effectively and outperforming end markets. We continued to invest heavily in innovation and look forward to adding another growth driver to our portfolio when the market strengthens.

Now I would like to turn the call back over to Dave.

Dave.

Thanks, Chris Please turn to slide number 13, the Americas transport refrigeration markets have been dynamic, but the long term outlook remains strong.

Turning to slide number 14, we expect to provide 2026 guidance during our fourth quarter earnings call, but ill discuss our early views based on current insights.

Projects the trailer market to bottom in the first half of 2026 improve in the second half and grow over 20% for the full year.

We expect continued strong growth in our commercial HVAC businesses, which make up 70% of our total revenues are.

In 2027.

We anticipate another significant increase with growth exceeding 40%, we are navigating the down cycle effectively and outperforming end markets. We continued to invest heavily in innovation and look forward to adding another growth driver to our portfolio when the market strengthens.

Our world class direct sales and service teams give us a competitive edge, allowing us to pivot quickly across vertical markets to capture growth opportunities.

With the broadest and most innovative portfolio in the industry, we are relentlessly reinvesting to support a rapidly growing pipeline of opportunities.

Turning to slide number 14.

We expect to provide 2026 guidance during our fourth quarter earnings call, but I will discuss our early views based on current insights.

Our proven track record of compounding bookings and revenue growth, especially in high growth verticals like data centers underscores our strength as a leading climate innovator or.

We expect continued strong growth in our commercial HVAC businesses, which make up 70% of our total revenues are world class direct sales and service teams give us a competitive edge, allowing us to pivot quickly across vertical markets to capture growth opportunities.

Our commercial HVAC backlog is not only elevated but growing up more than 800 million from year end 2024.

Positioning us well for continued strong growth in 2026 and beyond.

With the broadest and most innovative portfolio in the industry, we are relentlessly reinvesting to support a rapidly growing pipeline of opportunities.

And residential which represents about 15% of our revenues we believe.

Steve over the long term that the industry remains fundamentally healthy with a GDP plus framework.

Our proven track record of compounding bookings and revenue growth, especially in high growth verticals like data centers underscores our strength as a leading climate innovator.

We expect 2026 to be a tale of two halves the challenging first half due to tough comps followed by improvement in the second half against easier comps.

Our commercial HVAC backlog is not only elevated but growing up more than 800 million from year end 2024.

And our Americas transport business accounting for about 7% of our revenues. We also foresee a tale of two halves with soft markets in the first half and recovery in the second.

Positioning us well for continued strong growth in 2026 and beyond.

While the recovery slope may vary we are aligned with freight markets recovering in the second half of 2026.

And residential which represents about 15% of our revenues we believe Steve.

We have over the long term that the industry remains fundamentally healthy with a GDP plus framework.

Our focus on innovation yields healthy pricing opportunities in our business operating system is prime to stay ahead of tariff and inflationary pressures.

We expect 2026 to be a tale of two halves the challenging first half due to tough comps followed by improvement in the second half against easier comps.

Our services business comprising about one third of our enterprise revenues is a key driver underpinning our growth in 2026 and years to come.

And our Americas transport business accounting for about 7% of our revenues. We also foresee a tale of two halves with soft markets in the first half and recovery in the second.

We have a proven track record of driving strong services growth, we see continued growth opportunities across our portfolio, particularly in commercial HVAC.

While the recovery slope may vary we are aligned with freight markets recovering in the second half of 2026.

Where our large and growing installed base, an increasing mix of applied solutions carry a strong higher margin services tail.

Our focus on innovation yields healthy pricing opportunities in our business operating system is trying to stay ahead of tariff and inflationary pressures.

Additionally, our rapidly growing connected services portfolio is seeing increased demand for digital performance optimization and demand side management.

Our services business comprising about one third of our enterprise revenues is a key driver underpinning our growth in 2026 and years to come.

For our energy services business excels.

We have a proven track record of driving strong services growth, we see continued growth opportunities across our portfolio, particularly in commercial HVAC.

Overall, we are excited about the opportunities for continued growth in 2026.

Please turn to slide number 15.

In closing, our leading innovation elevated backlog and strong customer demand and position us for strong performance in 2026 and beyond.

Our large and growing installed base, an increasing mix of applied solutions carry a strong higher margin services tail.

Our uplifting culture continues to attract the best talent powering our innovation.

Additionally, our rapidly growing connected services portfolio is seeing increased demand for digital performance optimization and demand side management.

Our solutions offer strong returns to customers and also contribute to a sustainable world. This drives our consistent track record of performance and positions us to deliver differentiated value for shareholders over the long term.

For our energy services business excels.

Overall, we are excited about the opportunities for continued growth in 2026.

Please turn to slide number 15.

And now.

We'd be happy to take your questions operator.

In closing, our leading innovation elevated backlog and strong customer demand position us for strong performance in 2026 and beyond.

Thank you at this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.

Our uplifting culture continues to attract the best talent powering our innovation.

A reminder, we ask that you limit yourself to one question and one follow up.

Pause for just a moment, how the Q&A roster.

Your first question will come from Chris Snyder with Morgan Stanley.

Hey, Chris Good morning.

And now.

We'd be happy to take your questions operator.

I wanted to ask about Americas margins.

Thank you at this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.

Guys put up a 40% incremental almost in Q2 Q3 with like a 50.

Despite negative mix away from <unk>, So I guess kind of my question is.

A reminder, we ask that you limit yourself to one question and one follow up.

Pause for just a moment, how the Q&A roster.

Really on the service margins as the company and technology and fixed assets to the service aftermarket business is there opportunity for service incremental margins to improve versus history, because it feels like we're we're effectively kind of replacing more valuable human cost with more.

Your first question will come from Chris Snyder with Morgan Stanley.

Hey, Chris Good morning.

Place.

Wanted to ask about Americas margins.

Static fixed costs, whether it be technology or something else and any thoughts there would be helpful.

Guys put up a 40% incremental almost in Q2 Q3 with a 50.

Hey, Chris This is Chris.

Despite negative mix away from <unk>, So I guess kind of my question is.

First and then Dave May jump in so very happy with the Americas margin performance in the third quarter.

Really on the service margins as the company adds technology and fixed assets to the service or aftermarket business is there an opportunity for service incremental margins to improve versus history, because it feels like we're we're effectively kind of replacing more valuable human cost with more stock.

Operating income margins were nearly 22% up 120 basis points on a year over year basis.

And when you think about service, we've described service margins to be higher than the segment average, they're higher than equipment margins and we continue to invest strongly in that space across front end tools service technicians sales account managers and I think we like the path that those margins should be ongoing forward, there's obviously an opportunity.

<unk> fixed costs, whether it be technology or something else any thoughts there would be helpful.

Hey, Chris This is Craig Dahl.

First and then Dave May jump in so very happy with the Americas margin performance in the third quarter.

For those margins to expand.

The only thing I would add because we're also investing heavily in our training organization and we just we just opened a new training center here in North Carolina.

Operating income margins were nearly 22% up 120 basis points on a year over year basis.

And when you think about service, we've described service margins to be higher than the segment average theyre higher than equipment margins and we continue to invest strongly in that space across front end tools service technicians sales account managers.

And it's just we want to make sure our techs have the best tools in front of them in front of our customers, we want them to be the smartest as they can be and all of our connected solutions our training it all adds up to.

Technicians that are more productive and by the way our service business is growing at a very nice rate as a result of that.

I think we like the path that those margins should be ongoing forward, there's absolutely an opportunity for those margins to expand.

I appreciate that and then maybe going over to orders applied plus a 100%, obviously, a pretty pretty massive number and I know you can't continue to grow orders of 100%, obviously, but is there anything in that that feels one timing that's worth calling out it does seem.

The thing I would add Chris we're also investing heavily in our training organization and we just we just opened a new training center here in North Carolina, and it's just we want to make sure. Our techs have the best tools in front of them in front of our customers, we want them to be the smartest as they can be.

Like the pipeline I think you referred to it as rapidly growing so so it still feels like theres a lot of opportunity out there, but any kind of comment on that apply number and anything at the end market level would be helpful. Thank you.

And all of our connected solutions our training it all adds up to.

Technicians that are more productive and by the way our service business is growing at a very nice rate as a result of that.

Good question, obviously, we're very strong in <unk>.

I appreciate that and then maybe going over to orders applied plus a 100%, obviously, a pretty pretty massive number and I know you can't continue to grow orders, 100%, obviously, but is there anything in that that feels one timing thats worth calling out it does seem.

Articles.

It certainly had a lot of growth we did see several large orders.

In the third quarter.

You could think of a large order is over $100 million I guess my framework has changed there, but yes. So we have had several large orders I'll just remind you that data center orders can be more uneven.

The pipeline I think you referred to it as rapidly growing so so it still feels like theres a lot of opportunity out there, but any kind of comment on that apply number and anything at the end market level would be helpful. Thank you.

So you may see them in one quarter not another but look the pipeline of activity is what really.

It's really encouraging.

Good question, obviously, we're very strong in all of our verticals data centers certainly had a lot of growth we did see several large orders.

And.

It's the.

The opportunity I was walking into a meeting yesterday on campus and I ran into one of our chiller portfolio managers and this individual stop me from a what I thought was going to be two minutes and end up being 15 minutes about tell me about all the robust demand that they're seeing in the pipeline. The orders, we're receiving the innovation that's going to be coming out or is <unk>.

In the third quarter.

Now so look there's a lot of momentum out there right now and I would tell you that train technology is doing a great job of capturing more than our fair share of that momentum.

So you may see them, a one quarter not another but look the pipeline of activity is what really.

It's really encouraging.

And.

It's.

Well, thank you for that they really appreciate it.

I had the opportunity I was walking into a meeting yesterday on campus and I ran into one of our chiller portfolio managers and this individual stop me for what I thought it was going to be two minutes. It ended up being 15 minutes about telling me about all the robust demand that they're seeing in the pipeline and the orders, we're receiving the innovation that's going to be coming out or.

Alright, Thanks, Chris Thank you.

Your next question will come from Andy Kaplowitz with Citigroup.

Hey, good morning, everyone.

Hey, Andy how are you. Good morning, good how are you David because you grew revenue low teens in Americas commercial HVAC equipment in Q3, but is there any reason why your growth there wouldn't follow the Reacceleration America's commercial Hs bookings that you've seen lately and set you up actually for as good a stronger commercial HVAC organic revenue growth in 2006.

Is out now so look there's a lot of momentum out there right now and I would tell you that train technology is doing a great job of capturing more than our fair share of that momentum.

Well, thank you for that they really appreciate it.

<unk> versus 'twenty, five and is the Reacceleration in bookings I mean, you talked about large projects how are other verticals besides data centers.

Alright, Thanks, Chris Thank you.

Your next question will come from Andy Kaplowitz with Citigroup.

Andy I'll start look the commercial HVAC Americas business has had a great year and it's going to continue to push.

Hey, good morning, everyone.

Formed strongly in the future when you think about our full year guide for that business.

<unk> revenues to be up low double digits this year.

Q4 will be up around 10% and when you think on a three year stack for that business. Its consistent every quarter. This year, a three year stack up 50% revenues for our commercial HVAC business. So certainly the backlog and the order rates continue to give us more confidence on growth into the.

Six versus 25 and is the Reacceleration in bookings I mean, you talked about large projects how are you.

Other verticals.

<unk> data centers.

Andy I'll start look the commercial HVAC Americas business has had a great year and it's going to continue to perform strongly in the future. When you think about our full year guide for that business, we're expecting revenues to be up low double digits. This year.

The future and as you know services really underpins that business as well, it's about a third of the enterprise revenues, it's roughly half of the commercial HVAC in the Americas revenues and that will we see that being a tailwind for for many years to come as well. So we'll dial in 2026 when we.

Our on our next earnings call, but we're expecting this business to continue to have strong growth going forward, yeah, and the only thing I would add on the verticals Andy certainly very strong in data centers health care was also strong higher Ed was strong government was strong and we'll see how that goes with the government shutdown, but right now government was strong and we also saw some strength in <unk>.

As you know services really underpins that business as well, it's about a third of the enterprise revenues, it's roughly half of the commercial HVAC in the Americas revenues and that will we see that being a tailwind for many years to come as well. So we'll dial in 2026 when we.

Office, which was good to see so overall pretty balanced.

Strength that we're seeing out there in our core verticals as well as the high growth verticals.

Great and then you didn't change your incremental revenue impact on <unk> in Q4 that you told us that in September but can you give us some more color on what youre seeing in your channel. There is obviously debate out there as to when inventories in resi real rates. The race as I know you already talked about relatively weak one first half of 2006, mainly due to tough comps, but do you think inventories could get him back.

And we also saw some strength in office, which was good to see so overall pretty balanced.

<unk> by the end of the year, how do you think about that.

Yeah, I mean, we're hopeful it gets rebalanced I mean 2025 was such an odd year for residential really you had it started with the pre buy you could argue that maybe was was to pre buys with maybe a little bit.

Strength that we're seeing out there in our core verticals as well as the high growth verticals.

Tariffs, but and then you had this this refrigerant change that didn't go very well because of the canister issue that was well publicized.

And then you had a really short summer.

Until the week, one first half of 2006, mainly due to tough comps, but do you think inventories could get in balance by the end of the year, how do you think about that.

Across the U S. So those three factors are kind of anomalies that we look at in the resi space, obviously that caused a bit of inventory in the channel that needs to be burned down.

Yes, I mean, we're hopeful it gets rebalanced I mean 2025 was such an odd year for residential really you had it started with the pre buy you could argue that maybe was was to pre buys with maybe a little bit.

Our plan is hopefully it's burned down by the end of the.

By the end of the year, if not it will certainly be burned down by the first quarter, but we'll give you an update on that Andy when we when we present, our fourth quarter earnings.

Pre tariffs, but and then you had this this refrigerant change that didn't go very well because of the canister issue that was well publicized.

I appreciate the color guys.

Your next question will come from Julian Mitchell with Barclays.

And then you had a really short summer.

Across the U S. So those three factors are kind of anomalies that we look at in the resi space, obviously that caused a bit of.

Okay.

Hi, good morning.

Maybe I just wanted to understand a little bit the operating leverage.

Entering in the channel that needs to be burned down in.

The guidance change so you've moved to sort of 30% plus there on the organic front it is a bit higher than before and that's even with.

Our plan is hopefully it's burned down by the end of the.

By the end of the year, if not it will certainly be burned down by the first quarter, but we'll give you an update on that Andy when we when we present, our fourth quarter earnings.

Revenue.

Gannett Guide.

Being lowered to touch overall, so maybe help us understand sort of why is that operating leverage moving up does it reflect kind of exceptional cost control that may have to unwind a bit next year or is it more to do with something in the sort of shape of the business, particularly in commercial HVAC, that's giving you that.

I appreciate the color guys.

Your next question will come from Julian Mitchell with Barclays.

Yeah.

Hi, good morning.

Maybe I just wanted to understand a little bit the operating leverage.

Guidance change so you've moved to sort of 30% plus there on the organic front it is a bit higher than before and that's even with the.

Structural entitlement to higher Incrementals.

Hey, Julien it's Chris.

Yeah look I think first off we manage all parts of the P&L and when I step back and I see the volume growth in commercial HVAC.

Revenue.

<unk> guide.

Being lower that touch overall, so maybe help us understand sort of why is that operating leverage moving up does it reflect kind of exceptional cost control that may have to unwind a bit next year or is it more to do with something in the sort of shape of the business, particularly in commercial HVAC, that's giving you that.

We're getting strong leverage on that volume growth.

Youre right Theres headwinds in the business. We've described in residential in transport and in the fourth quarter. Some revenue shifting out to next year in commercial HVAC, but we're really offsetting nearly all of these headwinds on an EPS basis really because we're managing all parts of the P&L.

Structural entitlement to higher Incrementals.

Multiple areas there I mentioned volumes there is a strong cost management think of US is leveraging our scenario plans and our business operating system, where we beginning part of the third quarter. When we saw the lower volumes in residential we made sure that we were managing all parts of our cost it is a combination of.

Hey, Julien it's Chris.

Yeah look I think first off we manage all parts of the P&L and when I step back and I see the volume growth in commercial HVAC.

We're getting strong leverage on that volume growth.

Youre right Theres headwinds in the business. We've described in residential in transport and in the fourth quarter. Some revenue is shifting out to next year in commercial HVAC, but we're really offsetting nearly all of these headwinds on an EPS basis really because we're managing all parts of the P&L.

Generic cost control as well as some structural cost takeout and you'd expect that from a lean operator.

What we didn't do we haven't cut investments. So we're preserving investments and there's a number of investments we had planned for the fourth quarter and Dave was very clear and I, we're not cutting those investments we're moving forward with those because they set us up for future growth. So I look at the cost management strong volumes in commercial.

So as well as making sure that we're preserving investments yes. The only thing I would add is on the scenario planning.

It's a combination of discretionary cost control as well as some structural cost take out and you'd expect that from a lean operator.

We really really well is it's not just what it is.

You will not cut and we spend a lot of time on that and Thats why as Chris said, we're continuing to reinvest in all of our businesses and we have projects out there that we know are so important for our future.

We didn't do we havent cut investments so we're preserving investments.

And there's a number of investments we had planned for the fourth quarter and Dave was very clear and I, we're not cutting those investments we're moving forward with those because they set us up for future growth. So I look at the cost management strong volumes in commercial as well as making sure that we're preserving investments yeah. The only thing I would add is on the scenario planning.

These are all ring fenced. So we make sure that those are things that we will not cut because they are about our future. So we do the teams do a great job there of identifying those and making sure that we have.

Going to be not only ready for a particular quarter, but really well into the future.

We really really well is it's not just what it is.

That's great to hear and then just my follow up.

What you will not cut and we spend a lot of time on that and Thats why as Chris said, we're continuing to reinvest in all of our businesses and we have projects out there that we know are so important for our future, but those are all ring fenced. So we make sure that those are things that we will not cut because they are about our future. So we do the teams do a great job.

It would be around pricing.

Maybe just give us any color as to the price contribution to firm wide revenues in the third quarter.

And within those raise the Americas market, specifically, what's your comfort level that price discipline can hold up as this inventory destocking plays out.

They're of identifying those and making sure that.

We're going to be not only ready for a particular quarter, but really well into the future.

And Julian price for the quarter was a bit above three percentage points, we've been tracking around three percentage points in the first half of the year and from a full year guide perspective think of the 6% organic revenue growth is roughly 3% price 3% volume.

That's great to hear and then just my follow up.

It would be around pricing.

Maybe just give us any color as to the price contribution to firm wide revenues in the third quarter.

I'd say, we just continue to manage all the inflationary inputs well.

And within those raise the Americas market, specifically, what's your comfort level that price discipline can hold up as this inventory destocking plays out.

And ensuring that we've got a positive spread over price versus cost.

In residential it's really about a volume story, there, where obviously shifting into very much this year and to 454, b with a price mix contribution and there'll be a little bit of carryover going into next year, but we're also just making sure. We're staying ahead of a very dynamic environment in terms of cost input and remaining nimble. So we will continue to do.

Yeah, and resume the industries remain disciplined Julien.

I'd say, we just continue to manage all the inflationary inputs well.

Yes.

That's great. Thank you alright.

And ensuring that we've got a positive spread over price versus cost.

Alright. Thank you. Thank you.

Your next question will come from Amit Mehrotra with UBS.

Thanks, Operator, Hey, Dave Hey, Chris.

I wanted to ask.

Well, thanks, I wanted to ask about organic growth between.

The applied equipment and light commercial I know together those grew low teen hoping you can give us a little bit more color on just the applied equipment side.

Do that yes.

<unk> the industry has remained disciplined Julien.

Just given where the backlog in order to offer the equipment, obviously, the sustainable growth opportunity.

Okay.

That's great. Thank you.

Thank you. Thank you.

Yes.

Your next question will come from Amit Mehrotra with UBS.

So those two are kind of 50% of the business do you think growth can be maintained at the current levels accelerate decelerate because you have a large number of what could be the right expectation prospectively for those growth rates for those two particular parts of the business.

Thanks, Operator, Hey, Dave Hey, Chris.

I wanted to ask.

Well, thanks, I wanted to ask about organic growth between.

The applied equipment and light commercial I know together those grew low teen hoping you can give us a little bit more color on just the applied equipment side, and just given where the backlog in order to offer the equipment, obviously, the sustainable growth opportunity in the region.

Yes look applied was very strong very.

Very strong.

Unitary was positive I guess, that's a good news, but it was it has not been a big contributor this year to our growth.

We'll see how it plays out next year as far as services goes look our service business is very consistent.

Those two are kind of 50% of the business do you think growth can be maintained at the current levels accelerate decelerate because you have large numbers of what should be the right expectation prospectively for those growth rates for those two particular parts of the business.

And we continue to put up nice growth rates there we have.

If you go back to 2020, our compound annual growth rate as I said in my prepared remarks.

It's in the low teens, which is very very strong and by the way that doesn't happen by accident. Okay. We have a very detailed operating system around our service business that allows us to do that and if you think about all what's happening with our applied solutions in the installed base continuing to grow.

Yes look applied was very strong.

Very strong.

Unitary was positive I guess, that's a good news, but it was it has not been a big contributor this year to our growth.

We'll see how it plays out next year as far as services goes look our service business is very consistent and we continue to put up nice growth rates. There we have.

The future is very very bright for our service business.

Okay, and just as a follow up maybe for Chris. The company you guys have this framework for top quartile revenue earnings growth kind of year on year round.

If you go back to 2020, our compound annual growth rate as I said in my prepared remarks.

I interpret that to mean kind of high single digit revenue growth, maybe low to mid teens EPS growth, obviously youre achieving that this year, which is incredible in the context of what's happening in the residential market, but just given kind of where the commercial HVAC business order momentum is.

Hopefully better.

The future is very very bright for our service business.

It should be.

Sure.

We see an accelerating revenue and earnings algorithm next year I would assume that would be the case, just given the headwinds you're facing this year.

Okay, and just as a follow up maybe for Chris. The company you guys have this framework for top quartile revenue earnings growth kind of year on year round.

Yes, I mean look I think the future's bright.

We will update investors in about three months at our next earnings call but.

We do go into each and every year thinking about how we're going to plan for.

Top quartile.

Top line growth EPS growth in <unk>.

Hopefully better.

Not forget about free cash flow conversion with a with a four year average well over 100% I think we're one of the leaders in that space of converting that earnings to free cash flow.

It should be.

Should we see an accelerating revenue and earnings algorithm next year I would assume that would be the case, just given the headwinds you're facing this year.

With down markets in residential and transport we know the first half of 2026 is going to have some tough comps.

Yes, I mean look I think the future's bright.

We will update investors in about three months at our next earnings call but.

Our tough start to the year and tough comp off of tough comps.

We do go into each and every year thinking about how we're going to plan for.

The full year it looks like we will update you in a few more months things are dynamic but.

Top quartile.

Certainly the growth in commercial HVAC and over 90% of that backlog is for commercial HVAC of which the vast majority of that is applied systems.

Top line growth EPS growth in <unk>.

Not forget about free cash flow conversion with the four year average well over 100% I think we're one of the leaders in that space of converting that earnings to free cash flow.

It gives us a lot of confidence that we'll see strong growth in that business next year.

<unk>.

With down markets in residential and transport we know the first half of 2026 is going to have some tough comps.

Got it okay. Thank you very much.

Your next question will come from Scott Davis.

Oh, sorry, sorry.

Tough start to the year and tough comp off of tough comps.

Hey, good morning, guys.

Yeah.

Let's see how the full year it looks like we will update you in a few more months things are dynamic but.

It was applied bookings were.

There are big numbers.

Certainly the growth in commercial HVAC and over 90% of that backlog is for commercial HVAC of which the vast majority of that is applied systems.

Is that.

Is there any of that that's leaking into 'twenty seven or is that.

I know the industry standard used to be kind of one year Max lead time or is it now leaking out a little longer than one year, just given how strong demand is.

It gives us a lot of confidence that we'll see strong growth in that business next year.

Got it okay. Thank you very much.

Not really I mean, it was I think there might be just a little bit in 'twenty said most of it's going to ship in the next 15 months silicon.

Your next question will come from Scott Davis with Melius research.

Hey, good morning, guys.

Okay.

Cheng.

Okay.

And we're saying in the backlog in terms of.

It was applied bookings were.

Some of the large orders customers give us insight on what theyre going to place, but we won't put them put it into the backlog until theres a sign PEO. So there are slots, let's say that we're expecting to be filled for 2027, but that will convert to orders here starting in the fourth quarter into 2020.

There are big numbers.

Is that.

Is there any of that that's leaking into 'twenty seven or is that.

I know the industry standard used to be kind of one year Max lead time or is it now leaking out a little longer than one year, just given how strong demand is.

Not really I mean, it was I think there might be just a little bit in 'twenty said most of it's going to ship in the next 15 months silicon.

The pipeline of activity I know, we had very strong and I'm proud of what the team was able to third.

Third quarter.

Okay.

Our pipeline of activity is extremely extremely robust right now.

Chunk, that's timely and were saying, yes, and the backlog in terms of.

Yes clearly.

Some of the large orders customers give us insight.

So I just wanted to switch gears, a little bit you put out a press release two days ago on this.

On what theyre going to place, but we won't put it put it into the backlog until there is a signed Po. So there are slots, let's say that we're expecting to be filled for 2027, but that will convert to orders here.

This thermal management system, the reference design or for the video what's new in that design. It looked like to me. It almost implies that you guys are making the CDU and kind of doing kind of the Z.

<unk> in the fourth quarter into 2020.

At the pipeline of activity I know, we had very strong and I'm proud of what the team was able to.

Just kind of maybe talk about what's new in that design or the importance of it.

Quarter RP.

Our pipeline of activity is extremely extremely robust right now.

If I told you I won't be able to talk to you anymore.

Well look with the video there a later obviously the chip side of things and we're helping basically as a leader in that vertical and I've been saying for a long time, we're a leader in the data center vertical.

Yes clearly.

So guys I just wanted to switch gears, a little bit you put out a press released two days ago on this.

This thermal management system, the reference design or.

For the video what's new in that design. It looked like to me. It almost implies that you guys are making the CDU and kind of doing kind of the Z.

We're working with all Influencers, whether it would be hyper scaler or whether it would be great companies like <unk> that we're working with and it's really about our.

Our very technical engineers, working with their technical engineers and coming up with solutions that in some cases, we didn't think were possible just a very short period of time ago. So more to come on that we're excited about working with the video we've been working with them for a while and we think there is.

Just kind of maybe talk about what's new in that design or the importance of it.

But if I told you I won't be able to talk to you anymore.

We will work with the video there a later, obviously and the chip side of things and we're helping basically as a leader in that vertical and I've been saying for a long time, we're a leader in the data center vertical.

A lot of opportunities.

The innovation that we're seeing in the data center vertical is moving very very fast and where they're moving with it.

We're working with all influences, whether it would be hyper scaler or whether it would be great companies like the video that we're working with and its really about.

I would also tell you that a lot of this innovation as we develop we're pulling back into our core markets as well.

It's it's it's additive we like being challenged with.

Sitting at the table.

We like them in our labs, showing them, what we can do and when smart people challenge each other usually have great outcomes.

A lot of opportunities.

Fair enough, Okay best of luck, Dave Chris So you guys.

The innovation that we're seeing in the data center vertical is moving very very fast and where they're moving with it.

Thanks Scott.

Your next question will come from Tommy Moll Stephens.

I would also tell you that a lot of this innovation as we develop.

Good morning, and thank you for taking my question.

Hey, Tommy how are you.

We're pulling back into our core markets as well so.

Doing fine thanks.

Wanted to ask about EMEA margin, which we haven't covered in enough detail yet just given some of the comments you made there about recent investments that have.

It's additive we like being challenged.

What we like sitting at the table.

We like them in our labs, showing them, what we can do and when smart people challenge each other usually have great outcomes.

Pressured the margin percentage is a bit what's the timeline look like there.

Fair enough, Okay best of luck, Dave Chris.

When I.

Guys.

Assuming continued topline.

Thanks Scott.

Your next question will come from.

<unk> you could start to see some positive margin dynamic.

Steven.

Good morning, and thank you for taking my question.

Yeah, Tommy look the third quarter for our commercial HVAC business in EMEA came in really as expected.

Tommy how are you.

Doing fine thanks.

Wanted to ask about EMEA margin, which we haven't covered in enough detail yet just given some of the comments you made there about recent investments that have.

For our second half guide, we knew that the revenue growth will be stronger in the fourth quarter than the third quarter really based on the timing of when customers want their products.

Also expected sequential margin improvement throughout the year and we saw that also in the third quarter versus the second.

Pressured those margin percentages a bit what's the timeline look like there.

When I.

Second quarter.

Assuming continued topline.

Some of that for their segments is really around some recent M&A that we've completed both in the transport channel and in the commercial HVAC channel that just on day, one had lower margins than the segment average so we'll work through that throughout the year, but those are those M&A transactions are very important to give us.

<unk> you could start to see some positive margin dynamic.

Yes, Tommy look the third quarter for our commercial HVAC business in EMEA came in really as expected.

For our second half guide, we knew that the revenue growth will be stronger in the fourth quarter than the third quarter really based on the timing of when customers want their products.

More opportunities for growth in the markets that they serve so we're excited about that.

Also expected sequential margin improvement throughout the year and we saw that also in the third quarter versus the second quarter.

The region has continued to invest on its front end and sales.

Sales and service portfolio I think that's largely anniversaried at this point as we go into the fourth quarter, but we would expect those margins to continue to grow and accelerate into 2026.

Thank you, Chris and if we zoom.

Zoom out and look at.

Consolidated margins.

Specifically next year.

Obviously, youre not going to guide today.

<unk> for growth in the markets that they serve so we're excited about that the.

Are there any variances to your typical planning cycle around the mid Twenty's conversion that are worth pointing out and even if it's just a seasonal comment obviously there are a couple of factors that.

The region has continued to invest on its front end and sales.

Our sales and service portfolio I think thats largely anniversaried at this point as we go into the fourth quarter, but we would expect those margins to continue to grow and accelerate into 2026.

Weigh on the first half.

And then flip to a tailwind in the second half so perhaps you could give some context around that thank you.

Thank you, Chris and if we zoom.

Zoom out and look at.

And nothing to call out specifically I mean, you called out our long term framework of 25% or better Incrementals.

Consolidated margins.

Specifically next year.

Obviously, youre not going to guide today.

We would go into any planning year thinking along that guidance.

Are there any variances to your typical planning cycle around the mid Twenty's conversion that are worth pointing out and even if it's just the seasonal comment obviously there are a couple of factors that.

<unk>, Dave talked about in terms of.

Orders and bookings the pipelines for our investments in the company remains very very strong so for us it's always been about how to pull them ahead to drive growth even faster. So we'll manage the two of them as we think about 2026.

Weigh on the first half.

And then flip to a tailwind in the second half so perhaps you could give some context around that thank you.

I appreciate your comment on first half I do think for our transport market in the Americas and for residential those will be tougher first halves in 2026 and the expected growth in the second half.

And nothing to call out specifically I mean, you've called out our long term framework of 25% or better incrementals in.

We would go into any planning year thinking along that guidance.

And we'll put it all together and the goal would be let's drive to top quartile financial performance again, but we will update everyone in a few months.

Pipelines, Dave talked about in terms of.

Thank you, Chris I'll turn it back.

Tommy Thank you.

Your next question will come from Joe Ritchie with Goldman Sachs.

Hey, guys good morning.

Joe how are you good morning.

State your comment on first half I do think for our transport market in the Americas and for residential those will be tougher first halves in 2026 with expected growth in the second half.

Doing great. Thanks, Dave.

I wanted to just focus my question is just on the data center opportunity and what Youre seeing today.

So.

And we will put it all together and the goal would be let's drive to top quartile financial performance again, but we'll update everyone in a few months.

If you think about kind of like the nature of the projects that youre, winning I'm curious whether that the nature of the projects have changed around that.

Thank you, Chris I'll turn it back.

What specifically.

Thanks, Tommy Thank you.

Are you starting to see more modular type data centers getting built by the hyper scaler.

Your next question will come from Joe Ritchie with Goldman Sachs.

The time to market, it's really important just any anything else you can tell us around.

Hey, guys good morning.

Hey, Joe how are you good morning.

Doing great. Thanks, Dave.

The opportunity that you are booking would be helpful.

And then just focus my question is just on the data center opportunity and what Youre seeing today.

Yes, I mean, we've seen that for a while okay.

So.

Mount a stick build that you can reduce on a job site is obviously advantageous because it ensures a smoother build process.

You think about kind of like the nature of the projects that you're winning I'm curious whether that like the nature of the project teams around.

So that's what happened in the data center space for a while.

Specifically.

Are you starting to see more modular type data centers getting built by the hyper scaler because at the time of market. It's really important just any anything else you can tell us around.

And we're obviously you could see all of our our Chillers being installed there. So we're part of that process. So I wouldn't say, it's a change, but obviously I think it's a great question, though because I know, we're talking about data centers here, but if you think about.

The opportunities that you are booking would be helpful.

Other labor constraints in other verticals that whole modular or less.

Yes, but we've seen that for a while okay.

The amount of stick build that you can reduce on a job site is obviously advantageous because it ensures a smoother build process.

Labor required on a job site is certainly something that we.

Will trend in the future.

So that's been happening in the data center space for a while.

Yes.

That makes sense sorry.

Okay that makes sense.

Then I guess, Dave just kind of thinking going back to Scott's question just around lead time right you have certain parts of the of the value chain that are out. Thanks.

Thanks turbines are out like three to four years in terms of when they can get delivered and given that your lead times right now really kind of 12 to 18 months I mean, it just seems like the opportunity for you you've just got a lot of like already based on what we're seeing in the value chain and the opportunity for you guys should be really strong really.

Other labor constraints in other verticals that whole modular or less.

Labor required on a job site is certainly something that we.

Will trend in the future.

Yes.

That makes sense sorry.

Through the end of the decade, I don't want to put the cart before the horse here, but.

That makes sense.

Then I guess, Dave just kind of think of going back to Scott's question. Just around lead time right you have certain parts of the value chain that are out. Thanks.

Just how are you guys thinking about the data center opportunity for you guys. The decade I like it look I think 12 to 18 months first of all that may not be our capacity that maybe what the when the data the data centers just given the hyperscale is giving us visibility for planning purposes, we've actually expanded our capacity and the team do an analysis 2023 weeks.

Thanks turbines are out like three to four years in terms of when they can get delivered and given that your lead times right now really kind of 12 to 18 months.

It seems like the opportunity for you.

Spans at our chiller capacity by Forex.

Got a lot of like already based on what we're seeing in the value chain and the opportunity for you guys should be really strong really through the end of the decade I don't want to put the cart before the horse here, but.

So we haven't invested a lot there, but we're ready for the growth and by the way in some cases are lead times now have actually contracted to a point, where we have quick ship programs again.

How are you guys thinking about the data center opportunity for you guys. The decade I liked it look I think 12 to 18 months first of all that may not be our capacity that maybe what the when the data the data centers just given the hyperscale is giving us visibility for planning purposes, we've actually expanded our capacity had the team doing analysis since 2023 weeks.

For data centers, but thats for core verticals, but.

It's.

The momentum we're seeing is great to see the innovation that we have this is driving a lot of that momentum.

We are more than ready to make sure that we can meet the demand thats being placed upon us.

Expanding our chiller capacity by Forex.

So we've been we've invested a lot there, but we're ready for the growth in <unk>.

Great to hear thanks, guys alright, thank you.

And by the way in some cases are lead times now have actually contracted to a point, where we have quick ship programs again, that's not for data centers, but thats for core verticals, but.

Your next question will come from Jeff Sprague with vertical research.

Hey, Thanks, good morning, everyone.

Yes.

I'm doing great not quite as good as you, but I can't complain.

It's.

The momentum we're seeing is great to see the innovation that we have this is driving a lot of that momentum.

Youre up in Connecticut, So you must be doing great right. Yeah, Yeah things are good.

Hey, My question, maybe just a little bit related to sort of word show was that but.

And we are more than ready to make sure that we can meet the demand thats being placed upon us.

Just thinking about all of these large projects right things must be slipping back and forth all the time.

Great to hear thanks, guys alright, thank you.

I don't recall, you calling out projects slippage.

Your next question will come from Jeff Sprague with vertical research.

In the last couple of years like you are today with the $100 million.

Hey, Thanks, good morning, everyone.

Yes.

I'm doing great not quite as good as you, but I can't complain.

I'm just wondering even though your lead times are improving or are we starting to bump up against just the ability for the supply chain the construction community whatever to.

Youre up in Connecticut, So you must be doing great right, yes, yes things are good.

Hey, My question, maybe just a little bit related to sort of where Joe was that but.

Put this stuff in the ground at the pace, they would like or would.

Just thinking about all of these large projects right things must be slipping back and forth all the time.

Could you just kind of characterize what you pointed out today is just kind of normal noise and shipment patterns.

It gets normal noise. Okay. We haven't seen anything that I would say is a trend, but we certainly had.

I don't recall, you calling out.

Project slippage.

The last couple of years like you are today with the $100 million.

Several several customers ask us to wait until 2026 to ship product, which that happens in our industry.

I'm just wondering even though your lead times are improving are we starting to bump up against just the ability for the supply chain the construction community whatever to.

We're obviously never going to ship a product before it's a job site is ready for it but I think it's just.

Put this stuff in the ground at the pace they would like or would you just kind of characterize what you pointed out today is just kind of normal noise and shipment patterns.

Just timing and timing, sometimes there's positives and sometimes theres negatives is just in the fourth quarter, that's probably a more negative for us and we called out the $100 million thats going to push into 2026, but I wouldn't read too much into that the demand that we're seeing right now is extremely strong and you see that by our order rates So I'm not.

We won't get to normal noise. Okay. We haven't seen anything that I would say is a trend, but we certainly had.

Several several customers ask us to wait until 2026 to ship product, which that happens in our industry.

Normal activity not concerned about it Jeff I would add just wanted to be transparent and we just kind of call that out because it was there was something we had our internal plans were stronger than that and so with with that news from those customers. We just wanted to be transparent in terms of.

We're obviously never going to ship a product before it's a job site is ready for it.

I think it's just it's just timing and timing, sometimes there's positives and sometimes theres negatives, it's just in the fourth quarter.

More negative for us and we called out the $100 million thats going to push into 2026, but I wouldn't read too much into that the demand that we're seeing right now is extremely strong and you see that by our order rates So I'm not.

Of that Delta.

Great and then Chris a follow up for you.

Maybe this was partially addressed an earlier question, but the improvement and incorporate the.

The pick up in other.

Do those continue into 2026.

Normal activity not concerned about it Jeff I would add just wanted to be transparent and we just kind of call that out because it was there.

The thing unusual there that normalizes and also just a 20 <unk> kind of deal related headwind I think you still have a headwind next year, but a smaller headwind so effectively.

Its something we had our internal plans were stronger than that and so with with that news from those customers. We just wanted to be transparent in terms of of that Delta.

<unk> in the P&L right.

Can you maybe just elaborate on that.

Great and then Chris a follow up for you.

I was starting to reverse I think it.

Maybe this was partially addressed an earlier question, but the improvement and incorporate the.

It is a 20 the M&A. This year is about a 20 cent headwind think of that as really the.

The accounting requirements around amortization expense.

Pick up in other.

Do those continue into 2026 was there anything unusual there that normalizes.

And that's typically heavier in those first few years of of an acquisition. There's also integration costs that we've got planned to really drive the synergies that we see in those businesses. So should be less of a headwind going into 2026, we'll dial that in a.

Also just a 20 <unk> kind of deal related headwind I think you still have a headwind next year, but a smaller headwind so effectively its a tailwind in the P&L right.

A few months.

Can you maybe just elaborate on that.

Youre right corporate was favorable items below.

Yes, I was starting to reverse I think it is.

'twenty. The M&A. This year is about a <unk> <unk> headwind think of that as really the the accounting requirements around amortization expense and thats typically heavier in those first few years of an acquisition. There's also integration costs that we've got planned to really drive the synergies that we see.

Below the line were unfavorable I'd call out other income other expense unfavorable year over year.

Tax was actually a bit unfavorable in the third quarter very confident will have tax favorite are at 20% for the full year that means it'll be a bit favorable in the fourth quarter versus say, 20% Jeff.

And those businesses so.

Should be less of a headwind going into 2026, we'll dial that in.

But.

Look lots of investments still that make up our corporate structure some of the discretionary cost reductions and a reduction of say open roles. Some of that does impact the corporate line as well so.

In a few months.

Corporate was favorable items below.

Below the line were unfavorable I'd call out other income other expense unfavorable year over year.

Ultimately, but we will start on investments will start generally with corporate and then move into the segments as we see as we see benefits, but I wouldn't read too much into it this year, but we'll dial in and in a few months.

Tax was actually a bit unfavorable in the third quarter very confident we'll have a tax favorable are at 20% for the full year that means it'll be a bit favorable in the fourth quarter versus say, 20% Jeff.

Okay, Great I'll leave it there thanks, guys I appreciate it.

Thanks Bill.

Your next question will come from Andrew <unk> with Bank of America.

But.

Look lots of investments still that make up our corporate structure.

Good morning, how are you.

Some of the discretionary cost reductions and a reduction of say open roles. Some of that does impact the corporate line as well. So ultimately, but we will start on investments will start generally with corporate and then move into the segments as we see as we see benefits, but I wouldn't read too much into it this year, but we'll dial in and in a few months.

Okay.

It sounds like you're busy with the phones right right yes.

Just a question about <unk>.

Institutional business.

What's the visibility like into 'twenty six.

Seems a unit bond market is getting better and it seems that funding for schools and hospitals.

It is getting better. So does this mean that this business could accelerate into next year.

Okay, Great I'll leave it there thanks, guys I appreciate it.

Thanks, Dan.

Whereas the base and 25, because we haven't spoken about it this business for a while thank you.

Your next question will come from Andrew <unk> with Bank of America.

Hi, Yes, good morning, how are you.

I think if you look across our pipelines like we have a lot of strength in all of our verticals. So I think it's a great question and right now.

Okay.

It sounds like you're busy with the phones right now right.

Just a question about <unk>.

I've been in this industry a long time.

Institutional business.

And I would tell you that I've seen pipelines are strong as I see right now probably ever in my career.

What's the visibility like into 'twenty six it seems the muni bond market is getting better and it assumes that funding for schools and hospitals.

So we're very bullish on the momentum, especially in our commercial HVAC team and really in EMEA as well that they.

It is getting better. So does this mean that this business could accelerate into next year.

Whereas the base and 25, because we haven't spoken about it this business for a while thank you.

They have a lot of opportunities in front of them.

But the question is specifically about it's different so you haven't seen institutional slowdown this year right for you.

I think if you look across our pipelines like we have a lot of strength in all of our verticals. So I think it's a great question and.

Oh healthcare was very strong education remains strong, especially on the higher Ed side of things.

Now.

I've been in this industry, a long time and I would tell you that.

No we have not the only thing that we've seen at least in the third quarter.

Pipelines are strong as I see right now probably ever in my career.

Maybe a bit slower and it's always difficult to say a quarter makes a trend but retail was slow.

So we're very bullish on the momentum, especially in our commercial HVAC team and really in EMEA as well.

Industrial is slow.

Life Sciences, I don't like to pick on life Sciences, but that continues to be a little bit of a COVID-19 hangover there I think.

They have a lot of opportunities in front of them.

But the question specifically about it's different so you haven't seen institutional slowdown this year right for you.

But the rest of our markets were pretty strong.

And just a follow up question on data centers.

Health care was very strong education remains strong, especially on the higher Ed side of things.

Do you need to build.

Extra sort of muscle to service because you do have found will offerings.

No we have not the only thing that we've seen at least in the third quarter.

So you have to use.

Maybe a bit slower and it's always difficult to say a quarter makes a trend but retail was slow.

What does it take to be able to service inside the datacenter gray space versus sort of serving a chiller instead of sort of outside of the building.

Industrial is slow.

Life Sciences, I don't like to pick on life Sciences, but that continues to be a little bit of a COVID-19 hangover there I think.

Aren't about difference in what you need to do to.

Service workforce. Thank you.

But the rest of our markets were pretty strong.

Well it really it really depends on the data center.

And then just a follow up question on data centers.

I guess the short answer is look we're skilled that servicing all of our products, but a really good question.

Do you need to build.

Extra sort of muscle to service because you do have found will offerings.

That you're kind of reminds me of was this commissioning capability.

So you have to use.

And this is again one of our strengths with the with.

What does it take to be able to service inside the data center gray space versus sort of serving the chillers that are sort of outside of the building is there a discernible difference in what you need to do to.

With our technicians, we have.

A lot of resources to make sure that all of these data centers get commissioned on time and think of commissioning is when the mechanical contractor says okay. This particular chillers ready to go we go in that and make sure that it is going to operate the way. It was designed call that commissioning and we have a lot of resources that we are.

Your service.

Workforce. Thank you.

It really it really depends on the data center.

I guess the short answer is look we're skilled that servicing all of our products.

Really good question.

We're able to rifle to any particular data center to make sure that it gets up and running on our on time and I can tell you that that is something that I'm getting asked a lot of questions on about our capacity there and it's certainly one of our strengths.

That you're kind of reminds me of was this commissioning capability.

And this is again one of our strengths with the.

With our technicians, we have.

A lot of resources to make sure that all of these data centers get commissioned on time and think of commissioning is when the mechanical contractor says okay. This particular chores ready to go we go in and make sure that it is going to operate the way. It was designed call that commissioning and we have a lot of resources that we are.

Thank you very much.

Sure. Thank you.

Your next question will come from Nicole <unk> with Deutsche Bank.

Yes, thanks, good morning, guys.

Hey, Nicole how are you good morning, I am good how are you doing.

Yes.

Can we maybe talk about the step up that you guys saw in the EMEA.

Bookings this quarter are pretty attractive up 14% are you starting to see the data or the data center orders really come through in a big way yet or do you think that's still to come in the pipeline.

Thank you very much.

We certainly have data center orders in all of our regions. Okay Amir.

Sure. Thank you.

Your next question will come from Nicole <unk> with Deutsche Bank.

Trying to recall the third quarter. It comes to mind, but look I would tell you. The the data center orders in EMEA are a lot smaller from a <unk>.

Yes, thanks, good morning, guys.

Nicole how are you.

Good morning.

The size of the data centers a lot smaller than what we're seeing in the U S. So in the U S. It could be as much as like 110th the size. So we have a lot of orders that just small okay.

And could we maybe talk about the step up that you guys saw.

Bookings this quarter are pretty attractive up 14% are you starting to see the data or the data center orders really come through in a big way, yet or do you think that does it.

Okay got it that's really helpful color and then if I could ask.

And the pipeline.

We certainly have data center orders in all of our regions EMEA.

One on North America, Rajiv could you guys comment on what is the price mix versus volume split in line with what you laid out during our conference in September and then thoughts on annual price increase in 2026, if it'll be kind of normal and if you think that customers are willing to accept it since prices up so much over the past few years. Thank you.

Trying to recall the third quarter that comes to mind, but look I would tell you that the data center orders in EMEA are a lot smaller from a.

The size of the data centers a lot smaller than what we're seeing in the in the U S.

So in the U S. It could be as much as like 110th the size. So we have a lot of orders that just small okay.

Hey, Nicole, yes, the third quarter and our expectations for the fourth quarter are consistent with the September update revenues down about 20% that would imply volumes down roughly 30% and then the price mix impact would be favorable around 10 points and then of the <unk>.

Okay got it that's very helpful color and then if I could ask.

One on North America, Rajiv could you guys comment on what is the price mix versus volume split in line with what you laid out during our conference in September and then thoughts on annual price increase in 2026, if it will be kind of normal and if you think that customers are willing to accept it since prices up so much over the past few years. Thank you.

This mix think of that as roughly 50, 50, roughly five points plus or minus for each one of those attributes for.

For 2026, where we're prepared to go into the year, we haven't seen any structural changes within the industry. We will look at all the cost inputs that we that we have we will look at.

Where we're driving for share and ultimately what we look for each of our businesses is to is to drive strong lever is 25% or better and price versus inflation is one of those levers we'll look at so.

Typically our price increases don't come out until late let's call. It December January timeframe for the year. So we'll update you in a few months on what that standing is for 2026.

<unk> think of that as roughly 50, 50, roughly five points plus or minus for each one of those attributes.

For 2026, where we're prepared to go into the year, we haven't seen any structural changes within the industry. We will look at all the cost inputs that we that we have we will look at.

Great. Thank you I'll pass it on.

Thank you.

Your next question will come from Noah Kaye with Oppenheimer.

Thanks for taking the questions guys.

Services.

Consistently have an attractive margin profile.

I'm curious, perhaps goes a little bit to some of your earlier comments.

Typically our price increases don't come out until late let's call. It December January timeframe for the year. So we'll update you in a few months on what that standing is for 2026.

As you layer in brain box and some of the other software offerings into into the tool kit.

Do you think about sort of a richer software mix impacting where service margins go how are you implementing that in some of the project management now.

Great. Thank you I'll pass it on.

Thank you.

Your next question will come from Noah Kaye with Oppenheimer.

Yes, Great question look we're very I'll start with we're very happy with the brain back So AI acquisition.

Thanks for taking the questions guys.

Together I think of our trained connected business now with Brainbox, we have over 65000 connected buildings.

Services.

Consistently have an attractive margin profile.

I'm curious, perhaps goes a little bit to some of your earlier comments.

We're adding about one building every hour.

As you layer in brain box and some of the other software offerings into into the tool kit.

Momentum is increasing so yeah, you're spot on with your question. This is becoming.

Do you think about sort of a richer software mix impacting where service margins go how are you implementing that in some of the project management now.

I'm very bullish on the future as far as the connected service opportunities and how you optimize.

Yes, Great question look we're very I'll start with we're very happy with the brain back So AI acquisition.

Building using AI with Brainbox, we're using <unk> AI. Okay. So this is where the agent is actually make the decision on how to run the building looking at a vast amount of data. So the margins are obviously very accretive when youre able to deploy this type of software.

Together thank you.

Of our trained connected business now with Brainbox, we have over 65000 connected buildings.

And we're adding about one building every hour.

Our momentum is increasing so yes, you are spot on with your question. This is becoming.

Let me carefully we had a fast food or was there was a convenience store so think of thousands locations and they gave US a pilot and we implemented I think it was 50 of their stores and we ran the pilot for 90 days.

I'm very bullish on the future as far as the connected.

Service opportunities and how you optimize.

And the results were just they were amazed by it we were able to save the cost.

It was north of 30% on their energy costs.

As a pilot of 50 stores, but obviously theyre going to now run that through their entire.

Let me carefully we had a.

Portfolio. So this this is a this is going to be a fast grower for us.

Fast food or was there was a.

<unk> could store, so think of thousands locations and they gave US a pilot and we implemented I think it was 50 of their stores and we ran the pilot for 90 days.

Early innings, but but we're excited about the opportunities there and as you said when you start doing subscriptions the margins are are accretive.

And the results were just they were amazed by we were able to save the customer.

Thanks, David some great color on a similar theme when you think about what you may want to add into the portfolio I don't know maybe it's just next year, obviously, you're continuing to generate strong free cash flow. So there's.

It was north of 30% on their energy costs.

It's a pilot of 50 stores, but obviously theyre going to now run that through their entire.

There's dry powder there should we think about kind of continued sort of software centric.

Portfolio. So this this is this is going to be a fast grower for us.

Are there any parts on the <unk>.

Still early innings, but but we're excited about the opportunities there and as you said when you start doing subscriptions the margins are are accretive.

Product side that are of particular interest.

Yeah, I mean, I think we're gonna be well keep our options open we get a chance to look at everything as I'm sure you know being a major HVAC ICR player on a global basis.

Thanks, David spray colorant on a similar theme when you think about what you may want to add into the portfolio I don't know maybe.

We will be opportunistic.

But we'll also be disciplined so.

Do you want to add anything Chris, but I think the capital deployment framework has served us well for many years and will continue to balance.

This next year, obviously, you're continuing to generate strong free cash flow. So there's.

There's dry powder there should we think about kind of continued sort of software centric.

Without leaving any excess cash in the balance sheet, we'll make sure we toggle that between M&A that's.

Are there any parts on that.

The product side that are of particular interest.

Meets our internal goals and it's something that we can integrate well into the company as well as toggle between if not M&A than share repurchases when it trades below our calculated intrinsic value and we will continue I think that that expectation for many years to come.

Yeah, I mean, I think we're gonna be or keep our options open we get a chance to look at everything as I'm sure you know being a major <unk> player on a global basis. So.

We will be opportunistic.

But we will also be disciplined so.

Now if you want to add anything Chris, but I think the capital deployment framework has served us well for many years and will continue to balance.

Alright, Thank you guys. Thanks.

Thanks.

Your next question will come from Deane Dray with RBC capital markets.

Without leaving any excess cash in the balance sheet, we'll make sure we toggle that between M&A that's.

Thank you and good morning, everyone.

Hey, Dan how are you good morning, I am doing well thank you.

Meets our internal goals and something that we can integrate well into the company as well as toggle between if not M&A than share repurchases when it trades below our calculated intrinsic value and we will continue I think that that expectation for many years to come.

Wanted to follow up on your exchange with Nicole on the.

Data center demand by geography.

If you just look at where the big build outs are happening now like the middle East I would be surprised if they are smaller.

Alright, Thank you guys.

Smaller orders, but just maybe talk about the visibility by region.

Thanks.

Your next question will come from Deane Dray with RBC capital markets.

And expectations from there.

Thank you and good morning, everyone.

Youre spot on in the Middle East, specifically, Saudi Arabia were seeing larger and larger data centers, they're specific to Europe, they tend to be smaller.

Hey, Dan how are you good morning, I'm doing very well thank you.

Wanted to follow up on your exchange with Nicole on the.

But obviously in the United States.

Data center demand by geography.

There's some big data centers that are being built and I would tell you that there is even bigger data centers are being planned right now.

If you just look at where the big build outs are happening now like the middle East I would be surprised if they are smaller.

And how about Asia.

Yeah, we see it we see in Asia as well, we're seeing some activity for sure in China, but more outside of China, specifically Singapore.

Smaller orders, but just maybe talk about the visibility by region.

And expectations from there.

Youre spot on in the Middle East, specifically, Saudi Arabia were seeing larger and larger data centers, they're specific to Europe, they tend to be smaller.

Australia.

<unk> had some nice orders there so there is activity there nothing.

The size of what we're seeing in the United States right now but.

But obviously in the United States.

There is some big data centers that are being built and I would tell you that there is even bigger data centers that are being planned right now.

As you said in the Middle East specifically in Saudi Arabia, Theres, a lot of activity as well.

Yes, we've been hearing all about that and then just last one can you give any comments or updates insights into your investments in some of these liquid cooling startups.

And how about Asia.

Yeah, we see it we see it.

Asia as well, we're seeing some activity for sure in China, but more outside of China, specifically, Singapore.

Yes, I mean as you know we made an investment in liquid stocks several years ago, its going well.

Australia.

Hudson Nice orders there. So there is activity there is nothing as to the size of what we're seeing in the United States right now.

Continue to work with with their team and they continue to work with us and.

<unk>.

We like having partners like that right. They are innovative and we teach them they teach us and the one plus one often equals three or four so we will continue to work with those types of innovative companies in the future.

As you said in the Middle East specifically in Saudi Arabia, if theres a lot of activity as well.

Yes, we've been hearing all about that and then just last one can you give any comments or updates insights into your investments in some of these liquid cooling startups.

Good to hear thank you.

Thank you.

Yes, I mean as you know we made an investment in liquid stock several years ago, that's going well.

Yeah.

Okay.

Your next question will come from Steve Tusa with Jpmorgan.

We continue to work with with their team and they continue to work with us and.

Hey, good morning.

Hey, Steve Good morning, Congrats on the execution.

We like having partners like that are innovative and we teach them. They teach us one plus one often equals three or four so we will continue to work with those types of innovative companies in the future.

Out of a lot of noise out there in these markets for sure.

Thanks.

The backlog for commercial HVAC, you guys gave kind of a.

Bit of a like year to date increase.

Good to hear thank you.

Thanks, Dan Thank you.

From year end.

Okay.

Requires a little bit of math, but like what would that have been year over year.

Your next question will come from Steve Tusa with Jpmorgan.

For commercial HVAC backlog.

Hey, good morning.

Yes year over year enterprise backlog was roughly flattish, but similar to the walk from beginning of this year.

Hey, Steve.

Good morning Congrats.

Congrats on the execution.

Have a lot of noise out there in these markets for sure.

Thanks.

Thermo King and residential backlog down about $300 million commercial HVAC Americas backlog up nearly $500 million from on a year over year basis. So.

The backlog for commercial HVAC, you guys gave kind of a.

A bit of a.

Year to date increase.

The mix and the mix of that backlog continues to shift more towards a commercially.

From year end, just requires a little bit of math, but like what would that have been.

Year over year.

Okay, So thats up like what six 7%.

Commercial HVAC backlog.

Yes year over year enterprise backlog was roughly flattish, but similar to the walk from beginning of this year thermo King and residential backlog down about $300 million commercial HVAC Americas backlog up nearly $500 million from on a year over year.

From beginning of the year, it's up.

Year over year year over year.

On commercial Hvac's, yes, it's probably in that range, probably mid to high single digits, yes, Okay. And then just the amount of forward sales kind of in the backlog last year. I think you guys gave in enterprise number of like $4 1 billion or something like that where does that stand this year.

Year basis so.

The mix and the mix of that backlog continues to shift more towards commercial HVAC.

Yeah, I would just say it's stronger than last year, Okay, and obviously, we will continue to grow.

Okay, and so thats up like what six 7%.

On that front log for 2026 here into the fourth quarter lead times continue to as we talked earlier lead times continue to be contracting from last year's time to this year, so that Dave mentioned, a little bit around quick ship programs. As an example, where we have some opportunities but the absolute dollars of backlog for next year they are up.

From beginning of the year, it's up.

Year over year year over year.

And we will get it will give you more of an update as we.

As we approach the Q4 earnings call.

Yes, I would just say it's stronger than last year, Okay, and obviously, we will continue to grow.

Would expect backlog to remain elevated going into 2026, and then just one last one on resi maybe just the difference between your captive.

Distribution and the.

The independent.

Oh for the quarter, yes, yes for the quarter.

I mean, we had sell through that was.

And we will get it will give you more of an update as we.

Down in the high single digits range, obviously, our rosy growth was down about 20%.

As we approach the Q4 earnings call.

Would expect backlog to remain elevated going into 2026, and then just one last one on resi maybe just the difference between your captive.

I would say the sell in was was a little bit.

North of that and then the 20% a little bit higher than that.

Okay, great. Thanks, a lot really appreciate it.

Distribution and the.

Thanks, Dave.

The independent.

Your final question will come from Nigel Coe with Wolfe research.

For the quarter, yes, yes for the quarter.

Oh, Thanks, guys I appreciate you going into further in the game here.

I mean, we had sell through that was.

Kevin a lot of ground so.

Down in the high single digits range, obviously, our rosy growth was down about 20%.

We're scratching around when we talk about corporate but maybe maybe just talk.

Yes.

I'd say the sell in was was a little bit.

For four key corporate.

And then I think the M&A impact went up by five I think we're now looking at it twice.

North of that and then the 20% a little bit higher than that.

Okay, great. Thanks, a lot I really appreciate it.

<unk>.

Thanks, Dave.

Slightly greater impact 'twenty census, the number.

Yeah.

Your final question will come from Nigel Coe with Wolfe research.

For the year I mean, how does that look into 2026 does that 20 cents.

Zero, we still are we still dealing with a division that.

Alright, Thanks, guys I appreciate you go into further in the game here.

Yeah.

I'll answer the second question first I don't think that <unk> necessarily goes to zero.

Kevin a lot of ground so.

With scratching around when we told our corporate but maybe maybe just talk.

Our framework would be we want to make sure. We're EPS positive by the end of year three.

Yes.

<unk> corporate.

And then I think the M&A impact.

While we're very happy with the start of the Brainbox acquisition, there's a.

Went up by five <unk> I think we're now looking at it twice.

You know in early stage companies, there's a lot of amortization associated with it. So let's see what is that next year I would expect it to be better, but it wouldn't necessarily think it goes to zero.

Five.

Slightly greater impact <unk> census, the number.

For the year I mean, how does that look into 'twenty 'twenty fixed does that 20 <unk>.

Go to zero, we still are we still dealing with a division that.

And then Nigel your question on Q4, corporate yes, the implied number for the quarter was about $80 million, we're making sure we have.

Yes.

I'll answer the second question first I don't think that <unk> necessarily goes to zero our framework would be we want to make sure. We're EPS positive by the end of year three and.

The dollars reserved for the investments that we want to make in the fourth quarter. So that's how that that math works out.

While we're very happy with the start of the Brainbox acquisition there is a.

Okay.

And then my follow on I know citizens has got a firm at that time on the call.

And early stage companies, there's a lot of amortization associated with it. So let's see what is that next year I would expect it to be better, but it wouldn't necessarily think it goes to zero.

The consistent double digit growth in services is pretty extraordinary.

And.

I think investors appreciate if maybe just talk about how the service model has changed.

And then Nigel your question on Q4, corporate yes, the implied number for the quarter is about $80 million, we're making sure we have.

And what kind of comfort if you have that you can maintain.

If not 10%, but portfolio growth going forward.

The dollars reserved for the investments that we want to make in the fourth quarter. So that's how that math works out.

We're very happy with our growth rates I'll start there.

We continue to invest heavily in our services business, we have a whole business operating system built around it.

Okay and.

And then my follow on I know citizens has got a firm at that time on the call.

The consistent double digit growth in services.

We track lots of debates.

Pretty extraordinary.

I'm not going to create.

And.

Our roadmap for our competitors I would just tell you that it's a big part of our business. It is a competitive advantage that we have and it doesn't happen by accident. Okay. We're investing heavily in it and and you can see the outcomes that we're able to drive so.

I think investors appreciate if maybe just talk about how the service model has changed Dave and what kind of comfort. If you have that you can maintain.

If not 10%, but be a portfolio of growth going forward.

We're very happy with our growth rates I'll start there.

We're very happy with our services.

We continue to invest heavily in our services business, we have a whole business operating system built around it.

Okay. Thank you.

Alright, thanks, Thanks Daniel.

There are no further questions at this time I would now like to turn the call back over to Zac for any closing remark.

We track lots of debates.

Yeah.

I'm not going to create.

Yeah.

Thanks, operator, I'd like to thank everyone for joining today's call as always we'll be available for questions in coming days or weeks and we look forward to seeing many of you on the road in the fourth quarter.

Great day, Thank you.

Thank you for your participation that does conclude today's conference you may now disconnect.

We're very happy with our services.

Okay. Thank you.

Alright, thanks, Thanks, Michael.

There are no further questions at this time I would now like to turn the call back over to Zac for any closing remark.

Okay.

Have a great day. Thank you.

Thank you for your participation that does conclude today's call.

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