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Lennox Q3 2026 Earnings Report
Lennox reports 10% revenue growth but 7% EPS decline as it launches recovery plan for 2027.
In brief
Lennox reports 10% revenue growth but 7% EPS decline as it launches recovery plan for 2027. Lennox International Inc. reported Q3 revenue of $1.6 billion with 10% growth but adjusted diluted EPS down 7% due to pricing pressures, launching a recovery plan focused on pricing, productivity, portfolio refresh, and…
Q3 Revenue Growth
Lennox reported third quarter revenue of $1.6 billion, up 10% driven by organic growth in Building Climate Solutions and completed acquisitions.
Adjusted EPS Decline
Adjusted diluted EPS fell to $6.84, a 7% decline primarily due to lower price realization and higher inflationary costs.
Segment Profit Drop
Total segment profit decreased 2% to $323 million as profit gains from higher sales volumes were offset by a $45 million headwind from product cost inflation and tariffs.
Building Climate Solutions
Building Climate Solutions revenue increased 24% with 15% organic growth supported by business development and factory capacity investments.
Home Comfort Solutions
Home Comfort Solutions revenue rose 3% as a $39 million acquisition contribution offset a 1% organic revenue decline.
Margin Pressure
Home Comfort Solutions segment margin dropped 490 basis points due to targeted price adjustments to defend market share and $47 million cost headwinds.
Operating Cash Flow
Operating cash flow rose $95 million to $395 million from the previous year due to focused inventory reduction efforts.
Free Cash Flow
Free cash flow conversion reached 108% on a trailing 12-month basis, indicating high efficiency in converting earnings to cash.
Inventory Reduction
Organic inventory units decreased more than 15% compared to the prior year, though acquisitions added approximately $100 million in inventory value.
Share Repurchases
Share repurchases totaled $151 million during Q3, bringing the year-to-date total to $302 million.
Full-Year EPS Guidance
Full-year adjusted EPS guidance was lowered to $21.00 to $21.50 from $23.00 to $24.00 due to competitive pricing pressures and higher tax rates.
Revenue Guidance
Full-year revenue guidance revised downward to approximately 6% growth from 8% reflecting lower expectations for price and mix.
Free Cash Flow Guidance
Free cash flow guidance reduced to $700 million to $750 million from $750 million to $850 million.
Building Climate Solutions Guidance
Building Climate Solutions guidance increased to approximately 23% revenue growth from a previous 20% target.
Home Comfort Solutions Guidance
Home Comfort Solutions guidance revised to approximately 4% revenue decline from a prior expectation of 1% growth.
Recovery Plan Launch
CEO Maskara announced a recovery plan focused on regaining market share and restoring margins through pricing, productivity, portfolio refresh, and distribution efficiency.
What to remember
Lennox International Inc. reported Q3 revenue of $1.6 billion with 10% growth but adjusted diluted EPS down 7% due to pricing pressures, launching a recovery plan focused on pricing, productivity, portfolio refresh, and distribution efficiency for 2027.
