Lennox Q3: Sales Up 10% to $1.57B, but Diluted EPS Falls to $6.41 on Margin Squeeze
LII is trading near its 52-week low of $325.7 (2.3% above the low) on elevated volume (3.8× avg).
Summary
Lennox grew Q3 sales 10% to $1.57 billion, but diluted EPS fell to $6.41 from $7.38 as tariffs and lower factory absorption cut gross margin 250 bps. Commercial profit rose 19% while residential profit fell 18%.
Key Events · Earnings and Guidance · LII
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Q3 Sales Up 10%, EPS Down
Net sales rose to $1,572.5 million from $1,426.8 million, but operating income fell to $312.1 million from $328.8 million and diluted EPS dropped to $6.41 from $7.38.
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Gross Margin Down 250 bps
Gross margin fell to 31.6% from 34.1%, with 300 bps of the decline from higher product costs including tariff impacts and lower factory absorption, partly offset by 80 bps of favorable mix and price.
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Residential Profit Falls 18%
Home Comfort Solutions segment profit dropped $39.6 million to $175.7 million on $32 million of higher product costs and $12 million from reduced volumes; Building Climate Solutions profit rose $26.2 million to $166.5 million on 24% sales growth.
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Heat Controller Deal Priced
The July 13, 2026 acquisition cost $215.3 million in cash, adding $74.6 million of intangibles and $88.2 million of goodwill; it contributed $29.5 million of sales and $1.2 million of segment profit through September 30.
Analysis · LII · Technology
Profitability is paying for this growth. Sales rose 10% to $1,572.5 million, yet gross margin fell 250 bps to 31.6% as tariff-related product costs and weaker factory absorption bit, dragging operating income down 5% to $312.1 million and diluted EPS to $6.41 from $7.38. The segment split matters more than the headline: commercial (Building Climate Solutions) profit jumped 19% to $166.5 million while residential (Home Comfort Solutions) profit fell 18% to $175.7 million — the residential side is where tariffs and soft volumes are landing. Hard numbers also arrive for the July 13 Heat Controller deal ($215.3 million cash, $88.2 million of goodwill), and the filing formally discloses the HVAC antitrust class action, where the company says it cannot estimate a loss range.
How filings like this one have moved
In the 30 days to Oct 28, 2026, 30.7% of the 1698 measured filings Wiseek scored 7 moved their stock by 5% or more by the next session's close. The median move was 0.00%. These are measured outcomes after filings of this importance, not a forecast for this one.
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At the time of this filing, LII was trading at $333.18 on NYSE in the Technology sector, with a market capitalization of approximately $11.5B. The 52-week trading range was $325.70 to $587.27. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.