Lennox International Inc

First Quarter Performance: Lennox reported a 2% revenue growth in Q1 2025, with adjusted earnings per share at $3.37, reflecting steady performance despite a challenging trade environment. Segment margin was 14.5%, a decline of 140 basis points YOY, driven by cost inflation and short-term manufacturing inefficiencies.

Guidance Update: The company narrowed its full year adjusted EPS guidance to $22.25 to $23.50, raising the lower end from $22. This guidance accounts for a projected 2% revenue growth, but it also incorporates significant inflationary pressures, with total cost inflation now expected at 9%, up from previous expectations of 3%.

Destocking Challenges: Lennox anticipates continued destocking in the second quarter, especially in the Home Comfort Solutions (HCS) segment, as distributors work through existing 410A inventory. This could temporarily suppress order rates and negatively impact revenue growth, despite a stable replacement demand foundation.