Key Highlights:

  • Revenue came in at USD 1.5 billion, up 3% reflecting the contribution of completed acquisitions.
  • Adjusted Diluted EPS totaled USD 7.72, remaining flat compared to the prior-year period.
  • Full-Year EPS Guidance was updated to a range of USD 23 to USD 24 from the previous range of USD.
  • Building Climate Solutions Revenue was reported at USD 610 million, up 24% driven by a 15% organic growth rate.

Lennox International, Inc. (NYSE:LII) is scheduled to report third quarter results on Wednesday, Oct. 28, before the market open. Consensus estimates call for adjusted earnings per share of USD 7.36 on revenue of USD 1.58 billion, against a market capitalization of USD 12.64 billion.

In the most recently reported quarter, Revenue came in at USD 1.5 billion, up 3% reflecting the contribution of completed acquisitions. Adjusted Diluted EPS totaled USD 7.72, remaining flat compared to the prior-year period.

Home Comfort Solutions Revenue and Other Business Trends

Home Comfort Solutions Revenue came in at USD 936 million, down 7% due to lower sales volumes in residential markets. Residential Unit Volume totaled Down 12% in the second quarter, which management noted as an improvement from the 21% decline in the first quarter. Residential New Construction Revenue stood at Down approximately 30%, reflecting the strategic exit from low-margin contracts. Building Climate Solutions Segment Profit was reported at USD 155 million, up 29% due to higher volumes and favorable mix and pricing.

What Management Guided

Full-Year HCS Revenue Guidance was lowered to approximately 1% growth compared to the prior expectation of 4%. Full-Year BCS Revenue Guidance was increased to approximately 20% growth from the previous 16% expectation. Free Cash Flow Guidance was reaffirmed at USD 750 million to USD 850 million for the full year. Capital Expenditure Guidance was reduced to USD 225 million from USD 250 million due to the timing of specific projects.

Home Comfort Solutions Segment Profit and Capital Position

Home Comfort Solutions Segment Profit came in at USD 222 million, down 12% primarily reflecting USD 49 million in volume-related headwinds. Tariff Refunds totaled USD 30 million total benefit recognized in the quarter, including USD 25 million in the residential segment and USD 5 million in commercial. Productivity Guidance was lowered to USD 60 million from USD 75 million, reflecting factory absorption headwinds from lower residential production. Share Repurchases was reported at USD 132 million completed during the second quarter. Net Debt to Adjusted EBITDA came in at 1.3x at the end of the second quarter.

One-Step vs. Two-Step Volumes and Additional Detail

One-Step vs. Two-Step Volumes came in at One-step volumes declined in the mid-teens, while two-step volumes remained flat. Duro Dyne M&A Contribution totaled Added USD 11 million to the Building Climate Solutions segment profit. Inventory Reduction stood at Management stated the company remains on track for full-year reduction plans despite inventory dollars remaining flat at USD 1.2 billion due to inflation. Full-Year Interest Expense was reported at Forecasted at approximately USD 70 million following recent acquisition activity. M&A Amortization came in at Estimated at USD 25 million for the full year.

Figures to Follow in the Release

Investors can watch third quarter results against the figures management has already put on record, including the following: Full-Year EPS Guidance was updated to a range of USD 23 to USD 24 from the previous range of USD 23.50 to USD 25.