AI Takeaway
Lennox International (LII) delivered resilient FY2025 results with flat operating income of $1.04B despite a 2.7% revenue decline to $5.20B, while significantly expanding its balance sheet through a major acquisition and aggressive share buybacks.
Revenue
$5.2B
-2.73% YoY
EPS (Basic)
$22.89
++0.48% YoY
Gross Margin
33.4%
++0.11% YoY
Operating Income
$1.04B
++0.11% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-K filing
Revenue fell 2.7% YoY to $5.20B from $5.34B, yet operating income held nearly flat at $1.04B (+0.1% YoY) as operating margin improved 57 basis points to 20.0%, reflecting disciplined cost management and a 6.7% reduction in SG&A expenses to $681.4M.
Source: Source: 10-K Income Statement
SG&A expenses declined $49.2M (-6.7%) to $681.4M, which helped cushion the impact of lower revenues and supported operating income stability. This suggests management actively rightsized overhead in response to softer top-line performance.
Source: Source: 10-K Income Statement
R&D spending rose 10.5% YoY to $103.4M from $93.6M, indicating LII is accelerating investment in product innovation and technology, likely related to energy-efficient HVAC solutions and next-generation climate control systems.
Source: Source: 10-K Income Statement
2 more insights available
Upgrade to unlockCash and equivalents dropped dramatically from $415.1M to just $34.2M, a 91.8% decline, leaving LII with minimal cash buffer. This was driven by aggressive share buybacks ($482.3M) and elevated investing outflows (-$655.6M). Any unexpected operational disruption or credit market tightening could strain near-term liquidity.
Source: Source: 10-K Balance Sheet & Cash Flow Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $4.45 versus the $4.80 analyst consensus — a -7.2% miss for FY2025.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $5.2B | $5.34B | -2.73% |
Cost of Revenue | $3.46B | $3.56B | -2.90% |
Gross Profit | $1.73B | $1.78B | -2.40% |
Operating Income | $1.04B | $1.04B | +0.11% |
Net Income | $805.8M | $811.1M | -0.65% |
EPS (Basic) | $22.89 | $22.78 | +0.48% |
EPS (Diluted) | $22.79 | $22.66 | +0.57% |
R&D Expense | $103.4M | $93.6M | +10.47% |
SG&A Expense | $681.4M | $730.6M | -6.73% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $4.08B | $3.62B | +12.76% |
Current Assets | $1.9B | $2.03B | -6.33% |
Total Liabilities | $2.92B | $2.66B | +9.81% |
Current Liabilities | $1.19B | $1.31B | -9.25% |
Stockholders' Equity | $1.16B | $962.1M | +20.89% |
Cash & Equivalents | $34.2M | $415.1M | -91.76% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $757.6M | $945.7M | -19.89% |
Investing Cash Flow | $-655.6M | $-174.4M | -275.92% |
Financing Cash Flow | $-465.7M | $-418.6M | -11.25% |
Share Buybacks | $482.3M | $53.6M | +799.81% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 33.4% | 33.3% | +0.11% |
Operating Margin | 20.0% | 19.5% | +0.57% |
Net Margin | 15.5% | — | — |
ROE | 69.3% | — | — |
ROA | 19.7% | — | — |
Current Ratio | $1.597 | — | — |
Debt to Equity | $2.509 | — | — |
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LII reported FY2025 revenue of $5.20B, down 2.7% YoY, but held operating income nearly flat at $1.04B through cost discipline. Diluted EPS actually rose 0.6% to $22.79, aided by significant share buybacks totaling $482.3M.
LII's cash and equivalents fell 91.8% from $415.1M to just $34.2M in FY2025, primarily due to $482.3M in share buybacks and $655.6M in investing outflows — likely reflecting a major acquisition. The company deployed over $1.1B in capital during the year, significantly drawing down its cash reserves.
Yes, LII's diluted EPS grew 0.6% to $22.79 in FY2025 from $22.66 in the prior year, despite a slight decline in net income. The EPS improvement was driven by share count reduction from the company's aggressive $482.3M buyback program.
Based on the financial data, key risks include a dramatically reduced cash position (down to $34.2M), elevated financial leverage with a debt-to-equity ratio of 2.51x, and a 19.9% decline in operating cash flow to $757.6M. Integration risk from what appears to be a significant acquisition is also a concern given the $655.6M in investing outflows.
LII remains operationally strong with a 20% operating margin and $757.6M in operating cash flow, but its financial position has shifted meaningfully with cash near zero and leverage elevated at 2.51x debt-to-equity. The current ratio of 1.60x suggests adequate short-term liquidity, though the depleted cash balance warrants close monitoring going forward.