The HVAC manufacturer lowered full-year guidance after a 12% drop in residential unit volume and delayed demand recovery to 2027.
Lennox International reduced its 2026 adjusted EPS forecast to $23-$24, down from prior expectations, citing a 12% decline in residential unit volume. Management attributed the drop to a strategic exit from low-margin new construction business and persistent affordability pressures.
The company’s Building Climate Solutions segment offset some weakness with 24% revenue growth, driven by emergency replacement share gains and national account wins. However, residential demand recovery is now expected in 2027 rather than the second half of 2026, reflecting ongoing consumer sentiment challenges.
Lennox emphasized operational efficiency, including distribution network optimization and factory absorption management, to mitigate lower production levels. The shift from equipment replacement to repair is viewed as deferred demand rather than permanent destruction, supporting long-term growth prospects.