LENNOX INTERNATIONAL INC

Previous 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.

Current wording

Results for the third quarter of 2026 were mixed as our Home Comfort Solutions segment faced volume headwinds and higher product costs due to inflation, including tariff related impacts. Overall our net sales increased 10% and our segment profit decreased $13 million as compared to prior year. For our Home Comfort Solutions segment, net sales increased 3% and segment profit decreased $40 million. For our Building Climate Solutions segment, net sales increased 24% and segment profit increased $26 million.

Previous 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.

Current wording

•Net sales of $1,572 million in the third quarter of 2026 reflected a 10% increase as compared to the same period in 2025.

Previous wording

•Operating income in the second quarter of 2026 increased $6 million to $355 million as favorable mix and price were partially offset by lower sales volumes, higher product costs and higher freight and distribution costs.

Current wording

•Operating income in the third quarter of 2026 decreased $17 million to $312 million as lower sales volumes, higher product costs, and restructuring costs were partially offset by favorable price.

Previous wording

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

Current wording

•Net income for the third quarter of 2026 was $221 million.

Previous 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.

Current wording

•Diluted earnings per share was $6.41 per share in the third quarter of 2026 as compared to $7.38 per share in the same period in 2025.

Previous 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.

Current wording

•For the nine months ended September 30, 2026, we returned $138 million to shareholders through dividend payments and repurchased $302 million of common stock through our share repurchase program.

Previous 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.

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"), Section 232 of the Trade Expansion Act of 1962, and Sections 122 and 301 of the Trade Act of 1974.

Previous wording

In February 2026, the U.S. Supreme Court ruled against tariffs imposed under IEEPA, and U.S. Customs and Border Protection is now processing valid court-ordered IEEPA refunds. The ruling did not repeal Section 232 tariffs on steel, copper, and aluminum or Section 301 tariffs on covered Chinese HVAC imports.

Current wording

In February 2026, the U.S. Supreme Court ruled against tariffs imposed under IEEPA, and U.S. Customs and Border Protection is now processing valid court-ordered IEEPA refunds. The ruling did not repeal Section 232 tariffs on steel, copper, and aluminum or Section 301 tariffs on covered HVAC imports.

Previous 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.

Current wording

Following this ruling, the U.S. presidential administration imposed a temporary surcharge under 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 continues to evaluate tariff mitigation strategies.

Previous 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.

Current wording

Net sales for the third quarter of 2026 increased 10% as compared to the same period in 2025 primarily due to a 2% increase from higher sales volumes, a 2% increase from favorable mix and price and a 6% increase in sales volumes from completed acquisitions.

Previous 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.

Current wording

Gross profit margins in the third quarter of 2026 decreased 250 basis points ("bps") to 31.6% as compared to 34.1% in the same period in 2025. Gross margins decreased 300 bps from higher product costs, due to inflation, including tariff related impacts and lower factory absorption, and 50 bps from higher fuel costs, inflation on distribution, and ongoing investments, which were partially offset by 80 bps from favorable mix and price and 20 bps from sales volumes from completed acquisitions.

Previous 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.

Current wording

Selling, general and administrative expenses ("SG&A") increased $15 million to $177 million in the third quarter of 2026 as compared to $162 million in the same period in 2025, primarily attributable to higher discretionary and employee-related costs, the acquisition of Duro Dyne and Supco in the fourth quarter of 2025 and the acquisition of Heat Controller in the third quarter of 2026. As a percentage of net sales, SG&A was flat at 11.3%.

Previous wording

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

Current wording

Losses (gains) and other expenses, net for the third 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 second 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 third quarter of 2026 and 2025.

Previous 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.

Current wording

Interest expense, net increased to $18 million in the third quarter of 2026 from $11 million in the same period in 2025 primarily due to increased borrowings on our commercial paper facility and our Term Credit Agreement entered into in October of 2025.

Previous 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.

Current wording

Our effective tax rate was 24.6% for the third quarter of 2026 as compared to 18.1% in the same period in 2025. The increase in the rate is primarily due to higher income in higher tax jurisdictions.

Previous wording

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

Current wording

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

Previous 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):

Current wording

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

Previous 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.

Current wording

Net sales increased 3% in the third quarter of 2026 as compared to the same period in 2025 primarily due to a 4% increase in sales volumes from completed acquisitions and a 2% increase from favorable mix and price, which were partially offset by a 3% decrease in sales volumes.

Previous 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.

Current wording

Segment profit in the third quarter of 2026 decreased $40 million as compared to the same period in 2025, primarily due to $32 million from higher product costs due to inflation, including tariff related impacts and lower factory absorption, $12 million from reduced sales volumes, and $15 million from higher fuel costs, inflation on SG&A and distribution, and ongoing investments. These impacts were partially offset by a $13 million benefit from favorable mix and price, and $6 million from completed acquisitions.

Previous 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):

Current wording

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

Previous 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.

Current wording

Net sales increased 24% in the third quarter of 2026 as compared to the same period in 2025 primarily due to a 13% increase in sales volumes, a 9% increase in sales volumes from completed acquisitions, and a 2% increase from favorable mix and price.

Previous 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.

Current wording

Segment profit in the third quarter of 2026 increased $26 million as compared to the same period in 2025 primarily due to $24 million profit benefit from higher sales volumes, $13 million profit benefit from sales volumes from completed acquisitions, and $8 million from favorable mix and price, which were partially offset by $14 million in higher product costs due to inflation, including tariff related impacts and $5 million from other costs.

Previous wording

Net sales increased 4% for the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to a 5% increase from favorable mix and price and a 5% increase in sales volumes from completed acquisitions, which were partially offset by a 6% decrease in sales volumes.

Current wording

Net sales increased 6% for the nine months ended September 30, 2026 as compared to the same period in 2025, primarily due to a 5% increase in sales volumes from completed acquisitions and a 4% increase from favorable mix and price, which were partially offset by a 3% decrease in sales volumes.

Previous wording

Gross profit margins for the six months ended June 30, 2026 decreased 20 bps to 33.2% as compared to 33.4% in the same period in 2025. Gross margins decreased 170 bps from higher product costs, primarily reflecting inflation and factory under absorption, net of $30 million in tariff refunds, 40 bps from higher freight and distribution costs, and 20 bps from miscellaneous costs, which were partially offset by 180 bps from favorable mix and price and 30 bps from completed acquisitions.

Current wording

Gross profit margins for the nine months ended September 30, 2026 decreased 100 bps to 32.6% as compared to 33.6% in the same period in 2025. Gross margins decreased 220 bps from higher product costs, due to inflation, including tariff related impacts and lower factory absorption, net of $30 million in tariff refunds, 40 bps from higher fuel costs, inflation on distribution, and ongoing investments, and 10 bps from miscellaneous costs, which were partially offset by 140 bps from favorable mix and price and 30 bps from completed acquisitions.

Previous wording

SG&A increased $24 million to $368 million for the six months ended June 30, 2026 as compared to $345 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. As a percentage of net sales, SG&A increased 30 bps to 13.7% from 13.4%.

Current wording

SG&A increased $39 million to $546 million for the nine months ended September 30, 2026 as compared to $506 million in the same period in 2025 primarily due to higher discretionary and employee-related costs and the acquisition of Duro Dyne and Supco in the fourth quarter of 2025 and the acquisition of Heat Controller in the third quarter of 2026. As a percentage of net sales, SG&A increased 10 bps to 12.8% from 12.7%.

Previous wording

Losses (gains) and other expenses, net for the six months ended June 30, 2026 and 2025 included the following (in millions):

Current wording

Losses (gains) and other expenses, net for the nine months ended September 30, 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 decreased slightly to $1 million for the six months ended June 30, 2026 as compared to $3 million the same period in 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 decreased to $2 million for the nine months ended September 30, 2026 as compared to $6 million in the same period in 2025.

Previous wording

Interest expense, net increased $15 million for the six months ended June 30, 2026 to $30 million as compared to $15 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 $22 million for the nine months ended September 30, 2026 to $47 million as compared to $25 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 20.6% for the six months ended June 30, 2026 as compared to 19.4% in the same period in 2025. The increase in the rate was primarily due to higher income in higher tax jurisdictions.

Current wording

Our effective tax rate was 22.1% for the nine months ended September 30, 2026 as compared to 18.9% in the same period in 2025. The increase in the rate was primarily due to higher income in higher tax jurisdictions.

Previous wording

The following table presents our Home Comfort Solutions segment's net sales and profit for the six months ended June 30, 2026 and 2025 (dollars in millions):

Current wording

The following table presents our Home Comfort Solutions segment's net sales and profit for the nine months ended September 30, 2026 and 2025 (dollars in millions):

Previous wording

Net sales decreased 8% for the six months ended June 30, 2026 as compared to the same period in 2025 primarily due to a 16% decrease in sales volumes, which was partially offset by a 6% increase from favorable mix and price and a 2% increase in sales volumes from completed acquisitions.

Current wording

Net sales decreased 5% for the nine months ended September 30, 2026 as compared to the same period in 2025 primarily due to a 12% decrease in sales volumes which was partially offset by a 4% increase from favorable mix and price and a 3% increase in sales volumes from completed acquisitions.

Previous wording

Segment profit for the first six months of 2026 decreased by $68 million as compared to the same period in 2025, primarily due to lower sales volumes, which resulted in $104 million profit headwind, $25 million from product cost inflation and lower factory absorption, net of $25 million in tariff refunds, $4 million from higher freight and distribution and $8 million from miscellaneous costs. These impacts were partially offset by a $65 million benefit from favorable mix and price and $8 million from completed acquisitions.

Current wording

Segment profit for the first nine months of 2026 decreased by $107 million as compared to the same period in 2025, primarily due to lower sales volumes, which resulted in $116 million profit headwind, $57 million from higher product costs due to inflation, including tariff related impacts and lower factory absorption, net of $25 million in tariff refunds, $14 million from higher fuel costs, inflation across SG&A and distribution, and ongoing investments, and $12 million from miscellaneous costs. These impacts were partially offset by a $78 million benefit from favorable mix and price and $14 million from completed acquisitions.

Previous wording

The following table presents our Building Climate Solutions segment's net sales and profit for the six months ended June 30, 2026 and 2025 (dollars in millions):

Current wording

The following table presents our Building Climate Solutions segment's net sales and profit for the nine months ended September 30, 2026 and 2025 (dollars in millions):

Previous wording

Net sales increased 30% for the six months ended June 30, 2026 as compared to the same period in 2025 primarily due to a 14% increase in sales volumes, a 10% increase in sales volumes from completed acquisitions, and 6% from favorable mix and price.

Current wording

Net sales increased 28% for the nine months ended September 30, 2026 as compared to the same period in 2025 primarily due to a 14% increase in sales volumes, a 10% increase in sales volumes from completed acquisitions, and 4% from favorable mix and price.

Previous wording

Segment profit for the first six months of 2026 increased $72 million as compared to the same period in 2025 primarily due to $47 million profit benefit from higher sales volumes, $37 million increase from favorable mix and price, and $18 million profit benefit from sales volumes from completed acquisitions, which were partially offset by $17 million from product cost inflation and lower factory absorption, net of $5 million in tariff refunds, $8 million in increased SG&A costs, and $5 million from freight and distribution costs.

Current wording

Segment profit for the first nine months of 2026 increased $98 million as compared to the same period in 2025 primarily due to $72 million profit benefit from higher sales volumes, $46 million increase from favorable mix and price, and $32 million profit benefit from sales volumes from completed acquisitions, which were partially offset by $30 million from higher product costs due to inflation, including tariff related impacts and lower factory absorption, net of $5 million in tariff refunds, $19 million from higher fuel costs, inflation across SG&A and distribution, and ongoing investments, and $3 million from miscellaneous costs.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Net Cash Provided By Operating Activities - The change in net cash provided by operating activities for the nine months ended September 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 $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.

Current wording

Net Cash Used In Investing Activities -Net cash used in investing activities increased $247 million for the nine months ended September 30, 2026, as compared to the same period of 2025 primarily due to $210 million, excluding cash acquired, related to our acquisition of Heat Controller as well as the final settlement of the working capital adjustment for the Duro Dyne and Supco acquisition. Capital expenditures were $124 million for the nine months ended September 30, 2026 compared to $90 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 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.

Current wording

Net Cash Used In Financing Activities -Net cash used in financing activities for the nine months ended September 30, 2026 decreased to $234 million as compared to $627 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 $302 million of shares for the nine months ended September 30, 2026 and returned $138 million to shareholders through dividend payments.