Lennox International Inc.

What they do

Lennox designs, manufactures and markets HVACR products sold through direct sales, independent distributors and company-owned Lennox Stores in the U.S. and Canada. Home Comfort Solutions covers residential heating and cooling equipment, indoor air quality products and replacement parts under brands including Lennox, Armstrong Air, Ducane, AirEase and ADP. Building Climate Solutions serves commercial markets with unitary and applied heating/cooling equipment, VRF products, refrigeration equipment and service under brands including Lennox, Energence, Heatcraft Worldwide Refrigeration, Bohn and Larkin. In October 2025 the company acquired Duro Dyne and Supco, HVAC parts and supplies businesses added to Building Climate Solutions and Home Comfort Solutions respectively.

Revenue drivers

• Home Comfort Solutions — Residential furnaces, air conditioners, heat pumps, IAQ equipment and parts sold to independent dealers and through Lennox Stores; generated $3,343.4 million of net sales in 2025, the larger of the two segments.
• Building Climate Solutions — Commercial heating/cooling equipment, applied systems, VRF, refrigeration equipment and service; generated $1,851.9 million of net sales in 2025.
• Distribution channels — Products reach market through direct sales to independent installing dealers, independent wholesale distributors (Allied Air Enterprise brands), company-owned Lennox Stores and private label arrangements.
• Replacement demand — Management states a substantial portion of sales in each segment is attributable to replacement business rather than new construction, with demand seasonal and weather-sensitive.

Recent performance

Second quarter 2026 revenue was $1,545.3 million, up 3% year over year, with GAAP operating income of $355 million, up 2%, and GAAP diluted EPS flat at $7.72. Home Comfort Solutions revenue fell 7% to $936 million with segment margin down 130 basis points to 23.7% on lower residential volumes and absorption pressures. Building Climate Solutions revenue rose 24% to $610 million with segment margin up 100 basis points to 25.5%, including 15% organic growth and a 9% contribution from acquisitions. First half 2026 revenue was $2,680.4 million versus $2,573.5 million a year earlier, and first half net income was $386.2 million versus $403.5 million. Second quarter operating cash flow was $172 million versus $87 million in the prior-year quarter.

Strategy

Management describes a growth strategy built on innovation, operational excellence and disciplined capital allocation. The company expanded its portfolio in 2025 with the Duro Dyne and Supco acquisitions and subsequently added the Comfort-Aire and Century brands. Building Climate Solutions is being scaled through national account execution, emergency replacement activity and service offerings, while pricing actions have been taken to offset inflation and tariffs. Capital return remains active, with $132 million of share repurchases in the second quarter of 2026.

Risks

• Residential market softness — Home Comfort Solutions revenue declined 7% in Q2 2026 on lower volumes, and management cited continued residential end market softness and new construction as a headwind.
• Intense competition — Lennox states substantially all its markets are competitive on availability, reliability, efficiency, performance, service and price, with lower barriers in parts, supplies and commercial service.
• Tariffs and input costs — The company cites new or increased trade tariffs and higher raw material prices among factors that could materially affect results; Q2 2026 results included $30 million of tariff refunds.
• Weather and seasonality — Demand for HVACR products is seasonal and significantly affected by weather, with cooler summers and warmer winters depressing demand.

Outlook

Lennox updated its full year EPS guidance range to $23.00 to $24.00 in the July 29, 2026 earnings release. Management pointed to strong momentum in Building Climate Solutions and contributions from the Duro Dyne and Supco acquisitions mitigating residential softness. It also noted residential demand improved sequentially from the first quarter, while residential new construction remained a meaningful headwind.