Lennox International Q3 2026: Tariffs Trigger a Sharp Guidance Cut
As seen on the 24/7 Wall St. homepage on October 28, 2026.
Lennox cut full-year adjusted EPS guidance to $21.00-$21.50 from $23.00-$24.00, so tariffs and product cost inflation are now hitting earnings power, not just margins. Home Comfort Solutions profit fell 18% on competitive pricing. Both lines missed expectations.
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Lennox International reported Q3 2026 adjusted EPS of $6.84, missing the consensus estimate, while revenue came in just below expectations. Cost pressures are now directly eroding earnings.
The dominant drag was a $45 million headwind from product cost inflation and tariffs, which overwhelmed partial offsets from pricing, volume gains, and acquisitions. Total segment profit margin contracted to 20.6% as net income fell year over year even as revenue grew.
The sharpest pain landed in Home Comfort Solutions, where segment profit dropped 18% and margin fell to 18.7%. CEO Alok Maskara pointed to heightened competitive pressure and persistent inflation as the culprits, adding that the company is retooling its processes to more effectively pass through cost increases. Building Climate Solutions offered a partial offset, posting revenue growth with more resilient margins.
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Full-year 2026 adjusted EPS guidance was cut to $21.00 to $21.50 from $23.00 to $24.00. Full-year revenue growth guidance was trimmed to approximately 6%, including a benefit from completed acquisitions such as Duro Dyne, Supco, and Heat Controller.
Free cash flow guidance was updated to $700 million to $750 million, while operating cash flow in the quarter improved on reduced inventory levels. Lennox also kept repurchasing stock in Q3, a signal that management is still willing to return capital even as earnings come under pressure.
The key question heading into Q4 is whether tariff mitigation and pricing initiatives gain enough traction to protect the low end of the revised EPS range. Management flagged that North American HVAC and refrigeration markets performing worse than assumed remains a live risk, and Home Comfort Solutions faces the added challenge of defending market share while introducing new entry-tier products.
Mentioned: LII