Intro

This is Matt Reustle. Today we venture into the world of HVAC to break down Trane Technologies. Now, it's not often that I come across an industrial company with a $50 billion market cap that I just hadn't heard of. So when our guest today, Brett Larson, investor at NZS Capital, suggested Trane, it was as easy of a 'yes' as they come.

Brett and I cover the long corporate history of Trane, the dynamics that separate residential HVAC from commercial HVAC, and how Trane has helped create this unique consolidated industry. You may never look at your thermostat the same after this episode. Please enjoy this breakdown of Trane Technologies.

-----

This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick.

-----

Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @zbfuss | @ReustleMatt | @domcooke

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).

Show Notes:

(00:00:00) Welcome to Business Breakdowns

(00:01:59) Brett tells us what Trane is 

(00:02:34) The companies corporate history and how it became Trane

(00:04:05) Overall size of the commercial market 

(00:05:18) He explains the go to market sales strategy 

(00:09:20) An additional breakdown of business cost

(00:10:55) Revenue received from Trane software

(00:14:53) Trane’s market share in the residential space

(00:15:52) Differentiated products available on the commercial side

(00:17:17) Included commercial software components

(00:19:15) Average life cycle for commercial units  

(00:21:19) Demand on commercial and residential sides of the market

(00:25:31) The cyclicality of the business and how revenue has trended over time   

(00:27:35) A look at share gains and industry consolidation over recent years

(00:31:09) How the management team is viewed by the industry

(00:34:46) Key contributions from MNA and future consolidation    

(00:37:02) Data center demand for HVAC units

(00:39:40) Transport refrigerators key role in the industry market  

(00:41:02) Risks associated with the business

(00:43:30) What he’s learned from studying Trane