Carrier, Lennox report Q3 earnings

Carrier and Lennox reported earnings last week, and based on comments made during earnings calls, the companies see similar paths ahead:

Carrier 

• $5.7 billion in revenue, up 5% year-over-year

  • $4 billion (70%) was HVAC 

• HVAC sales increased 7% year-over-year

  • Residential is down low-single-digits

  • Light Commercial is up ~30%

• Residential and Light Commercial HVAC orders are down 15% year-over-year

Of note: On their earnings call, CEO David Gitlin reiterated his previous stance on the refrigerant transition: “What we said on pricing for R-454B stands. We said it would be up 15-20% over two years… We’re going to increase prices in residential.”

He emphasized that the reasons for the outlook are the added costs associated with new systems, including leak detection sensors and new control boards.

• 👉️ See full earnings presentation here.

Lennox

• $1.3 billion in Core Revenue, up 10% year-over-year

  • $896 million (69%) was Residential

• $251 million in Adjusted Segment Profit (incl. Residential and Commercial), up 33% year-over-year 

Like Carrier, Lennox also expects future price benefits from the refrigerant transition. CEO Alok Maskara said, “So we still expect refrigerant prices to go up. And all indications based on conversations with suppliers is that it will. So that will force everybody to do price increases, including us.”

• 👉️ See full earnings presentation here.

To watch: Both CEOs were asked if they’re seeing customers “trade down” — preferring repairs over replacements — and both said no. Maskara noted, “We have read the same things. We have not heard that or seen that from our channel or our dealer base yet, but we're going to keep a close eye on that.”

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