Lennox lowered its annual adjusted earnings forecast on October 28 as higher costs and competitive pressure weighed on third-quarter profitability, according to its results release.
Revenue increased 10% to $1.6 billion. Reported operating income fell 5% to $312 million, and the operating margin declined to 19.8%.
Net income was $221 million, or $6.41 per share, compared with $260 million, or $7.38 per share, a year earlier. Adjusted earnings fell 7% to $6.84 per share.
The heating and cooling company attributed a $45 million profit headwind to product cost inflation, including tariffs, and lower factory absorption. Higher fuel costs added $15 million in pressure.
Building Climate Solutions revenue increased 24%, including 15% organic growth. Home Comfort Solutions sales rose 3%, but its segment margin declined 4.9 percentage points.
Lennox now expects annual adjusted earnings of $21.00–$21.50 per share, down from $23.00–$24.00. It projects revenue growth of about 6%, including five percentage points from completed acquisitions, and free cash flow of $700 million–$750 million.
The outlook is a forecast. Adjusted earnings exclude specified items and supplement standard accounting results.
Sources: Lennox third-quarter results release.