Trane reported record enterprise bookings of $5.6 billion — up 5% from last year. According to Dave Regnery, chair and CEO of Trane Technologies, "Our performance continues to be led by Americas Commercial HVAC, with strong demand for our sustainable solutions across a broad base of highly complex projects. In the second quarter, orders for our bespoke applied solutions were up over 60%, adding to our backlog and our visibility to future equipment and services revenues.”  

Lennox also performed well, with revenue increasing 3% to $1.5 billion, despite ongoing challenges such as softness in new construction demand, refrigerant cylinder shortages, customer uncertainty, and inflationary pressures, said Alok Maskara, CEO and director of Lennox International Inc.  

“In Home Comfort Solutions (HCS), profitability remained strong, as we transitioned into selling primarily our R-454B products.” 

Refrigerant Shortage 

Indeed, Lennox is now selling mostly R-454B systems, and only limited R-410A inventory remains in the channel. However, Maskara acknowledged that dealer confidence has been impacted by concerns around the availability of R-454B cylinders.

“This may have led to a partial reversal of last year’s temporary share gain. We are beginning to see that more homeowners are choosing repair over replacement and trading down, as inflation and government incentives continue to influence some consumer behavior.” 

That said, Maskara said that R-454B cylinder availability is steadily improving and expressed optimism that the worst of the shortage may be behind the industry. He explained that Lennox and other OEMs have addressed dealer concerns by shifting to 30-foot line length pre-charged units — a move that began easing pressure in late June, once that updated inventory finally made it to warehouses. As more cylinders and properly charged units become available, he is hopeful that the refrigerant shortage will no longer be a major issue by the time third-quarter results roll around. 

Carrier is also selling almost all R-454B equipment, and Gitlin downplayed the long-term impact of the cylinder shortage.  

“The team really jumped on it, and we started pre-charging a number of units. We were actually going to tremendous lengths in Q2 to get our customers plenty of canisters, so we do not hear canisters in the field being an issue. We pivoted super hard in May and June, and hats off to the operations team working with our channel, it's no longer an issue.” 

Gitlin added that he hasn’t seen a noticeable shift toward repair over replacement, or a trend of homeowners trading down to lower-cost, entry-level models.  

“But it’s something we watch carefully,” he said.  

Regnery noted that although Trane had a high concentration of R-454B products in its inventory, the company still felt the impact when the refrigerant supply bottleneck hit in late April.  

“We reacted quickly. We've been overcharging units from the factory since May. We're working very closely with the suppliers of the refrigerants, so we know what they have committed to the industry. I guess the good news is, it was an impact, but it’s isolated. As we sit here at the end of July, I would say that we could argue whether 90% or 95% of this is behind us, but we're looking forward.” 

On the repair-versus-replace question, Regnery said it was a tough quarter to draw clear conclusions, given the complications caused by the refrigerant bottleneck.  

“We'll see what happens as the year progresses,” he said. “But we haven't seen anything yet. Again, I think it was not the optimal quarter to see if it's actually moving more to repair versus replace, but we're obviously watching that very closely.” 

Softening Sales 

While concerns about the refrigerant shortage are easing, worries are now shifting to softening residential sales in the second half of the year. At Carrier, residential sales were up 11% in Q2, but that still fell short of expectations due to lower volume. Gitlin attributed the shortfall to a late start to the cooling season, as well as higher interest rates and cautious consumers. 

“May movement was just a lot softer than we thought,” he said. “Cooling degree days were softer in the last six weeks of the quarter than usual, with particularly weak movement in June. And what that did is build up a bit more inventory in the channel than we'd like.”  

Gitlin added that residential sales remained a bit light in July as well, although they began to pick up toward the end of the month. 

“The issue we had in Q2, which we've now extrapolated for the second half, is that volume was down more than we thought — in the mid-single digits when we thought it was going to be up low-single digits,” said Gitlin. 

As a result, Carrier now expects residential volume to drop 20% to 25% in the second half of the year, with higher prices and a favorable product mix offsetting that by 10% to 15%. Gitlin noted that nets out to a sales decline of about 10% in the second half, which is why Carrier has revised its full-year residential forecast — up 15% in the first half and down 10% in the second, which averages out to mid-single-digit growth for the year. 

“We have been very purposeful in our projections to take inventory levels down to where they were last year when we end Q3 and Q4” he said. “So, in our sales guidance, we assume that we get inventory levels back into balance.” 

As for residential equipment pricing, Gitlin feels it’s appropriate for both R-454B and the base price increases, which offset some of the inflationary and tariff-related pressures in the market.  

“When we look at pricing in the first half, it was up mid-single digits,” he said. “We think that continues into Q3. It's in that 5% range on price, maybe a bit softer in Q4, closer to the low single digits is what we're forecasting for Q4. But it's in that range. We're not going to do a lot of rebating. And the 10% on the mix side with R-454B has been sticking.” 

Trane’s residential HVAC revenue was down 6% in Q2, primarily due to the shortage of R-454B cylinders, as well as higher inventory levels. The company expects residential revenue in Q3 to be down in the high single digit range, while Q4 will pick up. Still, Regnery remains confident about the remainder of the year. 

“In residential, we faced temporary headwinds, mainly affecting Q2 and Q3 of 2025 due to the cylinder shortage,” he said. “We expect this issue to improve in Q3 and be resolved by year end. At this point in the selling season, we also believe it's prudent to factor inventory normalization into the second half outlook. The estimated revenue impact of these combined headwinds is roughly $150 million for the second half. We now expect residential revenues to be flat for the full year versus our prior expectations of mid-to-high single digit growth.” 

Tariffs are also still a concern, and Trane’s executive vice president and chief financial officer, Chris Kuehn, noted that the company expects to manage and mitigate all enacted tariff impacts through proactive measures, including pricing. 

“Based on tariffs in place as of July 28, we estimate the cost impact in 2025 to be approximately $140 million — roughly half of our estimate provided at the end of the first quarter,” he said. “Our full year organic revenue growth guidance includes an estimated pricing impact from tariffs. The tariff environment remains dynamic, and we will provide updates as appropriate throughout the year.” 

Lennox expects HCS volumes to decline about 8% in the second half of the year, citing ongoing concerns around tariffs, R-454B refrigerant availability, and weak residential new construction. The company also sees signs of cautious consumer behavior. 

“We have seen consumers trade down, but that has been the case for many years,” said Maskara. “We have not seen any impact of consumer price elasticity — it remains a necessary purchase. But we do see consumers getting two to three quotes, while earlier they were getting one to two quotes. And we do see more consumers looking to get deals, which puts multiple dealers into play at any given time.” 

Following a Q1 price increase and tariff-related surcharge, one analyst on the call questioned whether Lennox was “getting more price than you need,” suggesting that high equipment prices could push consumers toward repairs or lower-tier models. 

Maskara acknowledged the complexity of pricing, noting, “You never get pricing exactly right. You're always going to be a tad too high or a tad too low.” He said Lennox uses AI and data analytics to fine-tune pricing daily and remains focused on balancing pricing and market share. 

“Keep in mind, the consumer price elasticity depends on dealers selling to consumers, not us selling to dealers,” said Maskara, “And there's a significant markup because of labor, installation, permits, and supplies that happens between when we sell to a dealer versus a dealer sells to consumer.” 

Overall, Maskara believes Lennox’s pricing strategy has turned out to be much better than expected.  

“Tariff costs continue to come through, but we ended up withdrawing a large portion of that surcharge as some of the tariffs came out lower. We remain focused on making sure we price fairly and we price competitively in the marketplace.”