Lennox Q2 Sales Beat Expectations with 3.4% YoY Growth, Raises Full-Year Guidance

Lennox International (NYSE:LII) reported Q2 CY2025 revenue of $1.50 billion, up 3.4% YoY and beating analyst estimates. The company's non-GAAP profit of $7.82 per share was 13.9% above consensus estimates. Lennox raised its full-year adjusted EPS guidance to $23.75, a 3.8% increase, and reported organic revenue growth of 3% YoY. The company's market capitalization is $22 billion.

Lennox International Inc (NYSE:LII) reported its second-quarter (Q2) 2025 financial results on July 23, with notable improvements in revenue and profit despite industry-wide challenges. The HVAC manufacturer reported a 3% year-over-year (YoY) increase in revenue to $1.5 billion, surpassing analyst estimates. Segment profit climbed 11% to $354 million, with segment profit margin expanding by 170 basis points to 23.6%. Adjusted earnings per share (EPS) reached $7.82, up 14% compared to the same period last year [1].

The company's performance reflects a significant improvement from Q1 2025, when revenue grew by 2% but segment margins decreased by 140 basis points. This quarter’s results demonstrate Lennox's ability to navigate pricing challenges while improving profitability [1].

Operating cash flow was $87 million, down $97 million year-over-year, while the company maintained a strong balance sheet with Net Debt/Adjusted EBITDA of 1.0x, an improvement of 0.2x from the previous year [1].

Lennox's Home Comfort Solutions segment, which represents approximately two-thirds of total revenue, grew 3% YoY to $1.009 billion. Despite a 9% volume decline attributed to R410A destocking and softness in residential new construction, the segment achieved a 12% increase from favorable mix and pricing. Segment profit increased to $255 million, up from $229 million in the prior year [1].

The Building Climate Solutions segment demonstrated stronger revenue growth of 5%, reaching $492 million. This segment also experienced volume challenges (-3%) but benefited from an 8% boost from mix and pricing. Segment profit grew to $123 million from $114 million in Q2 2024 [1].

Lennox raised its full-year adjusted EPS guidance to $23.25-$24.25, up from the previous range of $22.25-$23.50 provided after Q1 results. The company projects total revenue growth of approximately 3% for 2025 [1].

The updated guidance accounts for several factors, including continued inflation of approximately 6% and plans to offset this through productivity improvements and cost actions of around $75 million. The company anticipates free cash flow between $650 million and $800 million for the full year, with cash flow conversion improving to approximately 90% [1].

Lennox International's stock price jumped 4.05% in pre-market trading following the earnings announcement, with shares trading at $645.07. The company's strong Q2 performance comes after a challenging first quarter that saw the stock drop 5.24% despite beating earnings expectations [2].

The current average analyst rating on the shares is "hold," with a breakdown of recommendations including 6 "strong buy" or "buy," 9 "hold," and 6 "sell" or "strong sell." The average consensus recommendation for the electrical components & equipment peer group is "buy." Wall Street's median 12-month price target for Lennox International Inc is $591.00, about 4.9% below its July 22 closing price of $619.97 [2].

Lennox International's Q2 2025 results highlight its resilience in the face of industry challenges and demonstrate its ability to expand margins while navigating inflationary pressures. The company's strategic initiatives, including partnerships with Samsung and Ariston Group, position it well for future growth [3].

References:
[1] https://www.investing.com/news/company-news/lennox-q2-2025-slides-profit-surges-11-as-margins-expand-despite-volume-challenges-93CH-4147930
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_PLX96B0F0:0-ac-maker-lennox-beats-q2-revenue-estimates-raises-fy-2025-guidance/
[3] https://www.gurufocus.com/news/2996541/lennox-international-inc-lii-reports-strong-q2-2025-financial-results-lii-stock-news