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Lennox International (LII) investor relations material
Lennox International Q3 2025 earnings summary
Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.Executive summary
Q3 2025 revenue declined 5% year-over-year to $1.4 billion, driven by challenging macroeconomic conditions, refrigerant transition impacts, and a 16% drop in sales volumes, partially offset by an 11% increase in mix and pricing.
Adjusted EPS reached a Q3 record of $6.98, up 4% year-over-year, with net income at $246 million and segment profit margin up 150 basis points to 21.7%.
Operating income rose 2% to $310 million, while operating cash flow for Q3 was $301 million, down from the prior year due to elevated inventory.
Recent acquisitions (DuroDyne and Supco) are expected to be EPS accretive in 2026, expanding the parts and accessories portfolio and providing cost synergies.
Share repurchases totaled $350 million year-to-date, with $1.16 billion remaining under authorization as of September 30, 2025.
Financial highlights
Home Comfort Solutions (HCS) revenue fell 12% to $913 million, with segment profit down 10% to $203 million; Building Climate Solutions (BCS) revenue rose 10% to $514 million, with segment profit up 27% to $134 million.
Total Q3 2025 net sales were $1.43 billion, down 5% year-over-year; segment profit was $310 million, up 2%.
Gross profit margin for Q3 2025 increased 20 bps to 32.8% year-over-year, driven by favorable mix and pricing, offset by higher product and freight costs.
Operating cash flow for the first nine months of 2025 was $352 million, down from $613 million in the prior year, mainly due to less favorable working capital changes.
Effective tax rate for Q3 2025 was 17.7%, down from 18.7% in Q3 2024, due to higher income in low-tax jurisdictions.
Outlook and guidance
Full-year 2025 revenue is expected to decline 1%, with adjusted EPS guidance revised to $22.75–$23.25 and free cash flow guidance at ~$550 million.
Revenue guidance for 2025 reflects a 5% decline, with HCS down high single digits and BCS down low single digits.
Inventory normalization and market recovery are anticipated by Q2 2026, with growth expected to resume in 2026.
Pricing is expected to offset inflationary pressures, and the "One Big Beautiful Bill Act" will provide material 2025 cash tax savings.
Management expects a more normalized operating environment in 2026 and beyond.
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