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]

Core Insights - Lennox and Ariston Group have formed a joint venture to launch a new line of residential water heaters in the U.S. and Canada, combining Lennox's distribution strength with Ariston's advanced technology [1][4][5] Company Overview - Lennox is a leader in energy-efficient climate-control solutions, focusing on sustainability and innovation in HVACR systems [7] - Ariston Group is a global leader in sustainable climate and water comfort, with 2024 revenues of €2.6 billion, over 10,000 employees, and a presence in 40 countries [8] Joint Venture Details - The joint venture, named Ariston Lennox Water Heating North America, will be operational after customary closing conditions are met, with Ariston USA owning 50.1% and Lennox owning 49.9% [6] - The partnership aims to enhance market presence and drive innovation in the North American residential water heater market [4][5] Strategic Goals - The joint venture aligns with Lennox's strategy for accelerated growth by expanding product offerings in the residential market and strengthening customer relationships [5] - Ariston Group views the North American market as a strategic priority for profitable growth, having entered the region in 2016 through acquisitions [6]

Financial Data and Key Metrics Changes - The company reported record results for revenue, adjusted EBITDA, adjusted earnings per diluted share, and adjusted net income for the fourth quarter of fiscal year 2025, with revenue of $231 million, adjusted EBITDA of $60 million, adjusted earnings per diluted share of $2.24, and adjusted net income of $38 million [4][10] - For the full fiscal year 2025, revenue reached $878 million, representing an 11% growth, with adjusted EBITDA of $228 million and adjusted earnings per diluted share of $8.41 [5][10] - Cash flow from operations for the full year was $168 million, a 2% increase compared to the prior fiscal year [18][19] Business Segment Data and Key Metrics Changes - The Contractor Solutions segment generated $166 million in revenue, accounting for 71% of consolidated revenue, with a 17.5% growth compared to the prior year [13] - The Specialized Reliability Solutions segment saw a revenue decrease of 9% to $38 million, primarily due to softer market demand [14][15] - The Engineered Building Solutions segment's revenue decreased by 4% to $28.7 million, attributed to the timing of project completions [16] Market Data and Key Metrics Changes - The company experienced organic growth in Contractor Solutions driven by higher volumes and pricing actions, while the other two segments faced declines [10][11] - The HVACR and electrical end markets showed growth during the quarter, contributing to the Contractor Solutions segment's performance [14] Company Strategy and Development Direction - The company announced the acquisition of Aspen Manufacturing for $313.5 million, aimed at expanding its HVACR product offerings [5][20] - The company plans to continue pursuing accretive acquisitions and expects to deliver sustainable growth that exceeds the markets served [28][29] - The strategic move to the New York Stock Exchange is anticipated to enhance liquidity for shareholders [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, expecting revenue and adjusted EBITDA growth for each segment in fiscal year 2026 [21][27] - The company is focused on managing the impact of tariffs and has implemented pricing actions to offset costs [26] - Management noted that while there may be some margin compression, the overall strategy remains focused on protecting margin dollars [26] Other Important Information - The company reported a strong balance sheet with $226 million in cash at the end of the fiscal fourth quarter [18] - The effective tax rate for the fiscal fourth quarter was 24.6% on a GAAP basis [21] Q&A Session Summary Question: Impact of tariffs on COGS - Management indicated that there has not been much trailing impact from tariffs yet, as they had brought in extra inventory to mitigate potential costs [34][35] Question: M&A pipeline and debt repayment - Management confirmed that they remain acquisitive and will utilize the revolving credit facility for larger acquisitions while smaller acquisitions can be funded through free cash flow [39] Question: Pricing actions and margin implications - Management stated that pricing actions are ongoing and are expected to match tariff costs, with a focus on maintaining margins [49][50] Question: Demand changes entering spring and summer - Management noted that demand has been relatively normal, with a strong performance in Contractor Solutions despite a slow start to the hot season [52][76] Question: Timeline for achieving 20% EBITDA margin in Engineered Building Solutions - Management reiterated that the 20% EBITDA margin target remains, but achieving it will depend on overcoming cost and pricing challenges [87] Question: Strategies to address poor performance in Specialized Reliability Solutions - Management highlighted that volume was the main issue, and they are focusing on product development and operational improvements to enhance margins [90][92]

Core Insights - Lennox reported a revenue of $1.1 billion for Q1 2025, reflecting a 2% year-over-year growth, while operating income decreased by 7% to $156 million [1][2][5] - The company emphasized the resilience of its replacement-driven business model and its North American-focused strategy amidst current market uncertainties [3][4] Financial Performance - Revenue increased by 2% to $1.1 billion, driven by favorable pricing and product mix [2][5] - Operating income was $156 million, down 7%, with a segment margin of 14.5%, a decrease of 140 basis points [6][7] - Net income for the quarter was $120 million, or $3.37 per share, compared to $124 million, or $3.47 per share, in the prior-year quarter [8][9] Segment Analysis - Home Comfort Solutions segment revenue grew by 7% to $721 million, with segment profit increasing by 4% to $117 million, despite a slight margin decline [10] - Building Climate Solutions segment revenue decreased by 6% to $351 million, with segment profit down 32% to $54 million, impacted by sales volume and cost inefficiencies [11] Guidance and Outlook - For the full year 2025, adjusted earnings per share is expected to be in the range of $22.25 to $23.50, with revenue anticipated to increase by approximately 2% [13][16] - The company aims to leverage pricing gains to offset tariff impacts and maintain profit margins despite potential volume declines [13][16] Cash Flow and Capital Expenditures - Operating cash flow used was $36 million, compared to $23 million in the prior-year quarter, with net capital expenditures of $25 million [9][14] - The company repurchased $85 million in shares during the quarter [9]