Lennox International (LII) Barclays 42nd Annual Industrial Select Conference summary

Residential market trends and inventory

• Demand trends remain strong, with no significant disruptions observed so far this year.

• Pre-buy activity was overestimated; share gains and destocking reversal are more significant factors.

• Most equipment installed is still 410, with some 454B starting to appear; uncertainty persists.

• Distributor inventory levels are normal, with only minor dealer stockpiling due to space and cash constraints.

• Contractors avoid holding obsolete 410 inventory, limiting excess stock to a week or two.

Furnace and hybrid system trends

• Furnace sales have normalized after prior destocking, with weather impacting seasonal demand.

• Long-term shift from furnaces to heat pumps continues, with increased adoption of hybrid systems.

• Improved control technology and contractor experience are supporting hybrid system growth.

Revenue guidance, pricing, and tariffs

• Revenue guidance reflects caution due to pre-buy, share gain reversal, and consumer uncertainty.

• Flattish end consumer and new home demand expected; tariffs and inflation are key concerns.

• Industry-wide price increases are anticipated to offset tariff impacts, likely in the low single digits.

• No abnormal industry behavior around tariffs; some Canadian customers are pre-ordering.

• Tariffs on steel and aluminum have both direct and secondary cost impacts.