Core Viewpoint - Lennox International reported strong Q2 2025 results, exceeding analyst expectations in earnings per share and revenue, leading to an upward revision of full-year guidance [1][10]. Financial Performance - Non-GAAP earnings per share reached $7.82, surpassing the estimate of $6.86 and showing a 14% increase from Q2 2024 [2][5]. - GAAP revenue was $1.50 billion, exceeding the estimate of $1,471.07 million and reflecting a 3% year-over-year growth [2][5]. - Segment profit increased to $354 million, an 11% rise compared to Q2 2024, with operating margin improving by 1.5 percentage points to 23.6% [2][6]. - Free cash flow (Non-GAAP) fell to $58.7 million, down 61% from $151.9 million in Q2 2024 [2][8]. Business Overview - Lennox International specializes in climate control solutions, manufacturing and selling HVAC systems, including air conditioners, furnaces, and refrigeration equipment [3]. Key Success Factors - The company focuses on innovation in refrigerant technologies, adapting to regulations, and expanding distribution channels [4]. - Strategic acquisitions and workforce investments are also emphasized to drive growth and support margin expansion [4]. Operational Insights - The company experienced a decline in overall sales volume in both Home Comfort Solutions and Building Climate Solutions segments, but price increases and a favorable product mix mitigated this impact [5][6]. - The introduction of low-GWP R-454B refrigerant products contributed positively to profitability [7]. - The company has been proactive in addressing rising material costs through price adjustments, with management reporting "mid-single-digit" realization rates [9]. Future Outlook - Management raised the full-year 2025 revenue growth forecast to approximately 3%, up from 2%, and adjusted earnings per share guidance to $23.25 to $24.25 [10]. - Free cash flow guidance remains unchanged at $650 million to $800 million for FY2025 [10]. - Key watchpoints include the ability to sustain price increases amid cost pressures and potential impacts from tariff changes or shifts in consumer activity [10].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________ FORM 10-Q _________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to ______ Commission file number 001-15149 ______________________ ...

Financial Data and Key Metrics Changes - Revenue for the second quarter grew by 3% compared to the previous year, with a segment margin reaching a record 23.6%, an increase of 170 basis points [6][11] - Adjusted earnings per share (EPS) for the second quarter was $7.82, with operating cash flow reported at $87 million [6][11] - The full-year adjusted EPS outlook has been raised to a range of $23.25 to $24.25, reflecting strong execution in a challenging environment [8][20] Business Line Data and Key Metrics Changes - Home Comfort Solutions (HCS) segment saw a 3% revenue increase driven by favorable product mix and pricing, despite a decline in sales volume due to inventory destocking and market conditions [12][13] - Building Climate Solutions (BCS) segment achieved a 5% revenue increase, supported by emergency replacement products, although overall market demand remained weak [15][16] Market Data and Key Metrics Changes - The company noted softness in new construction demand and industry-wide refrigerant canister shortages impacting sales [6][7] - The transition to low GWP refrigerants is ongoing, with approximately 90% of refrigerant-based product sales now utilizing the new R454B refrigerant [12][21] Company Strategy and Development Direction - The company is focused on executing its transformation strategy introduced in 2022, with an emphasis on digital customer experience, ductless technology, and expanding its product portfolio through strategic partnerships [25][26] - Joint ventures with Samsung and Ariston are expected to enhance product offerings and customer experience, with significant contributions anticipated starting in 2026 and 2027 respectively [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate ongoing challenges, citing improved factory productivity and a strong operational execution [23][24] - The outlook for the second half of the year is cautiously optimistic, with expectations of stabilization in demand and continued margin expansion [20][21] Other Important Information - The company has authorized an additional $1 billion in share repurchases and increased its quarterly dividend by approximately 15% [16][17] - Inventory levels are expected to normalize in the second half of the year, following temporary investments to support the transition to new products [16][92] Q&A Session Summary Question: Can you discuss the price and cost dynamics, particularly regarding A2L manufacturing costs and tariffs? - Management indicated that both cost and price are in line with expectations, with productivity improvements driving margin expansion [30][34] Question: What are the volume assumptions for the second half? - Volume guidance for HCS is expected to decline by about 8%, while BCS is projected to decline by about 4% [35][36] Question: Can you confirm the margin outlook for the full year? - The company is projecting about a 50 basis point expansion in margins for the full year, with both segments expected to show margin improvement [40][41] Question: What are the expectations regarding the Ariston partnership and market share? - Early feedback from dealers on the water heater business has been positive, with meaningful growth expected starting in 2027 [54][57] Question: How is the company managing inventory and what is the outlook for the second half? - The company plans to reduce inventory levels to normal by the end of the year, with a focus on balancing supply and demand [92][93]

Here is how Lennox performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: View all Key Company Metrics for Lennox here>>> The reported revenue compares to the Zacks Consensus Estimate of $1.48 billion, representing a surprise of +1.35%. The company delivered an EPS surprise of +13.33%, with the consensus EPS estimate being $6.90. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how the ...

Financial Data and Key Metrics Changes - Revenue for Q2 2025 grew by 3%, with a segment margin reaching a record 23.6%, an increase of 170 basis points [5][11] - Operating cash flow was reported at $87 million, and adjusted earnings per share (EPS) for the quarter was $7.82 [5][11] - The full-year adjusted EPS outlook has been raised to a range of $23.25 to $24.25, up from the previous range of $22.25 to $23.50 [19][21] Business Line Data and Key Metrics Changes - Home Comfort Solutions (HCS) segment revenue increased by 3%, driven by a favorable product mix and a 12% increase in pricing, despite a decline in sales volume due to inventory destocking and construction softness [12][13] - Building Climate Solutions (BCS) segment achieved a 5% revenue increase, supported by an 8% benefit from favorable product mix and pricing, while sales volumes declined by only 3% [15][16] Market Data and Key Metrics Changes - The overall market remains challenging, with ongoing softness in new construction demand and industry-wide refrigerant shortages impacting sales [5][22] - The company is beginning to see early signs of demand stabilization in the BCS segment, with healthy order rates and backlog due to steady replacement demand [24] Company Strategy and Development Direction - The company is focused on executing its transformation strategy introduced in 2022, with an emphasis on digital customer experience, ductless technology, and expanding its product and service portfolio [26] - Strategic partnerships with Samsung and Ariston are aimed at enhancing the product portfolio and customer experience, with expectations for meaningful growth contributions starting in 2026 and 2027 respectively [10][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging environment, citing improved factory productivity and effective cost management as key factors [4][24] - The transition to low GWP refrigerants is progressing well, although concerns about canister availability have impacted dealer confidence [22][23] Other Important Information - The company has authorized an additional $1 billion in share repurchases and increased its quarterly dividend by approximately 15% [16][17] - Free cash flow guidance remains on track for $650 million to $800 million for the year [16] Q&A Session Summary Question: Insights on A2L manufacturing costs and tariffs - Management indicated that both cost and price expectations for A2L conversion are on track, with productivity improvements driving margin expansion [31][33] Question: Volume assumptions for the second half - HCS segment volumes are expected to decline by about 8% in the second half, while BCS volumes are projected to decline by about 4% [34][35] Question: Margin outlook and operating margin expansion - Full-year EPS guidance includes an expected 50 basis points of operating margin expansion, with both segments showing margin improvement [39][40] Question: Feedback on the Ariston partnership - Early dealer feedback on the water heater business has been positive, with expectations for meaningful growth starting in 2027 [50] Question: Impact of weather on sales - Management acknowledged that weather patterns have influenced sales, with stronger performance noted in June compared to May [62] Question: Inventory build and reduction expectations - The company plans to normalize inventory levels in the second half of the year, with a focus on transitioning to the new R454B products [88][89]

Financial Highlights - Revenue reached $1.5 billion, a 3% year-over-year increase[8] - Segment profit increased by 11% year-over-year, totaling $354 million[8] - Adjusted Earnings Per Share (EPS) rose by 14% to $7.82[8, 16] - Operating cash flow was $87 million, a decrease of $97 million year-over-year[8] - Segment profit margin improved by 170 basis points to 23.6%[8] Segment Performance - Home Comfort Solutions revenue increased by 3% to $1.009 billion, with a segment profit of $255 million[18, 19] - Building Climate Solutions revenue increased by 5% to $492 million, with a segment profit of $123 million[23, 24] Financial Guidance - The company anticipates full-year adjusted EPS between $23.25 and $24.25[8] - The company expects approximately 3% total revenue growth[35] - The company projects free cash flow between $650 million and $800 million[35] Cash Flow and Capital Deployment - The company is targeting a full-year 2025 cash conversion rate of approximately 90%[29] - Capital expenditures for 2025 are estimated to be around $150 million[34] - Share repurchases amounted to approximately $300 million year-to-date[33]

Company Performance - Lennox International (LII) reported quarterly earnings of $7.82 per share, exceeding the Zacks Consensus Estimate of $6.9 per share, and up from $6.83 per share a year ago [1] - The earnings surprise for this quarter was +13.33%, following a previous quarter where the company also surpassed expectations with earnings of $3.37 per share against an estimate of $3.25 per share, resulting in a surprise of +3.69% [2] - The company achieved revenues of $1.5 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.35% and increasing from $1.45 billion year-over-year [3] Market Outlook - Lennox shares have increased approximately 1.8% since the beginning of the year, while the S&P 500 has gained 7.3% [4] - The company's future stock performance will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings numbers [4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $7.12, with expected revenues of $1.56 billion, and for the current fiscal year, the estimate is $22.89 on revenues of $5.46 billion [8] - The estimate revisions trend for Lennox was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - The Building Products - Air Conditioner and Heating industry, to which Lennox belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, suggesting potential challenges ahead [9] - The performance of Lennox's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

Exhibit 99.1 Lennox Reports Second Quarter Results Q2 Highlights (All comparisons are year-over-year, unless otherwise noted) DALLAS, July 23, 2025 – Lennox (NYSE: LII), a leader in energy-efficient climate-control solutions, today reported second quarter financial results with $1.5 billion of revenue, $354 million of operating income, and $7.82 GAAP diluted earnings per share. Revenue grew 3% to $1.5 billion. Segment profit increased 11% to $354 million. Segment margin was up 170 basis points to 23.6%. Adj ...

Core Insights - Lennox reported second quarter financial results with revenue of $1.5 billion, an increase of 3% year-over-year, and operating income of $354 million, up 11% [1][5][7] - The company raised its full-year guidance, now expecting revenue growth of approximately 3% and adjusted earnings per share in the range of $23.25 to $24.25 [3][11] Financial Performance - Revenue for the second quarter was $1.5 billion, reflecting a 3% increase driven by favorable mix and pricing benefits [2][5] - Operating income reached $354 million, with an operating profit margin of 23.6%, up 150 basis points from the previous year [5][6] - Net income was reported at $278 million, or $7.82 per share, compared to $246 million, or $6.87 per share, in the prior-year quarter [7][20] Segment Performance - Home Comfort Solutions segment revenue was $1.0 billion, up 3%, with segment profit of $255 million, an increase of 12% [8][19] - Building Climate Solutions segment revenue increased by 5% to $492 million, with segment profit rising to $123 million, up 7% [9][19] - Both segments experienced margin expansion, attributed to favorable product mix and pricing, which offset inflationary pressures and softer sales volumes [4][6] Cash Flow and Capital Expenditures - Operating cash flow for the quarter was $87 million, down from $184 million in the prior-year quarter [7][24] - Net capital expenditures were $28 million, slightly lower than $32 million in the previous year [7][24] Guidance and Future Outlook - For the full year 2025, the company anticipates earnings per share in the range of $23.25 to $24.25 and revenue growth of approximately 3% [11][12] - Capital expenditures are projected to be around $150 million, with free cash flow expected to be between $650 million and $800 million [11][12]

Core Viewpoint - Lennox International (LII) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1]. Group 1: Earnings Performance - Lennox has a solid track record of surpassing earnings estimates, with an average surprise of 18.04% over the last two quarters [2]. - In the last reported quarter, Lennox achieved earnings of $3.37 per share, exceeding the Zacks Consensus Estimate of $3.25 per share by 3.69% [3]. - For the previous quarter, the company reported earnings of $5.6 per share against an expectation of $4.23 per share, resulting in a surprise of 32.39% [3]. Group 2: Earnings Estimates and Predictions - Estimates for Lennox have been trending upward, aided by its history of earnings surprises, and the stock currently has a positive Zacks Earnings ESP of +2.03% [5][7]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data indicating that nearly 70% of stocks with this combination exceed consensus estimates [6][7]. Group 3: Earnings Release Information - The next earnings report for Lennox is expected to be released on July 23, 2025 [7].