The following is a summary of the Lennox International Inc. (LII) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Lennox's core revenue increased by 6%, and the adjusted segment margin grew 157 basis points to 15.9%, resulting in a 23% increase in adjusted earnings per share to $3.47.

• Operating cash usage declined from $79 million in the prior year to $23 million.

• Home Comfort Solutions segment reported a revenue decline but marginal EBIT growth, resulting in a 30 basis point margin expansion.

• Building Climate Solutions segment achieved highest Q1 margins driven by growth in both revenue and profit.

Business Progress:

• Lennox is preparing for upcoming regulatory changes related to Low GWP, projecting an over 10% product price increase.

• A new factory in Saltillo, Mexico is set to open in early Q3 under Building Climate Solutions segment.

• Lennox is evolving into a tech-enabled distributor, with nearly half of all residential sales coming from their digital platform.

• Lennox aims to reinforce its distribution network as part of a multi-year effort; shows early signs of success through high customer fulfillment rate and net promoter score.

• Ongoing investments in personnel and technology to boost the network are reflected in Q1 numbers.

• Lennox anticipates growth in commercial volume from new factory investments, pricing excellence, and market share gain from refrigerant changes.

• Increase in production costs expected due to line shutdowns for transitioning from product 410A to 454B.

• Lennox plans to offset cost increase of raw material through pricing strategies to stay ahead of inflation.

• Despite demand surge, maximizing production capacity remains a priority. The company predicts volume growth in Q2, maintaining or exceeding market growth rates.

More details: Lennox International IR

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