Lennox International Inc Q3 2025 results

The earnings release, today's presentation, and the webcast archive link for today's call are available on our Investor Relations website at investor.lennox.com. Our results were also fueled by our recent investments, which will accelerate our growth and expand our margins as the industry turns a corner into a brighter 2026. Revenue this quarter declined 5% as growth initiatives and share gains were unable to fully offset the impact of soft residential and commercial end markets. Operating cash flow was $301 million, which was lower than last year as a sharp industry decline has temporarily elevated our finished goods inventory levels.

Adjusted EPS was a third quarter record of $6.98, a 4% year-over-year increase. HCS segment profit margin expanded by 30 basis points as the team executed meaningful cost actions to offset industry headwinds. BCS segment results were impressive as profit margins expanded 330 basis points and revenue grew 10%, even though the end markets remained weak. The team was able to offset end market conditions with rigorous execution of growth initiatives such as share gains in emergency replacement, business development in refrigeration, and full lifecycle value proposition in commercial services.

Given current end market conditions, we are adjusting our full-year outlook to reflect an anticipated sales decline of 1%. Now, let's move to slide four to discuss how our recent acquisition will increase the attachment rate for our parts and accessories. Our bolt-on acquisition of AES Industries in 2023 helped accelerate the attachment of commercial services and was a tremendous success based on financial and strategic metrics. Similarly, the recent acquisition of Durodyne and SUPCO will help accelerate attachment of parts and accessories across both HCS and BCS segments.