Lennox Earnings: Prebuy Sales Boost Q4 Results, but Tough Sales Comparison Looms in 2025

Lennox International Inc. (NYSE: LII) reported strong fourth-quarter results, driven by robust sales growth and improved profitability. However, investors should be aware of the potential challenges ahead, as the company faces a tough sales comparison in 2025 due to the industry R-410A prebuy ahead of the refrigerant transition.



In Q4 2024, Lennox's core revenue grew by an impressive 22%, with organic revenue up 21% driven by favorable sales volume and price/mix benefits. The Home Comfort Solutions segment delivered 25% revenue growth, while the Building Climate Solutions segment increased by 17%. Adjusted diluted EPS rose by 54% to $5.60, reflecting the company's strong financial performance.



However, investors should be cautious about the sustainability of these growth rates in 2025. The strong sales performance in Q4 2024 was partially driven by industry R-410A prebuy ahead of the refrigerant transition in 2025. This prebuy may not be repeated in the following quarters, leading to a tough sales comparison for Lennox in 2025.

Moreover, the transition to the new refrigerant in 2025 may present additional challenges for Lennox. The company is investing in new manufacturing facilities to accommodate the transition, but the ramp-up costs and existing factory inefficiencies have put pressure on segment profit margins compared to the same quarter last year.

Lennox is taking proactive measures to mitigate potential disruptions from the refrigerant transition. The company is capitalizing on industry prebuy, investing in new manufacturing facilities, and integrating acquisitions, such as AES, to drive synergies and customer wins. However, investors should be prepared for potential headwinds in 2025 as the company navigates the transition.

In conclusion, Lennox International Inc. reported strong Q4 results, driven by robust sales growth and improved profitability. However, investors should be aware of the potential challenges ahead, as the company faces a tough sales comparison in 2025 due to the industry R-410A prebuy and the transition to the new refrigerant. Lennox is taking proactive measures to mitigate potential disruptions, but investors should be prepared for potential headwinds in 2025.