Lennox posts 32% drop in residential unit volume

Lennox on Wednesday kicked off the HVAC industry’s fourth-quarter 2025 earnings season.

What’s happening: The company’s residential business, Home Comfort Solutions, saw a 21 percent year-over-year revenue decline during the quarter — and a 32 percent drop in unit volume. (That follows a similar decline in Q3.)

The big picture: Lennox attributed the trend to continued distributor destocking, softness in new construction, and broader macroeconomic uncertainty, which it says has led to an increase in deferred system replacements.

• What they’re saying: November and December were “worse than where October was trending,” CEO Alok Maskara said on the company’s earnings call. “I think the surprise for us was more on the residential new construction side, which I think performed worse than we expected.” 

What we’re watching: The company anticipates destocking — distributors pausing new orders to clear existing inventory, a drag on industrywide shipment volumes — to be complete by the end of Q2, and housing activity to improve this year due to lower mortgage rates. 

• Meanwhile, “Our assumption is that the repair versus replace activity is stabilized going forward,” Maskara said, adding that while consumer confidence remains choppy, “the confidence of the dealer has come back, and people are now looking at 2026 as a fresh start with R-454B.” 
• Lennox’s full-year 2026 guidance reflects “stabilizing end markets [and] normalized channel inventories,” CFO Michael Quenzer said. The company plans to share an updated outlook at its investor day on March 4.

Of note: “We believe the HVAC market is finding a bottom,” investment bank William Blair wrote in a research note. “To be fair, 2025 was one of the most challenging HVAC markets in over a decade.”