Lennox, Trane report Q4 earnings, offer peek into 2024

Lennox and Trane reported earnings last week and provided some color on what they expect in 2024. Here’s what to know, in bullets:

Lennox

• Revenue grew 6% YoY to $1.2 billion; its market cap sits at ~$15 billion

• Residential revenue grew 1%, but unit sales volumes declined by 5%

• Per Lennox’s CFO, “The [residential] segment benefited from a favorable mix of higher efficiency products and effective pricing execution”

• He also noted, “Although unit sales volumes for the segment declined by 5%, our direct-to-contractor sales volumes remained stable… Unit sales volumes through independent distribution channels declined more than 20% driven by continued industry destocking”

• When asked about a “market participant” (Johnson Controls) selling some assets, CEO Alok Maskara said they’re confident in their stand-alone strategy, but would “like to participate” if there’s a consolidation opportunity

• Residential sales volumes are expected to be “flat to down” in 2024; price increases will hover around 10-15% over the next two years, mostly showing up in 2025

Trane

• Revenue was up 9% YoY to $4.4 billion; its market cap is ~$60 billion

• Like Lennox, Trane faced residential volume declines and expects revenue to be flat this year

• “We don't have a lot baked into 2024 on the conversion to 454B. If we think that does have an impact, it's certainly second half of the year, maybe fourth quarter impact… But it's in the ballpark of what others have said around pricing [10-15%],” said CFO Chris Kuehn when asked about price increases

💭 Our thought bubble: Considering the somewhat bleak residential outlook, have you, as a contractor, noticed a shifting preference for repairs over replacements?