Lennox International (LII) investor relations material

Competitive positioning and business model

• Direct-to-contractor distribution model enables both manufacturing and distributor margins, with ongoing investments to improve distribution and contractor partnerships.

• Focus on contractor success through fulfillment, technical support, and training, aiming for 99% fulfillment and efficient technician support via AI tools.

• Broad product portfolio includes water heaters (via joint venture), expanded ductless offerings with Samsung, and a good-better-best strategy.

• Ownership of controls and power electronics allows cost-effective technology integration and differentiation across product lines.

Market trends and industry outlook

• Residential HVAC market faces short-term challenges from regulatory changes, tariffs, weather, and inventory destocking, but long-term discipline and growth potential remain.

• Sell-through is pressured by declines in new construction and existing home sales, with homeowners opting for repairs over replacements in the near term.

• Light commercial segment shows positive momentum with share recovery, new factory capacity, and multi-year refresh initiatives for national accounts.

• No significant share shifts observed; ductless systems are growing but remain a complementary segment.

Innovation, technology, and product development

• Investments in R&D focus solely on HVAC, leading to industry-leading efficiency in heat pumps, furnaces, and rooftop units.

• Recent product launches include cold climate heat pumps and integration of Samsung mini splits, with unified app development for seamless dealer and homeowner experience.

• AI is leveraged for hyper-personalization in e-commerce, technician support, and internal productivity, with 7,000 dealers using the AI app.

• Ongoing innovation includes new dehumidification and dedicated outdoor air solutions.