What Management Said
Read the full Q1 2026 transcript ↗The earnings release, today's presentation, and the webcast archive link for today's call are available on our investor relations website at investor.lennox.com. Turning to slide three, revenue was $1.1 billion, up 6% year-over-year, as growth initiatives gained traction and channel conditions stabilized. Our segment margin was 14.4% in the quarter, down 130 basis points, primarily due to the impact of factory under absorption. Operating cash flow was positive $16 million and adjusted earnings per share for the quarter was $3.35.
In Building Climate Solutions, emergency replacement momentum and disciplined execution contributed to record quarterly performance. We are reaffirming our full-year adjusted earnings per share guidance range of $23.50-$25.00. With that context, let's turn to slide four to discuss the current economic outlook. Channel destocking has largely concluded as dealers regain confidence and replacement demand strengthens.
At the same time, Lennox-specific growth initiatives are gaining momentum and beginning to offset these pressures. In addition, the on-track integration of Supco parts and supplies strengthens our attachment rate growth vector. In Building Climate Solutions, our superior execution continues with emergency replacement and national accounts both driving volume growth. Cold climate capabilities allow us to better address demand in northern regions, while our new compact air handlers make it easier to deploy high-efficiency systems in retrofit and space-constrained applications.
- Returned to year-over-year revenue growth of 6% to $1.1 billion after two consecutive quarters of declines
- Building Climate Solutions delivered record quarterly performance with organic sales up 26%, M&A growth up 12%, and profit margins expanding 300 basis points; sales volumes up 17%
- Home Comfort Solutions organic sales volume decline of 21% was a meaningful improvement from the 32% decline in Q4 2025, with two-step channel sentiment improving as distributors restocked
- Operating cash flow improved $52 million year-over-year to positive $16 million, with inventory build of only $60 million versus $210 million in the prior year period
- Emergency replacement and national account momentum in BCS, with the Saltillo factory paying strong dividends and Stuttgart stabilizing to support national account wins
- Successful water heater launch via Ariston JV and growing traction with new heat pump products; on-track integration of Supco and Duro Dyne parts and supplies
- Segment margin declined 130 basis points to 14.4%, attributed 100% to factory under absorption of approximately $15 million in the quarter
- Home Comfort Solutions revenue declined 10% overall, with organic revenue down 12% (one-step down approximately 10%, two-step down approximately 15%)
- Cost inflation guidance raised to approximately 5% from 2%, driven by new Section 232 tariffs and input cost increases in aluminum (up 25%), steel (up 20%-25%), diesel (up 50%), and copper (up 10%-15%)
- Residential new construction (about 25% of HCS) was down more than 30% in volumes, representing share loss that will negatively impact results all year
- Product costs were a $23 million headwind in HCS, driven by materials inflation and under absorption from lower production levels
Guidance Changes
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Performance Breakdown
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Earnings Call Themes & Trends
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Q&A Summary
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