Lennox International Q4 Earnings Miss Expectations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
0mins
Source: seekingalpha
- Disappointing Earnings: Lennox International reported a Q4 non-GAAP EPS of $4.45, missing expectations by $0.27, indicating pressure on the company's profitability.
- Revenue Decline: The company's Q4 revenue of $1.2 billion represents an 11.1% year-over-year decline, falling short of expectations by $60 million, reflecting weak market demand.
- Cautious Future Outlook: Revenue for 2026 is anticipated to grow by approximately 6% to 7%, with completed acquisitions contributing about 4%, demonstrating a cautiously optimistic view of future performance.
- Capital Expenditures and Cash Flow: Projected capital expenditures are around $250 million, with free cash flow estimated between $750 million and $850 million, indicating strategic considerations in investment and cash management.
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Analyst Views on LII
Wall Street analysts forecast LII stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for LII is 577.90 USD with a low forecast of 475.00 USD and a high forecast of 680.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
3 Buy
6 Hold
2 Sell
Hold
Current: 496.110
Low
475.00
Averages
577.90
High
680.00
Current: 496.110
Low
475.00
Averages
577.90
High
680.00
About LII
Lennox International Inc. is focused on climate-control solutions. The Company designs, manufactures and markets a range of products for the heating, ventilation, air conditioning and refrigeration markets. The Company's segments include Home Comfort Solutions and Building Climate Solutions. Its Home Comfort Solutions segment's products and services include furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, replacement parts and supplies. Its brands include Lennox, Ducane, AirEase, Concord, MagicPak, Supco, among others. Its Building Climate Solutions segment's products and services include unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment. Its brands include Enlight, Xion, Energence, Prodigy, Duro Dyne, among others. It sells its products and services through a combination of direct sales, distributors and Company-owned stores.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lennox International Q4 Earnings Call Highlights
- Market Challenges and Profitability: Lennox International reported an 11% revenue decline in Q4 2025, primarily due to weak residential and commercial demand, yet achieved a record 20.4% margin for the year, demonstrating resilience in profitability amid challenges.
- Cash Flow and EPS: The company generated $640 million in free cash flow for 2025, exceeding the $550 million guidance, with adjusted EPS at $23.16, reflecting a 2% increase from the previous year, showcasing effective cost control and cash management.
- Inventory Management and Accounting Change: Adopting FIFO inventory accounting in Q4 2025 is expected to boost EPS by approximately $1, despite a $300 million increase in inventory, as management aims for inventory normalization in 2026.
- 2026 Outlook: Lennox anticipates a revenue growth of 6% to 7% and adjusted EPS between $23.50 and $25 for 2026, indicating confidence in market recovery and plans for continued margin expansion in the future.
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Lennox International Q4 2025 Earnings Call Insights
- Historic Margin Achievement: Lennox achieved its first-ever full-year margin above 20% in 2025, with a record segment margin of 20.4%, demonstrating resilience amid tariff and inflation pressures, thereby enhancing its competitive position in the market.
- Revenue Decline: The company reported an 11% year-over-year revenue decline in Q4, primarily due to weak residential and commercial markets and channel destocking, although operating cash flow reached $406 million, with a total of $758 million for the year, showcasing effective cash management during challenging times.
- Future Outlook: Lennox anticipates total revenue growth of 6%-7% in 2026 and plans to increase operating expenses by $35 million despite facing 2.5% inflation, reflecting the company's confidence in future growth and commitment to strategic investments.
- Shareholder Returns: In 2025, Lennox repurchased $482 million in shares and invested $545 million in acquisitions and joint ventures, indicating proactive measures to enhance shareholder value and strengthen its market position.
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