What does Lennox do and what are its main business segments?

What factors drove the changes in Lennox's revenue and profit?

What is the revenue and EPS growth rate for Lennox year over year?

What were the key takeaways from Lennox’s earnings call?

What were the key takeaways from Lennox's earnings call?

What is Lennox's gross profit margin?

What is Lennox's latest dividend and current dividend yield?

What guidance did Lennox's management provide for the next earnings period?

- **Resilient Margins Despite Revenue Decline**: 21.7% segment margin record in Q3, driven by cost control and pricing, despite 5% revenue drop.
- **Strategic Acquisitions Paying Dividends**: DuroDyne/Supco acquisition to add $0.30-$0.40 EPS in 2026, with $225M annual run rate and cost synergies.
- **2026 Growth Catalysts**: Inventory normalization by Q2 2026, Samsung JV ductless product launch, and commercial services expansion.
- **Key Risks**: Ongoing repair vs. replace trend, macroeconomic weakness, and inventory destocking headwinds expected through mid-2026.

**【CEO Summary Section】**
- **Revenue and Margins**: Despite a 5% year-over-year revenue decline, the company achieved a record third-quarter segment margin of 21.7%, driven by disciplined cost management and pricing strategies. Adjusted EPS reached $6.98, a 4% increase from the prior year.
- **Market Challenges**: Residential and commercial end markets faced weakness due to inventory destocking, dealer caution post-refrigerant transition, and macroeconomic headwinds. HCS revenue declined 12%, while BCS revenue grew 10% through share gains in emergency replacements and refrigeration.
- **Strategic Acquisitions**: The acquisition of DuroDyne and Supco, valued at $225 million annually, is expected to be accretive in 2026, enhancing parts and services attachment rates. Integration efforts are already identifying cost synergies and operational improvements.
- **2026 Outlook**: Management anticipates channel inventory normalization by mid-2026, supported by lower interest rates, housing recovery, and resolution of refrigerant-related supply chain issues. Growth initiatives include ductless products (via Samsung JV) and commercial services expansion.

**【CFO Financial Commentary】**
- **Financial Performance**: GAAP net income was $420 million, with non-GAAP EPS of $6.98. Segment profit grew 2% despite a 5% revenue decline, driven by favorable product mix (R-454B adoption), cost reductions, and BCS growth. Free cash flow guidance was revised to $550 million due to elevated inventory levels.
- **Segment Breakdown**: HCS faced a 12% revenue decline due to unit volume drops (23%), while BCS grew 10% through share gains in emergency replacements and refrigeration. Both segments saw margin expansion (30 and 330 basis points, respectively).
- **Cost Management**: Tariff mitigation and operational efficiency improvements offset inflationary pressures. SG&A expenses were reduced, partially offsetting volume declines.

**【Q&A Highlights】**
- **Inventory and Destocking**: Dealer destocking, particularly in residential, reduced sell-through by 10-20%. Inventory levels are expected to normalize by Q2 2026. The company reduced production in Q4 to avoid overstocking, impacting margins temporarily.
- **Repair vs. Replace Trend**: Higher repair activity (parts and services growth) reflects consumer caution amid high interest rates and housing market weakness. This trend may persist as federal energy incentives sunset.
- **Strategic Investments**: Expansion of the Saltillo commercial factory and digital tools for dealers are key to 2026 growth. The Samsung JV ductless product launch is expected to add 0.5-1% annual growth starting in 2026.
- **Margin Resilience**: Despite headwinds, the company maintained margins through pricing, mix improvement (R-454B adoption), and cost productivity. 2026 margin stability is expected with customary pricing actions and operational efficiency.


Lennox International Inc. (LII) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

LII

LII fundamentals

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