LENNOX INTERNATIONAL INC

Previous wording

Results for the first quarter of 2026 were mixed as our Home Comfort Solutions segment faced volume headwinds driven by market softness. Overall our net sales increased 6% and our segment profit was relatively flat as compared to prior year. For our Home Comfort Solutions segment, net sales decreased 10% and segment profit decreased $37 million. For our Building Climate Solutions segment, net sales increased 38% and segment profit increased $37 million.

Current wording

Results for the second quarter of 2026 were mixed as our Home Comfort Solutions segment faced volume headwinds driven by market softness. Overall our net sales increased 3% and our segment profit was relatively flat as compared to prior year. For our Home Comfort Solutions segment, net sales decreased 7% and segment profit decreased $30 million. For our Building Climate Solutions segment, net sales increased 24% and segment profit increased $35 million.

Previous wording

•Net sales of $1,135 million in the first quarter of 2026 reflected a 6% increase as compared to the same period in 2025.

Current wording

•Net sales of $1,545 million in the second quarter of 2026 reflected a 3% increase as compared to the same period in 2025.

Previous wording

•Net income for the first quarter of 2026 was $117 million.

Current wording

•Net income for the second quarter of 2026 was $269 million.

Previous wording

•Diluted earnings per share was $3.35 per share in the first quarter of 2026 as compared to $3.63 per share in the same period in 2025.

Current wording

•Diluted earnings per share was $7.72 per share in the second quarter of 2026 as compared to $7.71 per share in the same period in 2025.

Previous wording

•For the three months ended March 31, 2026, we returned $45 million to shareholders through dividend payments and repurchased $20 million of common stock through our share repurchase program.

Current wording

•For the six months ended June 30, 2026, we returned $91 million to shareholders through dividend payments and repurchased $151 million of common stock through our share repurchase program.

Previous wording

Throughout 2025, the U.S. government implemented new tariff measures under various authorities, including the International Emergency Economic Powers Act ("IEEPA") and Section 232 of the Trade Expansion Act of 1962 (“Section 232”).

Current wording

Throughout 2025 and 2026, the U.S. government implemented new tariff measures under various authorities, including the International Emergency Economic Powers Act ("IEEPA") and Sections 122, 232, and 301 of the Trade Expansion Act of 1962.

Previous wording

In February 2026, the U.S. Supreme Court ruled against tariffs imposed under IEEPA. The ruling did not address refunds of tariffs paid, nor did it repeal Section 232 tariffs on steel and aluminum. Following this ruling, the U.S. presidential administration imposed a temporary surcharge, known as Section 122, which applies a 10 percent global tariff on most imported products. These tariffs apply broadly to manufactured goods and component parts. Section 232 tariffs on steel and aluminum also continued to evolve, with modifications implemented in April 2026. The Company is evaluating the potential impact of all tariff actions on future material costs and sourcing decisions.

Current wording

Following this ruling, the U.S. presidential administration imposed a temporary surcharge, known as Section 122, which applied a 10% global tariff on most imported products, effective through July 24, 2026. The temporary surcharge was replaced by a new Section 301 forced labor tariffs framework of 10% or 12.5%, covering imports from 60 trading partners. Section 232 articles and qualifying USMCA goods are excluded from this new framework. Section 232 tariffs also continued to evolve, with modifications implemented in April and June 2026. The Company is evaluating the potential impact of all tariff actions on future material costs and sourcing decisions.

Previous wording

Net sales for the first quarter of 2026 increased 6% as compared to the same period in 2025 primarily due to a 9% increase from favorable mix and price and a 5% increase in sales volumes from completed acquisitions, which were partially offset by an 8% decrease in sales volumes.

Current wording

Net sales for the second quarter of 2026 increased 3% as compared to the same period in 2025 primarily due to a 3% increase from favorable mix and price and a 4% increase in sales volumes from completed acquisitions, which were partially offset by a 4% decrease in sales volumes.

Previous wording

Gross profit margins in the first quarter of 2026 decreased 90 basis points ("bps") to 30.9% as compared to 31.8% in the same period in 2025. Gross margins decreased 300 bps from higher product costs, primarily related to inflationary impacts and factory under absorption, and 40 bps from higher freight and distribution inflation and investments, which were partially offset by 250 bps from favorable mix and price.

Current wording

Gross profit margins in the second quarter of 2026 increased 40 basis points ("bps") to 34.9% as compared to 34.5% in the same period in 2025. Gross margins increased 120 bps from favorable mix and price and 40 bps from sales volumes from completed acquisitions, which were partially offset by 80 bps from higher product costs, primarily reflecting inflation and factory under absorption, net of $30 million in tariff refunds, and 40 bps from higher freight and distribution inflation and investments.

Previous wording

Selling, general and administrative expenses ("SG&A") increased $14 million to $185 million in the first quarter of 2026 as compared to $171 million in the same period in 2025, primarily attributable to higher discretionary and employee-related costs and the acquisition of Duro Dyne and Supco in the fourth quarter of 2025.

Current wording

Selling, general and administrative expenses ("SG&A") increased $10 million to $183 million in the second quarter of 2026 as compared to $173 million in the same period in 2025, primarily attributable to higher discretionary and employee-related costs and the acquisition of Duro Dyne and Supco in the fourth quarter of 2025.

Previous wording

Losses (gains) and other expenses, net for the first quarter of 2026 and 2025 included the following (in millions):

Current wording

Losses (gains) and other expenses, net for the second quarter of 2026 and 2025 included the following (in millions):

Previous wording

Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting. Income from equity method investments was de minimis in the first quarter of 2026, consistent with 2025.

Current wording

Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting. Income from equity method investments was de minimis in the second quarter of 2026, consistent with 2025.

Previous wording

Interest expense, net increased to $15 million in the first quarter of 2026 from $6 million in the same period in 2025 primarily due to increased borrowings on our commercial paper facility and our term loan agreement entered into in October of 2025.

Current wording

Interest expense, net increased to $15 million in the second quarter of 2026 from $8 million in the same period in 2025 primarily due to increased borrowings on our commercial paper facility and our term loan agreement entered into in October of 2025.

Previous wording

Our effective tax rate was 20.2% for the first quarter of 2026 as compared to 19.4% in the same period in 2025. The increase in rate is primarily due to income in higher tax jurisdictions.

Current wording

Our effective tax rate was 20.8% for the second quarter of 2026 as compared to 19.4% in the same period in 2025. The increase in the rate is primarily due to higher income in higher tax jurisdictions.

Previous wording

First Quarter of 2026 Compared to First Quarter of 2025 - Results by Segment

Current wording

Second Quarter of 2026 Compared to Second Quarter of 2025 - Results by Segment

Previous wording

The following table presents our Home Comfort Solutions segment's net sales and profit for the first quarter of 2026 and 2025 (dollars in millions):

Current wording

The following table presents our Home Comfort Solutions segment's net sales and profit for the second quarter of 2026 and 2025 (dollars in millions):

Previous wording

Net sales decreased 10% in the first quarter of 2026 as compared to the same period in 2025 primarily due to a 21% decrease in sales volumes, which was partially offset by a 9% increase from favorable mix and price and a 2% increase in sales volumes from completed acquisitions.

Current wording

Net sales decreased 7% in the second quarter of 2026 as compared to the same period in 2025 primarily due to a 12% decrease in sales volumes, which was partially offset by a 3% increase from favorable mix and price and a 2% increase in sales volumes from completed acquisitions.

Previous wording

Segment profit in the first quarter of 2026 decreased $37 million as compared to the same period in 2025, primarily due to lower sales volumes, resulting in a $56 million profit headwind, $23 million in product cost inflation and lower factory absorption, and $1 million in other costs. These impacts were partially offset by a $41 million benefit from favorable mix and price and $2 million from completed acquisitions.

Current wording

Segment profit in the second quarter of 2026 decreased $30 million as compared to the same period in 2025, primarily due to lower sales volumes, which resulted in a $49 million profit headwind, $3 million from increased freight and distribution costs, $2 million from product cost inflation and lower factory absorption, net of $25 million in tariff refunds, and $8 million from miscellaneous other costs. These impacts were partially offset by a $24 million benefit from favorable mix and price, $5 million from completed acquisitions, and $3 million from SG&A improvement.

Previous wording

The following table presents our Building Climate Solutions segment's net sales and profit for the first quarter of 2026 and 2025 (dollars in millions):

Current wording

The following table presents our Building Climate Solutions segment's net sales and profit for the second quarter of 2026 and 2025 (dollars in millions):

Previous wording

Net sales increased 38% in the first quarter of 2026 as compared to the same period in 2025 primarily due to a 17% increase in sales volumes, a 12% increase in sales volumes from completed acquisitions, and 9% from favorable mix and price.

Current wording

Net sales increased 24% in the second quarter of 2026 as compared to the same period in 2025 primarily due to a 12% increase in sales volumes, a 9% increase in sales volumes from completed acquisitions, and 3% from favorable mix and price.

Previous wording

Segment profit in the first quarter of 2026 increased $37 million as compared to the same period in 2025 primarily due to $24 million profit benefit from higher sales volumes and $22 million increase in favorable mix and price, and $7 million profit benefit from sales volumes from completed acquisitions, which were partially offset by $8 million in product cost inflation and lower factory absorption, and $8 million from other costs.

Current wording

Segment profit in the second quarter of 2026 increased $35 million as compared to the same period in 2025 primarily due to $23 million profit benefit from higher sales volumes, $15 million increase from favorable mix and price, and $11 million profit benefit from sales volumes from completed acquisitions, which were partially offset by $9 million in product cost inflation and lower factory absorption, net of $5 million in tariff refunds, and $5 million from other costs.

Previous wording

The following table summarizes our cash flow activity for the three months ended March 31, 2026 and 2025 (in millions):

Current wording

The following table summarizes our cash flow activity for the six months ended June 30, 2026 and 2025 (in millions):

Previous wording

Net Cash Provided By (Used In) Operating Activities - The change in net cash provided by operating activities for the three months ended March 31, 2026 compared to the net cash used in operating activities for the same period in 2025 is primarily due to favorable working capital changes.

Current wording

Net Cash Provided By Operating Activities - The change in net cash provided by operating activities for the six months ended June 30, 2026 compared to the net cash provided by operating activities for the same period in 2025 is primarily due to favorable working capital changes.

Previous wording

Net Cash Used In Investing Activities -Capital expenditures were $56 million for the three months ended March 31, 2026 compared to $26 million in the same period of 2025. The increase in capital expenditures was primarily related to land and building purchases.

Current wording

Net Cash Used In Investing Activities -Capital expenditures were $91 million for the six months ended June 30, 2026 compared to $54 million in the same period of 2025. The increase in capital expenditures was primarily driven by strategic investments in land and buildings that will support future product innovation centers.

Previous wording

Net Cash Provided By (Used In) Financing Activities -Net cash provided by financing activities for the three months ended March 31, 2026 increased to $57 million as compared to $141 million used in during the same period of 2025. The change was primarily due to changes in net borrowings and repayments of long-term debt and repurchases of common stock through our share repurchase program. We repurchased $20 million of shares for the three months ended March 31, 2026 and returned $45 million to shareholders through dividend payments.

Current wording

Net Cash Used In Financing Activities -Net cash used in financing activities for the six months ended June 30, 2026 decreased to $76 million as compared to $368 million used during the same period of 2025. The change was primarily due to changes in net borrowings and repayments of long-term debt and repurchases of common stock through our share repurchase program. We repurchased $151 million of shares for the six months ended June 30, 2026 and returned $91 million to shareholders through dividend payments.

Previous wording

We utilize a commercial paper program (the "Program") pursuant to which we may issue short-term, unsecured commercial paper notes (the "CP Notes") under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the CP Notes outstanding under the Program at any time not to exceed $500.0 million. The CP Notes have maturities of up to 397 days from the date of issue and rank pari passu with all of our other unsecured and unsubordinated indebtedness. The net proceeds from issuances of the CP Notes are typically used for general corporate purposes. Our revolving credit facility serves as a liquidity backstop for the repayment of CP Notes outstanding under the Program. There are $361.0 million CP Notes outstanding under the Program as of March 31, 2026.

Current wording

We utilize a commercial paper program (the "Program") pursuant to which we may issue short-term, unsecured commercial paper notes (the "CP Notes") under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the CP Notes outstanding under the Program at any time not to exceed $500.0 million. The CP Notes have maturities of up to 397 days from the date of issue and rank pari passu with all of our other unsecured and unsubordinated indebtedness. The net proceeds from issuances of the CP Notes are typically used for general corporate purposes. Our revolving credit facility serves as a liquidity backstop for the repayment of CP Notes outstanding under the Program. There are $412.0 million CP Notes outstanding under the Program as of June 30, 2026.

Previous wording

On May 9, 2025, we entered into an Amendment and Restatement Agreement (the "Credit Agreement") to our existing unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto. The Credit Agreement decreased our total revolving commitments from $1.1 billion to $1.0 billion with an option to increase the revolving commitments by up to $350 million at our request, subject to the terms and conditions of the Credit Agreement. The Credit Agreement also extended the maturity date of the revolving commitments from July 2026 to May 2030. We had no outstanding borrowings and no amounts committed to standby letters of credit as of March 31, 2026. Subject to covenant limitations, $639.0 million was available for future borrowings after taking into consideration outstanding borrowings under our Program. Availability under the Credit Agreement is reduced by borrowings under the Program. The Credit Agreement includes a subfacility for swingline loans up to $65.0 million. Maturity of the Credit Agreement may be extended by the lenders pursuant to two one-year extension options that we may request under the Credit Agreement.

Current wording

On May 9, 2025, we entered into an Amendment and Restatement Agreement (the "Credit Agreement") to our existing unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto. The Credit Agreement decreased our total revolving commitments from $1.1 billion to $1.0 billion with an option to increase the revolving commitments by up to $350 million at our request, subject to the terms and conditions of the Credit Agreement. The Credit Agreement also extended the maturity date of the revolving commitments from July 2026 to May 2030. We had no outstanding borrowings and $1.7 million committed to standby letters of credit as of June 30, 2026. Subject to covenant limitations, $586.3 million was available for future borrowings after taking into consideration outstanding borrowings under our Program. Availability under the Credit Agreement is reduced by borrowings under the Program. The Credit Agreement includes a subfacility for swingline loans up to $65.0 million. Maturity of the Credit Agreement may be extended by the lenders pursuant to two one-year extension options that we may request under the Credit Agreement.

Previous wording

On October 16, 2025, we entered into a Term Credit Agreement (the “Term Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto. We borrowed $300.0 million pursuant to the Term Credit Agreement and used the net proceeds to repay existing borrowings under the Credit Agreement. The Term Credit Agreement matures on October 16, 2027. Loans under the Term Credit Agreement bear interest at our election at a rate per annum equal to (i) a forward-looking term rate based on the secured overnight financing rate for the applicable interest period ("Term SOFR"), plus an applicable margin ranging between 0.90% and 1.025% per annum depending on our long-term unsecured debt rating, or (ii) the highest of the Wells Fargo Bank, National Association prime rate, the Federal Funds rate plus 0.50%, and Term SOFR for a one month tenor in effect on such day plus 1.00%, plus an applicable margin ranging between 0.00% and 0.025% per annum depending on our long-term unsecured debt rating.

Current wording

On October 16, 2025, we entered into a Term Credit Agreement (the “Term Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto. We borrowed $300.0 million pursuant to the Term Credit Agreement and used the net proceeds to repay existing borrowings under the Credit Agreement. The Term Credit Agreement matures on October 16, 2027. Loans under the Term Credit Agreement bear interest at our election at a rate per annum equal to (i) a forward-looking term rate based on the secured overnight financing rate for the applicable interest period ("Term SOFR"), plus an applicable margin ranging between 0.90% and 1.025% per annum depending on our long-term unsecured debt rating, or (ii) the highest of the Wells Fargo Bank, National Association prime rate, the Federal Funds rate plus

Previous wording

We periodically review our capital structure to ensure the appropriate levels of leverage and liquidity. We may access the capital markets, as necessary, based on business needs and to take advantage of favorable interest rate environments or other market conditions. We also evaluate our debt-to-capital and debt-to-EBITDA ratios to determine, among other considerations, the appropriate targets for capital expenditures and share repurchases under our share repurchase programs. Our debt-to-total-capital ratio increased to 56% at March 31, 2026, as compared to 54% at December 31, 2025.

Current wording

We periodically review our capital structure to ensure the appropriate levels of leverage and liquidity. We may access the capital markets, as necessary, based on business needs and to take advantage of favorable interest rate environments or other market conditions. We also evaluate our debt-to-capital and debt-to-EBITDA ratios to determine, among other considerations, the appropriate targets for capital expenditures and share repurchases under our share repurchase programs. Our debt-to-total-capital ratio increased to 55% at June 30, 2026, as compared to 54% at December 31, 2025.

Previous wording

We believe our cash and cash equivalents of $48.2 million, future cash generated from operations and available borrowing capacity are sufficient to fund operations, planned capital expenditures, future contractual obligations, potential share repurchases and dividends, and other needs in the foreseeable future. Included in our cash and cash equivalents of $48.2 million as of March 31, 2026 was $19.3 million of cash held in foreign locations. Our cash held in foreign locations is used for investing and operating activities in those locations, and we generally do not have the need or intent to repatriate those funds to the United States. An actual repatriation in the future from our non-U.S. subsidiaries could be subject to foreign withholding taxes and U.S. state taxes.

Current wording

We believe our cash and cash equivalents of $51.5 million, future cash generated from operations and available borrowing capacity are sufficient to fund operations, planned capital expenditures, future contractual obligations, potential share repurchases and dividends, and other needs in the foreseeable future. In July 2026, we acquired Heat Controller for approximately $205 million. For more information, see Note 14 in the Notes to the Consolidated Financial Statements. Included in our cash and cash equivalents of $51.5 million as of June 30, 2026 was $21.8 million of cash held in foreign locations. Our cash held in foreign locations is used for investing and operating activities in those locations, and we generally do not have the need or intent to repatriate those funds to the United States. An actual repatriation in the future from our non-U.S. subsidiaries could be subject to foreign withholding taxes and U.S. state taxes.

Previous wording

Our senior unsecured notes were issued by Lennox International Inc. ("Parent") and are unconditionally guaranteed by the Guarantor Subsidiaries (and together with Lennox International Inc., the “Obligor Group”). The Guarantor Subsidiaries are 100% owned and consolidated, all guarantees are full and unconditional, and all guarantees are joint and several.

Current wording

Our senior unsecured notes were issued by Lennox International Inc. ("Parent") and are unconditionally guaranteed by the Guarantor Subsidiaries (and together with Lennox International Inc., the “Obligor Group”). The Guarantor Subsidiaries are

Previous wording

Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-Guarantor Subsidiary. The revenue amounts presented in the summarized financial information include substantially all of our condensed consolidated revenue, and there is no intercompany revenue from the non-Guarantor Subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.

Current wording

Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and balances within the Obligor Group and equity in the earnings from and investments in any non-Guarantor Subsidiary. The revenue amounts presented in the summarized financial information include substantially all of our condensed consolidated revenue, and there is no intercompany revenue from the non-Guarantor Subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01 and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.

Previous wording

The following combined Parent and Guarantor Subsidiaries financial information is presented as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 (in millions):

Current wording

The following combined Parent and Guarantor Subsidiaries financial information is presented as of June 30, 2026 and December 31, 2025 and for the six months ended June 30, 2026 (in millions):

Previous wording

For information regarding our commitments, contingencies, and guarantees, see Note 4 in the Notes to the Consolidated Financial Statements.

Current wording

For information regarding our commitments and contingencies, see Note 4 in the Notes to the Consolidated Financial Statements.