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DALLAS - On Wednesday, Lennox (NYSE:LII) reported third-quarter adjusted earnings per share of $6.98, exceeding analyst estimates of $6.93, despite revenue falling short of expectations at $1.43 billion compared to the consensus estimate of $1.5 billion.
The climate control solutions provider saw revenue decline 5% YoY to $1.4 billion in what CEO Alok Maskara described as a "transitional year" affected by the refrigerant transition and challenging macroeconomic conditions. Despite these headwinds, the company managed to increase segment profit by 2% to $310 million and expand segment margins by 150 basis points to 21.7%.
"During these uncertain times, the Lennox team continues to respond with agility and discipline, delivering margin expansion in both segments," said Maskara. "The recent DuroDyne and Supco acquisition strengthens our parts and accessories portfolio, positioning us for greater success during the more normalized operating environment expected in 2026 and beyond."
The Home Comfort Solutions segment saw a 12% revenue decline due to channel destocking and a weak summer selling season, though segment profit margins expanded by 30 basis points through cost reduction initiatives. Meanwhile, the Building Climate Solutions segment delivered 10% revenue growth and a 330 basis point margin expansion, driven by higher manufacturing output and improved factory efficiencies.
Lennox lowered its full-year guidance, now expecting revenue to decrease by approximately 1% and adjusted EPS to range between $22.75 and $23.25, below the analyst consensus of $23.37. The company also reduced its free cash flow guidance to approximately $550 million due to temporarily elevated inventory levels.
Operating cash flow for the quarter was $301 million, down from $452 million in the prior-year period, while the company repurchased $37 million in shares during the quarter.
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