Lennox International (LII)

Lennox International (LII) makes the furnaces, heat pumps, and air-conditioning systems that heat and cool homes and commercial buildings. In ETFpedia it represents the HALO concept of AI-resilient physical businesses, because its sales come from a non-discretionary replacement cycle on a vast installed base, physically installed by licensed technicians.

What does Lennox do?

Lennox manufactures heating, ventilation, air conditioning, and refrigeration equipment across two segments: Home Comfort Solutions for residential customers and Building Climate Solutions for commercial and refrigeration. It sells through dealers, distributors, and national accounts, and much of its profit comes from the steady, high-margin replacement of aging equipment (Lennox, Apr 29, 2026). The company was founded in 1895 in Marshalltown, Iowa, by Dave Lennox, the owner of a machine repair business for railroads, and today employs about 12,900 people, mostly in the United States and Mexico (Lennox 10-K, Feb 2026). In full-year 2025 it generated revenue of $5.2 billion, with Home Comfort Solutions contributing $3.3 billion and Building Climate Solutions $1.9 billion (Lennox, Jan 28, 2026).

Distribution is a quieter moat. Lennox sells its namesake brand directly to independent installing dealers, which makes it one of the largest wholesale distributors of residential HVAC equipment in North America, supported by a network of Lennox Stores across the U.S. and Canada where contractors pick up parts, supplies, and equipment (Lennox 10-K).

Why is Lennox resilient to AI disruption?

When a furnace or air conditioner that is 10 to 12 years old fails, someone has to physically replace it, regardless of what AI can do. That non-discretionary, technician-installed replacement demand is the heart of the HALO thesis: real-economy cash flows tied to a physical installed base, not to information work. Lennox’s own annual filing describes the demand base in exactly those terms:

A substantial portion of the sales in each of our business segments is attributable to replacement business, with the balance comprised of new construction business.

— Lennox International, Form 10-K for fiscal year 2025

Now contractors are more confident, and consumers are returning to economic decisions—replacing 10–12-year systems to get better efficiency, warranty, and financing.

— Alok Maskara, CEO, Lennox International (Q1 2026 earnings call)

How profitable is Lennox’s replacement-driven model?

Unusually for an industrial, Lennox pairs heavy installed-base demand with a capital-light income statement. In full-year 2025 it posted an operating margin of 20.0%, up 50 basis points and its first annual margin above the 20% mark, on GAAP EPS of $22.79 and adjusted EPS of $23.16 (Lennox, Jan 28, 2026). Capital expenditures were just $118.8 million, a little over 2% of revenue, because the heavy assets in the HALO sense sit inside customers’ homes and buildings as a multi-decade installed base rather than on Lennox’s balance sheet. That mix converted into free cash flow of $640.2 million, of which $482.3 million funded share repurchases and $173.0 million paid dividends (Lennox, Jan 28, 2026).

What did Lennox report most recently?

In Q1 2026 (the quarter ended March 31, 2026), Lennox reported revenue of $1.135 billion, up 6% year over year (Lennox). Both GAAP and adjusted EPS landed at $3.35, and both fell 8% from $3.63 a year earlier on product-cost inflation; the two measures coincided this quarter because there were no material adjusting items. Commercial revenue jumped 38% while residential fell 10%.

What is Lennox’s guidance?

For full-year 2026, Lennox guided revenue growth of about 8% (including roughly 4% from acquisitions), adjusted EPS of $23.50–25.00, and free cash flow of $750–850 million (Lennox).

What are the risks for Lennox?

• Residential softness. Home Comfort volumes fell 10% on weak new construction and channel destocking.
• Cost inflation. Product-cost inflation and lower factory absorption compressed margins.
• Refrigerant transition. The R-454B changeover adds training, supply, and pricing complexity.
• Acquisition reliance. Part of 2026 growth comes from M&A, which carries integration risk.

Related securities, concepts & terms

• AI-Resilient Investing parent
• Heavy Asset Low Obsolescence (HALO) parent
• W.W. Grainger (GWW) sibling
• Cummins (CMI) sibling

Related indices & ETFs

• Roundhill HALO ETF (LOHA) · Roundhill Investments
  Tracks the Akros U.S. HALO Index of physical-economy companies screened for AI resilience.

These references describe index-tracking relationships as a matter of fact and are not a recommendation to buy any product. Akros, as the index provider, may receive licensing fees from product sponsors. Review the product's prospectus before investing.

Frequently asked questions about Lennox International

Sources & references

1. Lennox reports 2026 first quarter results · Lennox International / PR Newswire, 2026-04-29
2. Lennox (LII) Q1 2026 earnings call transcript · The Motley Fool, 2026-04-29
3. Lennox reports fourth quarter and full year 2025 results; provides full year 2026 guidance · Lennox International / PR Newswire, 2026-01-28
4. Lennox International Form 10-K for fiscal year 2025 · Lennox International / SEC EDGAR, 2026-02-17
5. Lennox International · investor relations and events · Lennox International, 2026-06-02
6. NYSE listed company information · LII · New York Stock Exchange, 2026-06-02