Lennox International (LII) Oppenheimer 21st Annual Industrial Growth Virtual Conference summary

Growth initiatives and strategic priorities

• Targeting $500 million revenue growth from new initiatives by 2030, with $50 million expected this year and acceleration in subsequent years.

• Largest near-term opportunity is increasing attachment rates for parts, supplies, and services, supported by recent acquisitions and a strong dealer network.

• Emergency replacement is showing the most traction and is expected to have the greatest impact by 2026.

• Joint ventures with Samsung and Ariston are important but will take longer to impact due to low current market share.

• Ductless products are underrepresented in sales but are expected to grow over the next 5–10 years.

Channel development and dealer support

• Significant investment in dealer training, both in-person and online, with dedicated teams for new products.

• Integration of new products with existing apps and loyalty programs to enhance dealer and consumer experience.

• Training encourages cross-selling, especially for water heaters, leveraging digital connectivity and energy efficiency.

• Industry trends show a rise in dealers selling water heaters, expected to reach 70–80% in the next decade.

• Technology convergence is anticipated, with future products potentially combining home heating and hot water functions.

Market outlook and demand trends

• Residential market growth is conservatively estimated at 1–3% CAGR, with focus on differentiated growth initiatives.

• Reduced exposure to low-margin residential new construction; intent to rebid with better terms while maintaining margin discipline.

• Light commercial segment is outperforming peers, driven by emergency replacement and national accounts, with strong start to the year.

• Configure-to-order capabilities and R&D investments are supporting innovation and margin expansion.

• Housing starts impact revenue with a 6–12 month lag; replacement demand is stabilizing as inventory issues resolve.