CEO Dave Regnery on CNBC Talks Growth, Data Centers and Innovation

Cramer: This market is full of industrials that have caught fire because they own a piece of that great data center build out. Take Trane Technologies (TT), the climate control company with the stock that's up nearly 24% for the year. Now, good part of that's because it prevents these warehouses from overheating. A little over 2 weeks ago, Trane reported a healthy top and bottom line beat with its backlog up a staggering 30% year over year. Commercial HVAC bookings in the Americas up 40%. Applied equipment order surging 160%. The whole business is thriving, but that data center side is really on fire. One reason why management raised their full year forecast convincingly. So can this thing keep running? I got a chance to check in with Dave Regnery, Chair and CEO of Trane Technologies, who's come on the show multiple times, and this stock has been a winner. Take a look. Dave, Welcome back to Mad Money. Regnery: Jim, I'm always glad to be on your show. Thanks for having me. Cramer: Well, I'm thrilled you're here. I mean, it's just another great year for you and the stocks up 23% already. I guess it's pretty much when I read through the deck almost everything you feel better about and it's already been good, but it's getting great again. Regnery: Yeah, we had a very strong start to the year. First quarter or order rates have been just you know off the chart, I mean up 24% in the first quarter. Our backlog is that you know, we used to talk about backlogs being record when they were at four billion, 6 billion. Our backlog at the end of the first quarter is 10.7 billion and that's just equipment. And remember a third of our business is services. Cramer: I was going to say one time, I just was saying I like training because the service revenue is strong Regnery: The service business is a great business. It's a third of our company. It's had a compound annual growth rate over the last seven years of low teens. Compound annual growth rate. It’s a very resilient business and it's a third of our company and we invest heavily in it. We just opened up a new training facility in North Carolina, first of its kind. We bring every technician through our training center twice a year. And this is I think about we have in the United States, we have I think 4500 techs. We have another 3000 or two, 2500 globally. So we have 7000 techs now. Cramer: And now you've got some pretty much mission critical. If you go down a billion dollar facility doesn't generate any revenue, that's just not good. So when you're in the data center, I think those guys have to be ready every second. Regnery: Data center customers are very risk averse and they want to make sure that their equipment is going to work. The other thing data center customers want to do is they want to make sure that not only can you ship the equipment, but you could commission the equipment on site. So a lot of our training classes is training technicians to be a data center commissioning people. So what they do is they're able to go to the data center, mechanical contractor finishes the install. We then go make sure the equipment is working the way it's supposed to be working. Cramer: Right now. You're in a great industry with great companies almost all come on, how are you doing wallet share versus organic growth new from greenfield? Regnery: Look, we have our growth rates in the future are going to be fantastic. I mean think about it, I mean we've had a compounding a growth rate over the last five years that's been double digits on the top line. And then on the bottom line, Jim, our EPS growth has been over 20% per year. So we have a mixture, right. So we have greenfield as well as we have certainly brownfields and we do a lot of work with the existing customers and we certainly are always out with new customers every day. Cramer: Now, when I read through your most recent tags, the last two, you're a bit of a throwback. I people have the sustainability page, they either bury it in the last one or they have the first one. Then you move away and never hear about it again. I keep telling this, Oh my God, this is just core for you. Regnery: Yeah. You know, our, our purpose as a company is to challenge what's possible and innovate for a sustainable world. And I tell our employees that's our North Star. And it, it might not be fashionable right now to be talking about sustainability here in the United States, but to us, we still talk about it. And the reason why we talk about it is because we have such great solutions for our customers. We save our customers fantastic amount of energy, OK? And it also lowers their carbon footprint. Most people don't realize, Jim, that 30% of all the energy in the world goes to buildings and 40% of that is for heating and cooling. And we know most buildings operate very inefficiently. In fact, most buildings waste about 30% of the energy that they pay for. And that's the opportunity that we at Trane Technologies help our customers with. Think about all the savings you have with 30%. Energy prices are rising. Our paybacks keep going up because we're saving our customers this wasted energy. Cramer: OK, So take me into a data center. I mean, the thing must be boiling and you got to try to be sure that it stays cool. What's the cost of keeping it cool? And how do you have the equipment that can keep it 24/7 cool? Regnery: Well, we, we data center vertical is very strong for us, OK? Although I would tell you that many verticals are showing that's fair. Cramer: And it's not fair that I'm focused on that because it's true. Regnery: But you had a lot in the data center space. We are innovating at a pace that we have never seen before, OK. And a lot of those innovations are for the data center vertical. However, they're coming back through core verticals as well as we make the product more efficient and, and our product is some of the most efficient in the in the world, OK, we used in our world, we measure efficiency by coefficient of performance or COP, we used to think a COP of 3 or 4 was efficient. We did a job in Australia not too long ago, the COP was north of 11. It's just and so I mean the data center space is a great vertical. We'll continue to lead there, but we have a lot of other verticals we’re very strong in as well. Cramer: OK, but how is it part? I mean we don't have a lot of commercial construction. We have no residential construction to speak of and you're still generating double digit. I don't know how you're doing it. Regnery: A direct sales force is a big help, OK? We all of our employees are direct sales, that that are in the sales function and they just have an unbelievable ability to have deep domain expertise in their local markets. I was telling an analyst the other day was asking a question, I said 95% plus of our account managers or our sales force, they don't sell to data centers. They sell to other core verticals, whether it be higher ed, whether it be K through 12, whether it be healthcare. These are all verticals that we have a lot of expertise in and our portfolio is the broadest in the industry and it allows us to be able to sell solutions to these customers. Cramer: It's also amazing. A lot of people say, well, are they going to reassure you that you never left, you're here. Regnery: Our strategy for decades has been we manufacture in region for region. We have 21 plants in the United States. We have one plant in Mexico, 95% plus of what we sell in the United States. We manufacture in the United States. The job creation that we have is right here in the United States. We've added over 4,000 jobs over the last five years by reinvesting in the business, reinvesting in ourselves through innovation and serving our customers in in a way that's very important to Trane Technologies. Cramer: People keep saying, you know, this building is ridiculous. They can't keep putting up these data centers from your, you know, your boots on the ground vision. Are we really going to be tapped out? Don't we need these? Regnery: The data center pipeline, OK, this would be before they become orders is more robust than I've ever seen it before now. Cramer: Right now? Regnery: Right now as we speak. Cramer: And you're not worried that there's like soft order somewhere over building. Regnery: There is a lot of demand right now and it will be a lot of demand for the foreseeable future. Now I can see four or three years, we'll talk about whether it's five or seven years, but for the foreseeable future, we have a lot of demand right now in that particular vertical. Cramer: Well, I got to tell you if Dave Regnery says that that's what's happening, I'm going with him, not the doomers who I'm getting tired of, frankly, I'm getting tired of it as Dave Regnery is the chair and CEO of Trane Technologies. What a stock. Great to have you on the show. Regnery: Thanks for having me back. Cramer: Mad Money back after the break.