Lennox International reported higher third-quarter revenue but weaker profitability as cost inflation and competitive pressure squeezed margins. Growth was strongest in Building Climate Solutions, while Home Comfort Solutions faced share challenges and lower margins. The company lowered its full-year adjusted earnings-per-share outlook to $21.00–$21.50.
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Overall results: Revenue rose 10% year over year to $1.6 billion, reflecting organic growth in Building Climate Solutions and contributions from completed acquisitions. GAAP operating income fell 5% to $312 million, and operating margin declined 3.2 percentage points to 19.8%.
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Profitability and costs: Total segment profit, which includes unallocated corporate expenses, declined 2% to $323 million. Its margin fell 2.4 percentage points to 20.6%. Lennox cited a $45 million hit from product-cost inflation, including tariffs, as well as lower factory absorption. Higher fuel costs added $15 million of pressure, alongside inflation in selling, general and administrative expenses and distribution costs, and ongoing investments. Higher sales volumes provided a partial offset.
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Earnings per share: GAAP diluted EPS was $6.41. Adjusted diluted EPS was $6.84, down 7% from a year earlier.
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Home Comfort Solutions: Revenue increased 3%, but segment margin fell 4.9 percentage points. Price adjustments in selected markets were aimed at defending and regaining share; those actions, along with inflation and tariff-related costs, weighed on profitability. The segment’s priorities include addressing share challenges, improving productivity, mitigating tariff costs and introducing new entry-tier products.
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Building Climate Solutions: Revenue grew 24%, including 15% organic growth, supported by strength in commercial HVAC, refrigeration and services. Segment margin was 26.2%, down 1.1 percentage points from a record level a year earlier. Lennox said it still expects full-year margins in the segment to expand despite inflation and tariff pressures.
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Outlook and response: Lennox set its full-year adjusted EPS guidance at $21.00–$21.50. CEO Alok Maskara said the company is working to pass cost increases through more effectively and accelerate productivity.
The results show a divergence between Lennox’s two businesses: Building Climate Solutions delivered strong growth and maintained a high margin, while Home Comfort Solutions’ margin contracted sharply. Across the company, higher revenue did not prevent declines in operating income and adjusted EPS.