Lennox, a leader in energy-efficient climate-control solutions, has reported its third-quarter financial results. The company's revenue decreased by 5% to $1.4 billion, while GAAP operating income stood at $310 million, representing a 2% increase. GAAP diluted earnings per share (EPS) were reported at $6.98, with adjusted diluted EPS also up by 4% to $6.98.
The company has updated its full-year 2025 guidance, anticipating a revenue decline of approximately 1% and revising the adjusted EPS range to $22.75 to $23.25.
In the home comfort solutions segment, revenue dropped by 12% in the third quarter, driven by elevated channel destocking and a weak summer selling season. Despite these challenges, the segment profit margins expanded by 30 basis points, with cost reduction initiatives and favorable mix/pricing offsetting the impact of lower volumes and cost inflation.
On the other hand, the building climate solutions segment delivered a 10% revenue growth in the third quarter, with segment margins expanding by 330 basis points. This growth was attributed to higher manufacturing output, lower lead times, and increased factory efficiencies.
Some key financial highlights from the third quarter of 2025 include operating income of $310 million, up 2% year-over-year, and segment profit of $310 million, also up 2% year-over-year. Additionally, net income was reported at $246 million, or $6.98 per share, compared to $239 million, or $6.68 per share, in the prior-year quarter.
Lennox's operating cash flow for the quarter was $301 million, down from $452 million in the prior-year quarter, partly due to temporarily elevated finished goods inventory levels. The company also repurchased $37 million of shares during the period.
Looking ahead, Lennox expects its adjusted EPS for the full year to be within the range of $22.75 to $23.25, with an anticipated revenue decline of approximately 1%. The company also projects its free cash flow for the year to be approximately $550 million, driven by the temporarily elevated inventory levels.
Lennox's CEO, Alok Maskara, acknowledged the impact of the refrigerant transition and difficult macroeconomic conditions, describing 2025 as a transitional year. Despite these challenges, the company remains focused on responding with agility and discipline, aiming for greater success in the more normalized operating environment expected in 2026 and beyond. Following these announcements, the company's shares moved 2.66%, and are now trading at a price of $548.99. Check out the company's full 8-K submission here.
