Lennox International Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 22 October 2025: press release. Guidance figures: 3 lowered. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue fell, segment profit rose: Revenue was $1.4 billion, down 5%, on unfavorable sales volumes. Segment profit rose 2% to $310 million and segment margin reached 21.7%, up 150 basis points. Source
• Mix and price offset lower volumes: Mix and price added $118 million, mostly from new product mix, and other costs improved $4 million. Lower sales volumes reduced profit by $85 million. Source
• Home Comfort revenue fell 12%: Segment revenue was $913 million, down 12%, and segment profit was $203 million, down 10%. Segment profit decreased $24 million compared with the prior-year quarter. Source
• Shift toward repair over replacement: Management linked the shift toward repair over replacement to the regulatory transition and macroeconomic uncertainty weighing on consumer and dealer sentiment. Source
• Building Climate revenue rose 10%: Segment revenue was $514 million, up 10%, and segment profit was $134 million, up 27%, with profit up $28 million. Source
• Building Climate margin up 330 basis points: Building Climate segment margin reached 26.1%, up 330 basis points, on favorable mix, cost control and pricing, offsetting inflation. Source
• Operating cash flow fell on inventory: Operating cash flow was $301 million versus $452 million a year earlier, as finished goods inventory was temporarily elevated. Source
• Acquisition adds parts and accessories: Management said the recent DuroDyne and Supco acquisition strengthens the parts and accessories portfolio. Source

“During these uncertain times, the Lennox team continues to respond with agility and discipline, delivering margin expansion in both segments,”

CEO, Alok Maskara

Guidance

What changed from last quarter

• Guidance lowered: Adjusted EPS range moved from $23.25 to $24.25 down to $22.75 to $23.25. Source
• Guidance lowered: Revenue guidance moved from about 3% growth to about 1% decline. Source
• Guidance lowered: Free cash flow guidance moved from $650 million to $800 million down to about $550 million. Source
• New: Acquisition of DuroDyne and Supco added to the parts and accessories portfolio. Source

Results and growth drivers

• Revenue fell, segment profit rose: Revenue was $1.4 billion, down 5%, on unfavorable sales volumes. Segment profit rose 2% to $310 million and segment margin reached 21.7%, up 150 basis points. Source
• Diluted EPS rose to $6.98: Net income was $246 million, or $6.98 diluted per share, against $239 million, or $6.68, a year earlier. Adjusted diluted EPS rose 4% to $6.98. Source
• Mix and price offset lower volumes: Mix and price added $118 million, mostly from new product mix, and other costs improved $4 million. Lower sales volumes reduced profit by $85 million. Source

Home Comfort Solutions segment

• Home Comfort revenue fell 12%: Segment revenue was $913 million, down 12%, and segment profit was $203 million, down 10%. Segment profit decreased $24 million compared with the prior-year quarter. Source
• Volume loss partly offset: Sales volumes contracted $86 million and product cost inflation, net of factory productivity, cost $26 million. Mix and price added $85 million and other costs improved $3 million. Source
• Shift toward repair over replacement: Management linked the shift toward repair over replacement to the regulatory transition and macroeconomic uncertainty weighing on consumer and dealer sentiment. Source

“In light of ongoing industry volume pressures and consumer confidence trends, we believe it is prudent to update our full-year guidance to include an expected revenue decline of 1% and adjusted earnings per share from $22.75 to $23.25.”

CEO, Alok Maskara

Building Climate Solutions segment

• Building Climate revenue rose 10%: Segment revenue was $514 million, up 10%, and segment profit was $134 million, up 27%, with profit up $28 million. Source
• Emergency replacement demand supported growth: Growth came despite ongoing pressure in the light commercial industry. Higher manufacturing output and lower lead times supported emergency replacement demand. Source
• Commercial services and Heatcraft grew: Commercial services and Heatcraft both grew at double-digit rates, which management tied to investments in sales excellence beginning to produce results. Source

Margins and costs

• Home Comfort margin rose on cost actions: Home Comfort segment margin expanded 30 basis points to 22.2%, as cost reduction and favorable mix and price offset lower volumes and cost inflation. Source
• Building Climate margin up 330 basis points: Building Climate segment margin reached 26.1%, up 330 basis points, on favorable mix, cost control and pricing, offsetting inflation. Source
• Saltillo output supported factory efficiency: Factory efficiencies increased as production at the new Saltillo facility continued to scale, supporting margin improvement. Source

Cash, inventory and capital returns

• Operating cash flow fell on inventory: Operating cash flow was $301 million versus $452 million a year earlier, as finished goods inventory was temporarily elevated. Source
• Cash balance fell to $52.9 million: Cash and equivalents were $52.9 million at September 30, 2025, against $415.1 million at December 31, 2024. Inventories, net, were $991.5 million versus $704.8 million. Source
• Capex and share repurchases in quarter: Net capital expenditures were $35 million versus $40 million a year earlier. Shares repurchased in the quarter totaled $37 million. Source
• Quarter free cash flow lower: Free cash flow was $265.3 million for the quarter versus $411.7 million; for nine months it was $263.2 million versus $511.8 million. Source

Strategy and 2026 setting

• Acquisition adds parts and accessories: Management said the recent DuroDyne and Supco acquisition strengthens the parts and accessories portfolio. Source
• 2025 called transitional year: Management described 2025 as a transitional year shaped by the refrigerant transition and difficult macroeconomic conditions, as it had anticipated. Source
• Guidance reduced on industry pressures: The full-year update reflected ongoing industry volume pressures and consumer confidence trends, in management's stated view. Source

Coming up, as management said on 22 October 2025

• 2026 operating environment expected more normal: Management expects a more normalized operating environment in 2026 and beyond, which the DuroDyne and Supco acquisition is positioned for. Source

Figures management reported

Risks management discussed

• Demand: Management attributed the Home Comfort decline to elevated channel destocking and the summer selling season. Source
• External: Product cost rose $30 million in the quarter, which management linked to recent inflationary impacts. Source

Earlier plans management reported on

• Not stated: Management said 2025 is a transitional year, as it had anticipated. Source
• Not stated: Management said it continues to expect pricing to offset inflationary pressures. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.