Lennox Reports 2026 First Quarter Results
Rhea-AI Summary
Lennox (NYSE: LII) reported Q1 2026 results: $1.1 billion revenue (+6%), $164 million operating income (‑3%), and $3.35 GAAP diluted EPS (‑8%). Total segment margin declined 130 bps to 14.4%. Home Comfort revenue fell 10% while Building Climate revenue rose 38% (organic +26%).
Full‑year revenue growth guidance updated to ~8% (including ~4% from acquisitions); EPS guidance maintained at $23.50–$25.00; free cash flow outlook remains $750–$850 million.
Positive
- Revenue +6% to $1.1 billion
- Building Climate revenue +38% (organic +26%)
- Full‑year revenue growth guidance ~8% including ~4% acquisitions
- Maintained full‑year EPS guidance of $23.50–$25.00
- Free cash flow guidance $750–$850 million
Negative
- GAAP diluted EPS down 8% to $3.35 in Q1
- Total segment margin down 130 bps to 14.4%
- Home Comfort revenue down 10% and segment margin down 390 bps
- Operating income down 3% to $164 million
- Net capital expenditures increased to $55 million from $25 million
Key Figures
Market Reality Check
Peers on Argus
LII was down 1.34% pre-news with above-average volume, while key building-products peers like CSL (-1.64%), BLDR (-2.12%), OC (-0.49%), MAS (-0.24%) and WMS (-2.21%) were also negative, suggesting broader pressure but no momentum-clustered sector move.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Apr 08 | Earnings date set | Neutral | +6.1% | Announced timing and access details for Q1 2026 earnings call. |
| Mar 20 | Dividend declaration | Positive | -2.0% | Declared quarterly cash dividend of $1.30 per share. |
| Mar 04 | Guidance & targets | Positive | -0.3% | Reaffirmed 2026 guidance and set 2030 revenue and margin goals. |
| Mar 03 | Strategic joint venture | Positive | -2.0% | Entered JV with Ariston to expand into residential water heating. |
| Feb 10 | Investor Day announced | Neutral | +3.6% | Planned 2026 Investor Day to outline strategy and long-term targets. |
Recent news has produced mixed reactions: scheduling and event announcements sometimes lifted shares, while dividends and strategic updates, including guidance reaffirmation and a new joint venture, saw modest negative moves.
Over the last few months, Lennox has focused on communication and long-term positioning. It scheduled Q1 results on Apr 08, declared a $1.30 quarterly dividend on Mar 20, and reaffirmed 2026 guidance with ambitious 2030 targets on Mar 04. A joint venture on Mar 03 expanded into residential water heating, and an Investor Day was announced on Feb 10. Reactions have varied, with some corporate events drawing gains and others mild selling, indicating no consistent bias around announcements.
Regulatory & Risk Context
Lennox has an effective automatic shelf registration on Form S-3ASR filed on 2025-10-24, allowing it to issue debt securities (potentially guaranteed), common and preferred stock, warrants, depositary shares, and units over time. Terms and pricing would be set in future prospectus supplements, with net proceeds earmarked for general corporate purposes such as working capital, capex, acquisitions, debt repayment or refinancing, and potential repurchases or redemptions.
Market Pulse Summary
This announcement highlights a mixed quarter: revenue grew 6% to $1.1 billion, but GAAP diluted EPS declined 8% to $3.35 and margins compressed. Home Comfort remained soft, while Building Climate Solutions delivered 38% revenue growth and margin expansion. Full-year EPS and free cash flow guidance were maintained, underscoring management’s confidence. Investors may track segment mix, acquisition integration, inflation impacts, and progress on productivity and supply chain initiatives relative to prior strategic targets.
AI-generated analysis. Not financial advice.
Highlights
(All comparisons are year-over-year, unless otherwise noted)
- Revenue
$1.1 billion 6% - GAAP Operating Income
$164 million 3% - GAAP diluted EPS
$3.35 8% - Maintaining full year EPS guidance range of
$23.50 $25.00
Revenue increased
"Our results this quarter were supported by stabilizing end-markets and encouraging momentum across our strategic initiatives, including the integration of Duro Dyne and Supco. We remain confident in our strategy to deliver long-term shareholder value through differentiated growth and bolt-on M&A opportunities," said CEO, Alok Maskara. "While macro uncertainties persist, we are focused on productivity measures, supply chain optimization, and thoughtful pricing actions to offset inflationary pressures."
In Home Comfort Solutions, industry conditions started stabilizing during the first quarter, as expected. Revenue declined by
The Building Climate Solutions segment delivered another strong quarter, with organic sales increasing
1 Includes unallocated corporate expenses |
FIRST QUARTER 2026 FINANCIAL HIGHLIGHTS
(All comparisons are year-over-year, unless otherwise noted)
Revenue:
Operating Income:
Total Segment Profit1:
Net Income:
Adjusted Net Income:
Cash Flow: Operating cash flow was
Home Comfort Solutions: Business segment revenue was
Building Climate Solutions: Business segment revenue was
Corporate and Other: Corporate expenses were
1 Includes unallocated corporate expenses |
FULL YEAR 2026 GUIDANCE
For full year 2026, we are updating revenue growth guidance to approximately
Earnings per share is still expected to be within the range of
Free Cash Flow is still estimated to be within the range of
CONFERENCE CALL INFORMATION
A conference call to discuss the company's first quarter results will be held this morning at 8:30 a.m. Central Time. To participate in the earnings conference, please call 800-267-6316 (
ABOUT LENNOX
Lennox (NYSE: LII) is a leader in energy-efficient building solutions and is committed to creating healthier and more comfortable environments. Serving residential and commercial customers, the company delivers innovative heating, cooling, indoor air quality, refrigeration, and water heating systems. Through trusted products, parts, and services, and advanced technology, Lennox delivers connected solutions that support the full lifecycle of customer needs. Additional information on Lennox is available at Lennox.com or by contacting investor@lennox.com.
FORWARD-LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES
The statements in this document that are not historical statements, including statements regarding the 2026 full-year outlook and expected consolidated and segment financial results, as well as financial targets for future years, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on information currently available as well as management's assumptions and beliefs today. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the statements, and investors should not place undue reliance on them. Risks and uncertainties that could cause actual results to differ materially from such statements include risks that the North American HVAC and refrigeration markets perform worse than current assumptions. Additional risks include but are not limited to competition in the HVACR business; our ability to successfully develop and market new products or execute our business strategy; our ability to meet and anticipate customer demands; our ability to continue to license or enforce our intellectual property rights; our ability to attract, motivate, develop, and retain our employees, as well as labor relations problems; artificial intelligence technologies; a decline in new construction activity and related demand for our products and services; the impact of weather on our business; the impact of higher raw material prices and significant supply interruptions; product liability, warranty claims, or recalls; changes in environmental and climate-related legislation or government regulations or policies; changes in tax legislation; the impact of new or increased trade tariffs; improper conduct by any of our employees, agents, or business partners; litigation risks; general economic conditions in
For information concerning these and other risks and uncertainties, see LII's publicly available filings with the Securities and Exchange Commission. LII disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
A reconciliation of non-GAAP financial measures appearing in this document to financial measures prepared in accordance with
This document includes forward-looking statements regarding segment profit, adjusted net income, adjusted diluted earnings per share, and free cash flow, which are non-GAAP financial measures. These non-GAAP financial measures are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts excluded is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period and the high variability of certain amounts, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, changes in environmental liabilities, the impact and timing of potential acquisitions and divestitures, future restructuring costs, and other structural changes or their probable significance. We are unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort or expense. The unavailable information could have a significant impact on LII's full year GAAP financial results.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) | |||
(Amounts in millions, except per share data) | For the Three Months | ||
2026 | 2025 | ||
Net sales | $ 1,135.1 | $ 1,072.6 | |
Cost of goods sold | 783.8 | 731.7 | |
Gross profit | 351.3 | 340.9 | |
Operating Expenses: | |||
Selling, general and administrative expenses | 185.2 | 171.3 | |
Losses and other expenses, net | 2.2 | 2.8 | |
Loss (income) from equity method investments | 0.4 | (1.2) | |
Operating income | 163.5 | 168.0 | |
Pension settlements | 0.5 | 0.1 | |
Interest expense, net | 15.2 | 6.2 | |
Other expense, net | 0.9 | 0.9 | |
Net income before income taxes | 146.9 | 160.8 | |
Provision for income taxes | 29.7 | 31.2 | |
Net income | $ 117.2 | $ 129.6 | |
Earnings per share – Basic(1): | $ 3.37 | $ 3.65 | |
Earnings per share – Diluted(1): | $ 3.35 | $ 3.63 | |
Weighted Average Number of Shares Outstanding - Basic | 34.8 | 35.5 | |
Weighted Average Number of Shares Outstanding - Diluted | 35.0 | 35.7 | |
(1) Amounts may not recalculate due to rounding. |
Note: The 2025 amounts are adjusted to reflect the accounting method change from LIFO to FIFO that occurred in the fourth quarter of 2025. |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES Segment Net Sales and Profit (Unaudited) | |||
(Amounts in millions) | For the Three Months | ||
2026 | 2025 | ||
Net Sales | |||
Home Comfort Solutions | $ 650.0 | $ 721.4 | |
Building Climate Solutions | 485.1 | 351.2 | |
Total net sales | $ 1,135.1 | $ 1,072.6 | |
Segment Profit(1) | |||
Home Comfort Solutions | $ 86.5 | $ 123.9 | |
Building Climate Solutions | 95.6 | 58.8 | |
Total segment profit | 182.1 | 182.7 | |
Corporate and other expenses(2) | (18.6) | (14.7) | |
Total segment profit, including unallocated Corporate and other expenses | 163.5 | 168.0 | |
Reconciliation to Operating income: | |||
Restructuring charges | — | — | |
(Gain) loss on sale from previous dispositions | — | — | |
Acquisition costs | — | — | |
Operating income | $ 163.5 | $ 168.0 | |
(1) | We define segment profit as a segment's operating income (loss) included in the accompanying Consolidated Statements of Operations, excluding: |
| |
(2) | Corporate and other expenses include unallocated corporate costs related to corporate administrative functions such as tax, treasury, accounting, internal audit, legal and human resources. |
Note: The 2025 amounts are adjusted to reflect the accounting method change from LIFO to FIFO that occurred in the fourth quarter of 2025. | |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Balance Sheets | |||
(Amounts in millions, except shares and par values) | As of March 31, 2026 | As of December 31, 2025 | |
(Unaudited) | |||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 48.2 | $ 34.2 | |
Short-term investments | 2.0 | 0.5 | |
Accounts and notes receivable, net of allowances of | 647.9 | 578.8 | |
Inventories, net | 1,209.7 | 1,152.6 | |
Other current assets | 124.3 | 137.7 | |
Total current assets | 2,032.1 | 1,903.8 | |
Restricted cash equivalents | 19.0 | 18.5 | |
Property, plant and equipment, net of accumulated depreciation of | 917.6 | 887.2 | |
Right-of-use assets from operating leases | 404.4 | 356.3 | |
Goodwill | 503.7 | 497.2 | |
Intangible assets, net of accumulated amortization of | 269.7 | 273.0 | |
Deferred income taxes | 12.6 | 12.9 | |
Other assets, net | 133.6 | 132.9 | |
Total assets | $ 4,292.7 | $ 4,081.8 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 464.6 | $ 438.0 | |
Accrued expenses | 301.5 | 374.2 | |
Income taxes payable | 63.4 | 46.4 | |
Commercial paper | 361.0 | 226.0 | |
Current maturities of long-term debt | 18.2 | 18.3 | |
Current operating lease liabilities | 83.8 | 88.9 | |
Total current liabilities | 1,292.5 | 1,191.8 | |
Long-term debt | 1,144.1 | 1,144.1 | |
Long-term operating lease liabilities | 347.8 | 293.4 | |
Pensions | 19.4 | 18.7 | |
Other liabilities | 275.0 | 270.7 | |
Total liabilities | 3,078.8 | 2,918.7 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 0.9 | 0.9 | |
Additional paid-in capital | 1,249.7 | 1,243.0 | |
Retained earnings | 4,963.0 | 4,891.1 | |
Accumulated other comprehensive loss | (48.0) | (48.5) | |
Treasury stock, at cost, 52,360,280 shares and 52,374,147 shares for 2026 and | (4,951.7) | (4,923.4) | |
Total stockholders' equity | 1,213.9 | 1,163.1 | |
Total liabilities and stockholders' equity | $ 4,292.7 | $ 4,081.8 | |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows
(Unaudited) | |||
(Amounts in millions) | For the Three Months | ||
2026 | 2025 | ||
Cash flows from operating activities: | |||
Net income | $ 117.2 | $ 129.6 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Loss (income) from equity method investments | 0.4 | (1.2) | |
Provision for credit losses | 2.1 | 1.3 | |
Unrealized losses (gains), net on derivative contracts | 2.1 | (0.5) | |
Stock-based compensation expense | 6.3 | 6.3 | |
Depreciation and amortization | 29.2 | 25.6 | |
Deferred income taxes | 3.3 | (1.1) | |
Pension expense | 1.0 | 1.1 | |
Pension contributions | (0.3) | (0.3) | |
Changes in assets and liabilities, net of effects of acquisitions and divestitures: | |||
Accounts and notes receivable | (73.6) | 8.3 | |
Inventories | (62.6) | (209.4) | |
Other current assets | 13.7 | (1.7) | |
Accounts payable | 31.0 | 85.2 | |
Accrued expenses | (74.3) | (105.1) | |
Income taxes payable and receivable, net | 18.8 | 27.1 | |
Leases, net | 1.3 | 3.4 | |
Other, net | 0.5 | (4.4) | |
Net cash provided by (used in) operating activities | 16.1 | (35.8) | |
Cash flows from investing activities: | |||
Proceeds from the disposal of property, plant and equipment | 0.7 | 0.5 | |
Purchases of property, plant and equipment | (55.5) | (25.5) | |
Acquisitions, net of cash | (0.2) | — | |
(Purchases of) proceeds from investments and other | (1.6) | 1.5 | |
Net cash used in investing activities | (56.6) | (23.5) | |
Cash flows from financing activities: | |||
Commercial paper borrowings | 434.1 | — | |
Commercial paper payments | (299.1) | — | |
Payments on debt arrangements | (5.3) | (5.0) | |
Proceeds from employee stock purchases | 2.6 | 1.2 | |
Repurchases of common stock | (19.5) | (85.2) | |
Repurchases of common stock to satisfy employee withholding tax obligations | (10.5) | (11.3) | |
Cash dividends paid | (45.2) | (40.9) | |
Net cash provided by (used in) financing activities | 57.1 | (141.2) | |
Increase (decrease) in cash, cash equivalents and restricted cash | 16.6 | (200.5) | |
Effect of exchange rates on cash, cash equivalents and restricted cash equivalents | (2.1) | 2.6 | |
Cash, cash equivalents and restricted cash, beginning of period | 52.7 | 415.1 | |
Cash, cash equivalents and restricted cash, end of period | $ 67.2 | $ 217.2 | |
Supplemental disclosures of cash flow information: | |||
Interest paid | $ 23.5 | $ 19.2 | |
Income taxes paid (net of refunds) | $ 7.0 | $ 5.1 | |
Note: The 2025 amounts are adjusted to reflect the accounting method change from LIFO to FIFO that occurred in the fourth quarter of 2025. |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES | |||||
Reconciliation to | |||||
(Unaudited, in millions, except per share and ratio data) | |||||
Use of Non-GAAP Financial Measures | |||||
To supplement the Company's consolidated financial statements and segment net sales and profit (loss) presented in accordance with |
Reconciliation of Net Cash Provided by (Used in) Operating Activities, a GAAP measure, to Free Cash Flow, a Non- | |||
For the Three Months | |||
2026 | 2025 | ||
Net cash provided by (used in) operating activities | $ 16.1 | $ (35.8) | |
Purchases of property, plant and equipment | (55.5) | (25.5) | |
Proceeds from the disposal of property, plant and equipment | 0.7 | 0.5 | |
Free cash flow, a Non-GAAP measure | $ (38.7) | $ (60.8) | |
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SOURCE Lennox International Inc.