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FY2026 Q2
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Lennox International, Inc. earnings call
Buzzberg read
Residential recovery pushed to 2027; EPS guidance cut
Lennox reported Q2 2026 results highlighting a mixed performance: strong growth in Building Climate Solutions offset by continued weakness in Home Comfort, leading to a full-year EPS guidance cut. Management is confident in the long-term resi recovery despite delaying the expected benefit to 2027. Total revenue increased 3% to $1.5B, but adjusted EPS was flat at $7.72.
Buzzberg read Residential recovery pushed to 2027; EPS guidance cut Lennox reported Q2 2026 results highlighting a mixed performance: strong growth in Building Climate Solutions offset by continued weakness in Home Comfort, leading to a full-year EPS guidance cut. Management is confident in the long-term resi recovery despite delaying the expected benefit to 2027. Total revenue increased 3% to $1.5B, but adjusted EPS was flat at $7.72. Read full analysisCollapse analysis
Lennox reported Q2 2026 results highlighting a mixed performance: strong growth in Building Climate Solutions offset by continued weakness in Home Comfort, leading to a full-year EPS guidance cut. Management is confident in the long-term resi recovery despite delaying the expected benefit to 2027. Total revenue increased 3% to $1.5B, but adjusted EPS was flat at $7.72.
- HCS revenue declined 7% due to a 12% unit volume decline; weak residential new construction and a strategic walk-away from low-margin business were the primary drivers.
- BCS revenue grew 24%, with 12% organic growth, driven by emergency replacement and national accounts; M&A from Duradyne contributed 9%.
- FY2026 EPS guidance lowered to $23-24 from previous higher range; HCS revenue guide cut to ~1% growth while BCS raised to ~20%.
BCS Revenue growth24%Reported
HCS Revenue growth-7%Reported
Revenue$1.5453B+36% QoQ
EPS$7.72Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Demand
Walked away from low-margin new construction business
Demand
BCS strong with 24% revenue growth, share gains
Show 3 more callouts
M&A
Comfort Air and Century acquisition accretive in 2027
Supply
Channel inventory normalized; no further destocking
Cash Flow
Free cash flow outlook unchanged at $750-$850 million
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| BCS Revenue growth | 24% | Reported |
| HCS Revenue growth | -7% | Reported |
| Revenue | $1.5453B | +36% QoQ |
| EPS | $7.72 | Reported |
| Gross margin | 34.91% | Reported |
| Operating margin | 22.97% | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | $225M | $225M | Lowered |
| EPS | FY2026 | $23.00–$24.00 | $23.50 | Lowered |
| Free cash flow | FY2026 | $750M–$850M | $800M | Maintained |
| RevenueHCS | FY2026 | 1% | 1% | Lowered |
| RevenueBCS | FY2026 | 20% | 20% | Raised |
AI, capex & demand read
Management read
Cautious
Management acknowledged slower residential recovery and reduced full-year guidance, but expressed confidence in long-term strategy and cash generation.
Investment and capacity
Management lowered full-year capital expenditure outlook to approximately $225 million from $250 million due to project timing, while emphasizing key investment priorities remain unchanged.
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Companiesreturns since call
Partners
Partners
Alok Maskara
Samsung partnership is part of Lennox's strategy to broaden offerings and strengthen its competitive positioning in HVAC.
Evidence
“we are leaning into initiatives that strengthen our long-term competitive position, including distribution network optimization and partnerships like Samsung and Ariston”
Supply chain
Supply chain
Alok Maskara
Lennox is losing significant share in new construction by intentionally walking away from low-margin business, which is a bigger impact than originally anticipated and driving most of the one-step volume decline. — This market share forfeiture in new construction is a strategic decision that pressures near-term volumes for LII, but could create pricing power shifts for competitors in the residential new construction channel.
Evidence
“It is bigger than what we had originally looked at. That market remains extremely competitive and the margins were there but just not acceptable.”
Supply chain
Alok Maskara
The emergency replacement market in commercial HVAC is a strong growth area where Lennox is gaining share, indicating competitors are losing out in this high-demand, immediate-replacement segment. — Share gains in the lucrative emergency replacement channel signal a competitive advantage for LII in commercial HVAC and indicate potential share losses for rivals.
Evidence
“Yes, we have definitely gained share. Within emergency replacement, our core contractor business in commercial, our referential dealers, and working through distribution, all C have gained and we are pleased with the progress there.”
External signals
Supply-chain alpha · 3returns since call
Lennox is losing significant share in new construction by intentionally walking away from low-margin business, which is a bigger impact than originally anticipated and driving most of the one-step volume decline.
The resi market is seeing a bifurcation where 'sell-in' (to channel) is strong but 'sell-through' (to end consumer) remains weak, suggesting potential further inventory correction in the channel despite recent destocking.
Evidence
“The June AHRI data and everything else that we looked at continues to show us a continual difference between sell-in and sell-through.”
The emergency replacement market in commercial HVAC is a strong growth area where Lennox is gaining share, indicating competitors are losing out in this high-demand, immediate-replacement segment.
Methodology & coverage
Management-only analysis. All 6 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.