Snapshot
Lennox International Inc reported $1.14B of revenue in Q1 2026, up 5.8% year over year, with diluted EPS of $3.35 and an operating margin of 14.4%.
- Revenue
- $1.14B
- YoY growth
- +5.8%
- Diluted EPS
- $3.35
- Operating margin
- 14.4%
$1.14B
Revenue
+5.8%
YoY growth
$3.35
Diluted EPS
14.4%
Operating margin
01 Key takeaways
What management said
- •The earnings release, today's presentation, and the webcast archive link for today's call are available on our investor relations website at investor.lennox.com.
- •Turning to slide three, revenue was $1.1 billion, up 6% year-over-year, as growth initiatives gained traction and channel conditions stabilized.
- •Our segment margin was 14.4% in the quarter, down 130 basis points, primarily due to the impact of factory under absorption.
- •Operating cash flow was positive $16 million and adjusted earnings per share for the quarter was $3.35.
- •In Building Climate Solutions, emergency replacement momentum and disciplined execution contributed to record quarterly performance.
- •We are reaffirming our full-year adjusted earnings per share guidance range of $23.50-$25.00.
- •With that context, let's turn to slide four to discuss the current economic outlook.
- •Channel destocking has largely concluded as dealers regain confidence and replacement demand strengthens.
- •At the same time, Lennox-specific growth initiatives are gaining momentum and beginning to offset these pressures.
- •In addition, the on-track integration of Supco parts and supplies strengthens our attachment rate growth vector.
- •In Building Climate Solutions, our superior execution continues with emergency replacement and national accounts both driving volume growth.
- •Cold climate capabilities allow us to better address demand in northern regions, while our new compact air handlers make it easier to deploy high-efficiency systems in retrofit and space-constrained applications.
What went well
- •Returned to year-over-year revenue growth of 6% to $1.1 billion after two consecutive quarters of declines
- •Building Climate Solutions delivered record quarterly performance with organic sales up 26%, M&A growth up 12%, and profit margins expanding 300 basis points; sales volumes up 17%
- •Home Comfort Solutions organic sales volume decline of 21% was a meaningful improvement from the 32% decline in Q4 2025, with two-step channel sentiment improving as distributors restocked
- •Operating cash flow improved $52 million year-over-year to positive $16 million, with inventory build of only $60 million versus $210 million in the prior year period
- •Emergency replacement and national account momentum in BCS, with the Saltillo factory paying strong dividends and Stuttgart stabilizing to support national account wins
- •Successful water heater launch via Ariston JV and growing traction with new heat pump products; on-track integration of Supco and Duro Dyne parts and supplies
What went wrong
- •Segment margin declined 130 basis points to 14.4%, attributed 100% to factory under absorption of approximately $15 million in the quarter
- •Home Comfort Solutions revenue declined 10% overall, with organic revenue down 12% (one-step down approximately 10%, two-step down approximately 15%)
- •Cost inflation guidance raised to approximately 5% from 2%, driven by new Section 232 tariffs and input cost increases in aluminum (up 25%), steel (up 20%-25%), diesel (up 50%), and copper (up 10%-15%)
- •Residential new construction (about 25% of HCS) was down more than 30% in volumes, representing share loss that will negatively impact results all year
- •Product costs were a $23 million headwind in HCS, driven by materials inflation and under absorption from lower production levels
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|