Carrier 

Carrier reported third-quarter sales of $5.6 billion, down 7% year-over-year. Within its Climate Solutions Americas (CSA) segment, sales declined 8%, as the 30% increase in commercial sales was more than offset by lower residential volume (down about 40%) and light commercial sales (down 4%).  

During their earnings call, David Gitlin, chairman and CEO of Carrier Global Corp., said that third-quarter results were generally in line with expectations outlined at the September Laguna Investor Conference, where the company projected that softness in the North American residential market would pose roughly a $500 million sales headwind for the quarter. 

“Though we are, of course, not pleased with the unexpected decline this year, this is a best-in-class business,” he said. “We hold the No. 1 market position, and our share continues to grow.” 

After underscoring Carrier’s market leadership and product strength, Gitlin outlined several steps the company was taking to strengthen its footing going into next year. Chief among them is a concerted effort with channel partners to normalize inventory levels and “right-size” field stock ahead of 2026. 

Gitlin reported that by the end of the third quarter, field inventories were down 12% year-over-year, and as of late October, they had fallen another 10%, roughly 20% lower than last year. The company expects field inventory levels to be down 30% by year-end, marking the lowest levels since 2018. 

“We will continue to play offense and, given continued investments and our aggressive cost takeout, we expect to realize outsized returns as this business recovers,” he said. 

Carrier’s commercial HVAC business remains a bright spot, with Gitlin pointing out that the company’s sustained investments in technology, capacity, and talent are paying off.  

“Not only has the total business more than doubled in five years, but also our applied business, aftermarket, and controls have all doubled during this period,” he said. “Data centers remain a top priority for us, and our traction has been excellent, especially on orders in the past few months.” 

While Carrier’s commercial segment is on track to grow more than 25% this year, weakness in the residential and light commercial markets is causing Carrier to revise its outlook. According to CFO Patrick Goris, the company now expects CSA residential sales to decline in the high-single digits compared to its earlier forecast for mid-single-digit growth. 

As for next year, Goris stated, “The first half will be very difficult, given the very strong first half we had this year. I think it's fair to say that we would expect residential in the first half — especially Q1 — to be down year-over-year from a volume perspective.” 

There are also price increases on the horizon in 2026, and Carrier plans to announce a mid-single-digit price increase for next year, likely within the next few weeks. Repair versus replace may also continue to be an issue, although according to Gitlin, Carrier’s distribution partners are not seeing any uptick in the sales of components and compressors.  

“Having said that, it's hard not to imagine that there are more consumers opting for repair over replace,” he said. 

Lennox 

Third-quarter revenue at Lennox fell 5% to $1.4 billion, driven by unfavorable sales volumes.  

“As anticipated, 2025 is proving to be a transitional year, shaped by the impact of the refrigerant transition and difficult macroeconomic conditions,” said CEO Alok Maskara during the earnings call. 

To that end, revenue in the Home Comfort Solutions segment declined 12%, largely due to a 23% drop in unit sales volumes, said Michael Quenzer, executive vice president and chief financial officer at Lennox. 

“While we anticipated a decline in sales volume, the extent was greater than expected due to several contributing factors: contractors and distributors actively reduced inventory levels; macroeconomic softness weighed on both new and existing home sales; moderate weather dampened demand; and there was a clear shift towards systems repair rather than full replacements,” he said. “Despite these challenges, mix and pricing remained favorable, supported by the ongoing transition to the new R-454B products.” 

On the commercial side, the Building Climate Solutions segment delivered 10% revenue growth last quarter, driven by favorable product mix and pricing, even though volumes were flat, said Quenzer.  

“Light commercial HVAC, which represents approximately 50% of BCS revenue, continued to see year-over-year declines in industry shipments. Despite these market headwinds, we maintained volume levels through share gains in emergency replacement products and solid growth across our refrigeration and service offerings.” 

In response to evolving market conditions, Lennox updated its full-year guidance to reflect deeper inventory destocking trends and continued macroeconomic weakness, particularly in home sales and consumer confidence, said Quenzer.  

“We now expect full-year revenue to decline by 1% compared to our previous guidance of 3% growth. This revision is primarily driven by lower total sales volumes in Home Comfort Solutions, which are now expected to decline in the mid-teens range compared to our previous guidance of high-single digit decrease.” 

Maskara said he expects market conditions to improve next year as the refrigerant transition stabilizes. He noted that dealers, who were understandably cautious amid industry-wide refrigerant cylinder shortages and supply chain friction, should regain confidence as those transition-related challenges move into the rearview mirror. 

Still, he cautioned that economic pressures will continue to shape buying behavior, driving stronger demand for value-tier products and increased repair activity as homeowners delay full system replacements. The expiration of certain federal energy-efficiency incentives could also create near-term uncertainty, he added, though overall demand should remain stable thanks to ongoing state and utility-level rebate programs. 

Price increases are also planned for next year to offset inflation, and Maskara said they would be similar in scale to those seen in previous years. He added that some carryover effects are expected in 2026, driven by tariff-related pricing and the ongoing A2L product mix shift. 

“We remain confident about growth next year, especially as destocking ends,” Maskara said. “By the second quarter, we expect meaningful growth to return — and overall, 2026 should be a growth year for both segments.” 

Trane 

Trane posted a strong third quarter, with record bookings of $6 billion — a 13% increase in organic growth from the same period last year.  

“Our global commercial HVAC businesses delivered outstanding performance,” said company CEO David Regnery in the earnings call. “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.” 

He added that excluding residential, revenue growth remained 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,” he said. 

Residential is a different story, as bookings declined approximately 30% and revenues fell 20%, consistent with the update Trane provided earlier this fall, said Regnery.  

“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, with $100 million in Q3 and $150 million in Q4, as channel inventory continues to normalize.” 

Trane’s revised guidance anticipates approximately 6% organic revenue growth for the year, factoring in headwinds from the residential and transport Americas markets, said company executive vice president and chief financial officer, Chris Kuehn.  

“For the fourth quarter, we expect approximately 3% organic revenue growth driven by continued strong commercial HVAC growth. Excluding residential, organic revenue growth is expected to remain robust at approximately 7%.” 

Regnery described 2025 as an unusual year for the residential market, citing three main factors: a round of pre-buying early in the year, followed by another round tied to potential tariffs; challenges surrounding the refrigerant transition and the widely reported cylinder issue; and finally, an unusually short summer cooling season across much of the U.S. 

“Those three factors are kind of anomalies that we look at in the residential space,” he said. “Obviously, they caused a bit of inventory in the channel that needs to be burned down, and we hope it's burned down by the end of the year. If not, it will certainly be burned down by the first quarter [of 2026].” 

It is still too early to predict what may happen next year, said Regnery, but Trane expects continued strong growth in its commercial HVAC businesses, which make up 70% of the company’s total revenues.  

“In residential, which represents about 15% of our revenues, we believe over the long term that the industry remains fundamentally healthy. … We expect 2026 to be a tale of two halves — a challenging first half due to tough comps, followed by improvement in the second half against easier comps.” 

In discussing potential 2026 price increases, Kuehn said the company hasn’t seen any structural shifts in the industry that would alter its typical approach. Pricing decisions will be based on input costs, market share goals, and the company’s ongoing focus on achieving strong leverage of 25% or better, he said. He added that Trane typically announces its annual price adjustments in December or January, so updates for 2026 will be shared closer to that timeframe. 

“I'd say we just continue to manage all the inflationary inputs well and ensure that we've got a positive spread over price versus cost,” said Kuehn. “Residential is really about a volume story. We're obviously shifting very much this year into 454B with a price mix contribution. It'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 inputs and remaining nimble.”