LENNOX INTERNATIONAL INC (LII): Results of Operations and Financial Condition
LENNOX INTERNATIONAL INC (LII) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Lennox Reports 2026 Second Quarter Results ____________________________________________________________________________ Highlights (All comparisons are year-over-year, unless otherwise noted) • Revenue $1.5 billion, up 3% • GAAP Operating Income $355 million, up 2% •
How this was made
The 30-second read
Why it matters
Traders can update models for 2H 2026 based on the revised EPS range ($23.00-$24.00) and the segment split: Home Comfort revenue down 7% with margin down 130 bps, while Building Climate revenue up 24% with margin up 100 bps.
Market read
Fresh quarterly datapoints and guidance update can drive near-term repricing, especially around expectations for residential demand, margins, and cash flow.
What to watch
Tariff refunds and absorption effects are cited as offsets; if those benefits fade, margins and cash conversion could deteriorate versus the guidance implied by current quarter.
Lennox Reports 2026 Second Quarter Results
Revenue increased 3% and operating income increased 2%, supported by Building Climate Solutions and acquisitions, while Home Comfort Solutions revenue declined 7%, segment margin declined 130 basis points, and full-year EPS guidance was updated to $23.00 to $24.00 from $23.50 to $25.00.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $ 1,545.3 | – | up 3% |
| Cost of goods soldGAAP | 1,005.8 | – | – |
| Gross profitGAAP | 539.5 | – | – |
| Selling, general and administrative expensesGAAP | 183.1 | – | – |
| Losses (gains) and other expenses, netGAAP | 2.4 | – | – |
| Income from equity method investmentsGAAP | (1.0) | – | – |
| Operating incomeGAAP | $355 million | – | up 2% |
| Operating profit marginGAAP | 23.0% | – | down 30 bps |
| Total segment profitnon-GAAP | $355 million | – | up 2% |
| Total segment profit marginnon-GAAP | 23.0% | – | down 30 basis points |
| Pension settlementsGAAP | 0.1 | – | – |
| Interest expense, netGAAP | 14.7 | – | – |
| Other expense, netGAAP | 0.6 | – | – |
| Net incomeGAAP | $269 million | – | – |
| Diluted earnings per shareGAAP | $7.72 per share | – | flat |
| Adjusted diluted earnings per sharenon-GAAP | $7.72 | – | flat |
| Operating cash flowGAAP | $172 million | – | – |
| Net capital expenditureother | $35 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Home Comfort SolutionsRevenue declined primarily reflecting lower sales volumes, partially offset by favorable mix-price and contributions from acquisitions. Demand improved across both distribution channels, though residential new construction activity remained a meaningful headwind. | $936 million | – | down 7% |
| Building Climate SolutionsOrganic revenue growth of 15% was driven by strong execution with national account customers, healthy emergency replacement activity, and growth in service offerings, while acquisitions added 9% to revenue growth. | $610 million | – | up 24% |
full year 2026 outlook
- Revenueapproximately 8% growth
- Noteupdated 5% benefit from completed acquisitions
- NoteEarnings per share guidance has been updated to a range of $23.00 to $24.00 compared to the prior range of $23.50 to $25.00.
- NoteFree Cash Flow is still estimated to be within the range of $750 million to $850 million.
Capital returns
- Share repurchases totaled $132 million.
What drove it
- Revenue increased 3% to $1.5 billion, driven by revenue from completed acquisitions.
- Total segment profit margin was primarily driven by $39 million of mix/price benefits and $17 million from completed acquisitions.
- Building Climate Solutions benefited from higher sales volumes, mix/price benefits, and completed acquisitions.
- Earlier than expected tariff refunds provided a benefit during the quarter.
- Operating cash flow improved driven by reduced inventory levels.
Concerns
- Residential market conditions remained challenging during the second quarter.
- Residential new construction activity remained a meaningful headwind.
- Home Comfort Solutions profit faced a $49 million headwind from lower sales volumes.
- Home Comfort Solutions segment margin declined 130 basis points.
- Total segment profit was partially offset by a $25 million decrease from lower sales volumes, $11 million of product cost, and $14 million of SG&A and distribution inflation and investments.
- Full-year EPS guidance was updated to a range of $23.00 to $24.00 compared to the prior range of $23.50 to $25.00.
What to watch
- Residential demand and the pace of improvement across Home Comfort Solutions distribution channels.
- Residential new construction activity.
- Building Climate Solutions execution with national account customers, emergency replacement activity, and service offerings.
- Realization of the updated 5% benefit from completed acquisitions.
- Inflation, factory absorption, and tariff-related impacts.
Balance sheet and cash flow
- Operating cash flow was $172 million compared to $87 million in the prior-year quarter driven by reduced inventory levels.
- Net capital expenditure was $35 million compared to $28 million in the prior-year quarter.
Analysis
Lennox reported second-quarter revenue of $1.5 billion, up 3%, and GAAP operating income of $355 million, up 2%. GAAP diluted earnings per share were $7.72, described as flat, while net income was $269 million versus $274 million in the prior-year quarter. Operating profit margin was 23.0%, down 30 bps, showing that modest consolidated growth did not translate into margin expansion.
Building Climate Solutions was the principal source of growth. Segment revenue was $610 million, up 24%, with segment profit up $35 million or 29% and segment margin improving 100 basis points to 25.5%. The release attributes organic revenue growth of 15% to national account execution, emergency replacement activity, and service offerings, while acquisitions added 9% to revenue growth.
Home Comfort Solutions remained the pressure point. Revenue was $936 million, down 7%, and segment profit was $222 million, down 12%; segment margin declined 130 basis points to 23.7%. Lower sales volumes created a $49 million profit headwind, while distribution, freight, and other costs reduced profit by $11 million. Mix/price benefits, acquisition contributions, SG&A improvement, and tariff refunds only partly offset the volume and cost pressures. Management stated that demand improved sequentially from the first quarter, but residential new construction remained a meaningful headwind.
Consolidated segment profit benefited from $39 million of mix/price and $17 million from completed acquisitions. These benefits were partly offset by a $25 million decrease from lower sales volumes, $11 million of product cost reflecting inflation and factory under absorption net of tariff refunds, and $14 million of SG&A and distribution inflation and investments. Corporate expenses were $22 million, down $2 million from the prior-year quarter.
Cash generation improved, with operating cash flow of $172 million compared with $87 million in the prior-year quarter, driven by reduced inventory levels. Net capital expenditure was $35 million compared with $28 million, and share repurchases totaled $132 million. For full year 2026, Lennox reaffirmed approximately 8% revenue growth, including an updated 5% benefit from completed acquisitions, while updating EPS guidance to $23.00 to $24.00 from $23.50 to $25.00. Free cash flow remains estimated at $750 million to $850 million.
Management, verbatim
Our results this quarter reflect the strength of our portfolio and team. Strong momentum in Building Climate Solutions, and contributions from the Duro Dyne and Supco acquisitions mitigated the continued softness in the residential end market. We also expanded our portfolio through the acquisition of Comfort-Aire and Century brands and remain focused on executing our growth strategy through innovation, operational excellence, and disciplined capital allocation.
Alok Maskara, Chief Executive Officer
Not in the filing
stated, not guessed- GAAP gross margin
- Prior-year GAAP operating profit margin
- Prior-year total segment profit
- Prior-year total segment profit margin
- Prior-year adjusted diluted earnings per share
- Actual free cash flow
- Cash balance
- Debt balance
- Dividend information
- Full consolidated statement of operations below net income before income taxes, because the provided filing text is truncated
- Balance sheet and additional cash flow statement information, because not included in the provided filing text
- Forward gross margin guidance
- Forward operating expenses guidance
- Forward tax rate guidance
- Previous-release outlook for comparison against reported results
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC 8-K (Item 2.02) with Q2 2026 results and an updated full-year EPS guidance range for Lennox.
Ticker impact
Lennox reported Q2 revenue of $1.5B (+3% YoY), GAAP diluted EPS of $7.72, and updated full-year EPS guidance to $23.00-$24.00.
Likely modest volatility around the guidance range, with upside bias if investors focus on Building Climate strength and cash flow improvement.
The filing provides fresh, quantified Q2 results and a revised EPS range, but does not include consensus beats/misses or a large one-off event beyond tariff refunds and acquisitions.
Market effects
Read-through for HVAC/building products demand trends, with commercial strength offsetting residential weakness.
No explicit regional breakdown, but tariff/refund and residential construction headwinds suggest sensitivity to US housing activity.
Limited direct global exposure in the disclosure; tariff and inflation references imply broader cost and policy sensitivity.
Counterpoint
The Building Climate outperformance may be partly acquisition and mix-driven, while residential margin compression could reassert if volumes weaken again.
Key entities
- companyLennox International Inc
Reported Q2 2026 results and updated full-year EPS guidance in an SEC 8-K.
- executiveAlok Maskara
CEO quoted on portfolio strength, acquisitions, and residential softness.
