Lennox Cuts 2026 Earnings Forecast to $21.00–$21.50 per Share After Quarterly Profit Decline
Key Facts
Lennox cut its 2026 adjusted earnings-per-share forecast to a range of $21.00–$21.50, from its previous range of $23.00–$24.00, after reporting third-quarter results. The company said revenue was $1.6 billion, up 10% year over year, while adjusted diluted earnings per share fell 7% to $6.84. The results showed a widening gap between sales growth and the trajectory of profitability, as management said margins and results came in below its expectations. The annual forecast cut puts cost and competitive pressures at the forefront of the quarter's results, despite continued revenue growth. In premarket trading on October 28, the stock fell 4.6%, according to a dated report published by Investing.com.
Net sales were $1,572.5 million in the third quarter, compared with $1,426.8 million in the same period a year earlier. Chief Executive Alok Maskara said residential end markets had begun to stabilize and that the Building Climate Solutions business delivered strong revenue growth. But he added that results and margins fell short of the company's expectations, citing intensifying competitive pressures and persistent cost inflation. Maskara said, "Our margins and results came in below our expectations, reflecting intensifying competitive pressures and the impact of ongoing inflation on our costs."
In the Home Comfort Solutions segment, revenue rose 3% to $937 million, but segment profit fell 18% to $176 million. The segment's margin declined 490 basis points to 18.7%, according to company data. Lennox attributed the pressures to lower volumes, inflation and the impact of factory absorption, while saying it had implemented targeted pricing adjustments in selected market segments to defend and regain share. The segment figures show that sales growth did not prevent declines in profit and margin, consistent with management's comments on competition and rising costs. Maskara said the company was recalibrating its operations to pass through cost increases more effectively and accelerate productivity.
Lennox expects revenue growth of about 6% in 2026, including a 5% contribution from completed acquisitions, and cut its free cash flow forecast to $700–$750 million. The company said it still expects Building Climate Solutions segment margins to expand over the year, despite inflation and tariff pressures. Management identified easing market-share challenges, advancing productivity and tariff-mitigation initiatives, and launching new products in the economy tier among its priorities. The revised guidance reflects continued expectations for sales growth alongside lower estimates for earnings and free cash flow.