stockrowWhat it does
Lennox International designs, manufactures and sells heating, ventilation, air conditioning and refrigeration equipment. Its products help heat and cool homes and commercial buildings, maintain indoor air quality, and refrigerate food and other perishables. The company also sells replacement parts and supplies and provides commercial installation and maintenance services.
For homes, Lennox offers furnaces, air conditioners, heat pumps and packaged systems, along with controls and indoor air quality equipment. Its products are used both to replace existing equipment and in new construction. Independent dealers install Lennox-branded systems, while other brands reach contractors through wholesale distributors. Company-owned Lennox Stores supply contractors and dealers with equipment, parts and tools.
For businesses, Lennox sells equipment used in places such as offices, restaurants, schools, stores and distribution centers. Its refrigeration products are used in supermarkets, warehouses and other facilities, as well as in industrial cooling applications. Commercial customers can also buy installation, service and preventive maintenance.
The company operates through Home Comfort Solutions and Building Climate Solutions. It was founded in 1895, is headquartered in Richardson, and is led by Chief Executive Officer Alok Maskara.
How it makes money
Lennox earns most of its revenue by selling equipment, components and supplies through its residential and commercial businesses. It also earns revenue from commercial installation, service and preventive maintenance. In both segments, a substantial portion of sales comes from replacing existing equipment; the rest comes from new construction. Replacement creates ongoing demand, although it is not the same as a recurring subscription or a guaranteed service contract.
Home Comfort Solutions sells heating and cooling systems, indoor air quality equipment, controls, parts and supplies. Its Lennox brands are sold directly to independent installing dealers, while Allied Air and ADP products are sold through independent distributors. Lennox Stores give contractors another place to buy equipment and replacement parts. Residential heating and cooling accounted for 64.4% of revenue in FY2025.
Building Climate Solutions sells commercial heating and cooling equipment, refrigeration products, controls, parts and supplies. It also provides installation and service through National Account Services and sells accessories and recycling services through AES. Its customers include commercial contractors, national accounts, distributors and end-users. The segment accounted for 35.6% of revenue in FY2025.
Lennox sells brands at different price points and manages prices alongside changes in product costs and mix. In the third quarter of 2026, the company said it adopted more dynamic residential pricing to defend market share, but realized less pricing than expected while tariffs and inflation increased costs. Commercial price increases also took longer under large national contracts.
Net sales were $5,195 million in 2025; third-quarter 2026 revenue was $1.6 billion.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Residential Heating and Cooling | $3.3 billion | 64.4% | −6.53% |
| Commercial Heating and Cooling | $1.9 billion | 35.6% | 4.97% |
| Refrigeration | $0.00 | 0.00% | — |
Customers and how it sells
Lennox serves residential installing dealers and contractors, wholesale distributors, commercial contractors, national accounts and end-users. Homeowners buy systems for replacements and new construction through the installing channel. Commercial applications include low-rise offices, restaurants, retail centers, schools and distribution facilities. Refrigeration equipment serves customers handling perishables and industrial cooling needs.
The company uses several routes to market. It sells Lennox-branded residential equipment directly to independent dealers and sells other brands to distributors, which in turn supply installing contractors. Lennox Stores sell equipment, parts, supplies and tools. Commercial heating and cooling products are distributed primarily through contractors and directly to national accounts; refrigeration products reach distributors, contractors, equipment manufacturers and end-users.
The United States accounted for 92.8% of FY2025 revenue and Canada for 7.19%. Lennox manufactures in North America and operates stores across the U.S. and Canada. Sales and segment profit tend to be higher in the second and third quarters, when air conditioning demand is seasonally stronger.
Lennox is also updating its approach to private equity-backed residential contractor groups and residential new-construction accounts. It says those customers have different needs that require an expanded set of capabilities.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| UNITED STATES | $4.8 billion | 92.8% | −3.98% |
| CANADA | $373.4 million | 7.19% | 16.9% |
Suppliers and costs
Lennox manufactures in North America and buys raw materials and components from suppliers. Steel, aluminum and copper make up the bulk of its raw material purchases; compressors, motors and controls are its most significant component purchases. A central sourcing group combines purchases across segments, and Lennox holds a minority interest in a compressor-manufacturing joint venture to help secure supply.
The company generally concentrates purchases of a given material or component among a small number of suppliers. It also makes many products at single-location facilities and, in some cases, relies on suppliers with concentrated production or a single source for necessary products. An interruption can therefore affect its ability to deliver equipment.
Costs include components, raw materials, factory overhead, labor, estimated warranty expense, freight and distribution. Lennox uses pricing, supplier contracts, efficiency initiatives and commodity hedges to address cost volatility. In the third quarter of 2026, tariffs and related inflation, net of productivity savings, drove $47 million in cost headwinds in Home Comfort Solutions.
- Revenue$5.2B
- Cost of revenue−$3.5B
- Selling, general and administrative−$681.4M
- Other operating costs−$11.9M
- Operating income$1.0B
Competitive position
Lennox competes on product availability, reliability, energy efficiency, performance, service and price. In residential heating and cooling, its named competitors include Carrier, Trane, Paloma, Bosch, Daikin and Madison Industries. Carrier, Trane, Paloma and Daikin also compete with Lennox in commercial heating and cooling, alongside companies including AAON. Refrigeration competitors include Hussmann, Carrier and GEA Group.
Lennox says overseas entrants are adding competition in lower-tier products. It is expanding its entry-tier range in response and has adopted more dynamic residential pricing to defend its position. The company says it is gaining share in commercial, while its previously discussed residential share loss has been concentrated in other parts of the business.
Our reading: Direct dealer relationships and company-owned stores provide a meaningful distribution advantage because they give Lennox multiple ways to reach installers and supply replacement parts. Our reading: That advantage is not exclusive or immune to pricing pressure; distribution and some parts and service markets have lower barriers to entry.
Our reading: The installed equipment base supports replacement and service opportunities, but it does not assure Lennox of every subsequent sale. Its brands, engineering and range of products also support competition, though no single patent is material to the business as a whole.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Carrier Global Corporation | Residential and commercial heating and cooling; refrigeration | High |
| Trane Technologies plc | Residential and commercial heating and cooling | High |
| Paloma Industries, Inc. | Residential and commercial heating and cooling; refrigeration | High |
| Daikin Industries, Ltd. | Residential and commercial heating and cooling | High |
| The Bosch Group | Residential heating and cooling | Medium |
| Madison Industries | Residential heating and cooling | Medium |
| AAON, Inc. | Commercial heating and cooling | Medium |
| Hussmann Corporation | Commercial refrigeration | Medium |
Growth opportunities
Lennox is investing in sales coverage, distribution and manufacturing capacity to reach customers and improve product availability. It says factory and sales-coverage investments are helping it quote faster and win emergency replacement business. It is also seeking to expand commercial national-account relationships through equipment, installation and service offerings.
In residential markets, the company is refreshing its entry-tier range and plans a full launch in Q1 2027. Lennox says the range responds to homeowner affordability concerns and competition from overseas products. It is also working to improve its offering for larger residential contractor groups and new-construction customers.
Acquisitions and joint ventures broaden the products Lennox can offer through its existing channels. The company acquired HVAC parts businesses Duro Dyne and Supco in 2025 and completed the $200 million acquisition of the Comfort Air and Century brands in the third quarter of 2026. Its Ariston joint venture makes water heaters available through Lennox Stores and the dealer network; its Samsung joint venture distributes ductless air conditioners and heat pumps.
The company is pursuing more parts and accessories sales alongside equipment and is investing in heat pumps, commercial service and data-center cooling innovation. Lennox expects capital expenditures of approximately $225 million in 2026, including spending to support the entry-tier launch, contractor training facilities and innovation labs. These initiatives sit alongside a productivity plan covering manufacturing, distribution and overhead.
- $4.2BFY2021
- $4.7BFY2022
- $5.0BFY2023
- $5.3BFY2024
- $5.2BFY2025
Structural risks
HVACR markets are competitive, and some parts, distribution and commercial service markets have lower barriers to entry. Lennox may have to reduce prices or lose share. In the third quarter of 2026, it said lower price realization did not cover tariff and inflation pressures.
New-construction sales depend on building activity and economic conditions. Cooler summers and warmer winters can depress replacement demand, while homeowner affordability and uncertainty have constrained residential demand.
Many products are made at single-location facilities, and some necessary inputs come from concentrated or single-source suppliers. Disruptions can limit deliveries; lower demand can also leave fixed factory costs spread over fewer units.
Steel, copper, aluminum and purchased components expose Lennox to price volatility. Tariffs, supply interruptions and changes in trade agreements can raise costs or affect demand, and the company may not be able to pass increases on to customers.
Changes in energy-efficiency or refrigerant rules can require investment in product development. Warranty claims, defects or recalls can create costs and damage customer relationships; the product warranty liability was $167.2 million as of December 31, 2025.
Bottom line
Our reading
Our reading: Lennox is an equipment manufacturer and distributor with a substantial replacement business, supported by dealer relationships, stores and commercial service. Its exposure is concentrated in North America and particularly the United States, while weather, construction activity and the cost of components influence results. Recent commercial growth and portfolio investment offer avenues for expansion, but residential competition has shown that defending share can limit the company’s ability to recover higher costs through pricing.