Lennox International (LII) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 results with revenue of $1.5 billion, core revenue up 15% year-over-year, and GAAP operating income up 62% to $303 million, driven by pricing, volume, and operational execution.

• Adjusted EPS grew 24% to $6.68, with net income up 83% to $239 million.

• Both Home Comfort Solutions and Building Climate Solutions segments delivered 15% revenue growth and double-digit profit growth, aided by the AES acquisition.

• Raised full-year 2024 EPS guidance to $20.75–$21.00 and free cash flow guidance to $575–$650 million.

• Chief Legal Officer transition announced, with Monica Brown succeeding John Torres in January 2025.

Financial highlights

• Q3 core revenue was $1.5 billion, up nearly $200 million year-over-year, with 13% organic growth and 2% from acquisitions.

• Adjusted segment profit increased 21% to $303 million, with margin up 90 basis points to 20.2%.

• Operating cash flow for Q3 was $452 million, up 44% year-over-year; free cash flow rose 50% to $412 million.

• Gross profit margin for Q3 2024 increased 120 basis points to 32.6%.

• Capital expenditures were $41 million for the quarter and $103 million year-to-date.

Outlook and guidance

• Full-year 2024 core revenue projected to increase by ~10%, including 2% from AES acquisition.

• EPS guidance raised to $20.75–$21.00; free cash flow guidance increased to $575–$650 million.

• 2025 outlook anticipates margin expansion from low-GWP product mix, productivity improvements, and continued share gains.

• Management expects continued demand driven by replacement business and new construction, with seasonality and commodity price volatility as ongoing factors.

• Liquidity remains strong, with $243 million in cash and $1.1 billion in available credit.