Research · Sep 3, 2026
[LII] Lennox International Thesis 2026: First Year Above Twenty Percent Margin Validates Premium Position
Lennox International Inc. FY25 revenue $5.20B (-3%); op income $1.02B (-2%); NI $786M (-3%); EPS $22.22 (-1%). Achieved full-year margins above 20% for first time in history. HCS (Home Comfort Solutions) record 20.4% full-year segment margin (Q4 17.7% reflecting volume declines from weak residential + commercial end markets). BCS (Building Climate Solutions) Q4 +8% revenue (favorable mix + pricing); +7% from completed acquisition. $300M strategic investments since 2022. A2L canister shortages + regulatory changes addressed. Samsung ductless/ducted heat pump products partnership. FIFO inventory accounting adopted (industry-aligned). $-502M FY25 buyback (+569% vs FY24). FY26 guide: revenue +6-7% (organic volumes -low single digits net of growth from parts/accessories + commercial emergency replacement + Samsung heat pumps); adj EPS $23.50-$25.00 (+5-12% from FY25); capex $250M; BCS growth ~+15%; HCS growth ~+2%; inflation +2.5%; $35M added operating expenses offset by $75M productivity + cost savings.