Lennox International Slashes Full-Year EPS Guidance by Up to $3 After Q3 Margin Pressure

Lennox International reported third-quarter 2026 revenue of $1.60 billion, up 10% year over year and slightly ahead of analyst estimates, but adjusted earnings per share of $6.84 missed the consensus by 4.74%. GAAP operating income fell 5% to $312 million, with an operating margin of 19.8%, while net income came in at $221 million and cash flow from operations reached $395 million.

The company slashed its full-year 2026 adjusted EPS guidance to a range of $21.00 to $21.50, down sharply from a prior range of $23.00 to $24.00, a cut of up to $3 per share. Revenue growth guidance was also trimmed to approximately 6%, including a 5% benefit from completed acquisitions, down from the prior forecast of approximately 8%. Free cash flow guidance was reduced to $700 million to $750 million from $750 million to $850 million.

CEO Alok Maskara attributed the shortfall to heightened competitive pressure and persistent inflation weighing on costs, particularly in the Home Comfort Solutions segment, where revenue grew just 3% and segment margin declined 490 basis points. The company implemented targeted price adjustments in select residential market segments to defend and recapture share, but those actions combined with tariff-related cost inflation hurt profitability. Building Climate Solutions continued to deliver strong revenue growth and helped offset the residential weakness.

Shares fell roughly 5% to 5.7% in premarket trading and hit a 52-week low of $337.81 on the session, reflecting investor concern about the depth of the guidance cut and near-term margin headwinds. Management said it is retooling processes to more effectively pass through cost increases while accelerating productivity initiatives.