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What changed in Lennox International's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Lennox International's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+214 added−206 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-11)

Top changes in Lennox International's 2025 10-K

214 paragraphs added · 206 removed · 175 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

43 edited+6 added−8 removed55 unchanged
Biggest changeBrown was appointed Executive Vice President, Chief Legal Officer, and Secretary effective January 1, 2025 . Previously, she served as LII’s Vice President, Deputy General Counsel, and Assistant Secretary. During her tenure at Lennox, she has been responsible for a broad range of legal functions, including securities, corporate governance, real estate, and the 7 refrigeration and residential businesses.
Biggest changeDuring her tenure at Lennox, she has been responsible for a broad range of legal functions, including securities, corporate governance, real estate, and the refrigeration and residential businesses. Prior to starting at Lennox in 2012, she practiced commercial litigation at Jones Day, a multinational law firm, for almost 13 years.
Research and Development and Technology Research and development is a key pillar of our growth strategy.
Research, Development and Technology Research and development is a key pillar of our growth strategy.
We are committed to sustaining resilient margins through pricing excellence, enhanced productivity from higher volumes, material cost reductions, and a favorable mix influenced by regulatory transitions. Together, these initiatives fortify our financial foundation and long-term competitiveness. Execution Management . We will leverage the Lennox Unified Management System to streamline our operations and set clear priorities.
Resilient Profit Margins . We are committed to sustaining resilient margins through pricing excellence, enhanced productivity from higher volumes, material cost reductions, and a favorable mix influenced by regulatory transitions. Together, these initiatives fortify our financial foundation and long-term competitiveness. Execution Management . We will leverage the Lennox Unified Management System to streamline our operations and set clear priorities.
Career Journey allows employees to have more meaningful career development conversations with their manager. In addition to training and development programs, we regularly conduct succession planning reviews and have robust performance review and goal setting processes for all employees. We believe this helps employees meet expectations throughout the year while continuing development of their long-term careers at Lennox.
Career Journey allows employees to have more meaningful career development 5 conversations with their manager. In addition to training and development programs, we regularly conduct succession planning reviews and have robust performance review and goal setting processes for all employees. We believe this helps employees meet expectations throughout the year while continuing development of their long-term careers at Lennox.
Our European products consisted of small package units, rooftop units, chillers, air handlers and fan coils that served medium-rise commercial buildings, shopping malls, other retail and entertainment buildings, institutional applications 2 and other field-engineered applications. We manufactured heating and cooling products in several locations in Europe and marketed these products through both direct and indirect distribution channels.
Our European products consisted of small package units, rooftop units, chillers, air handlers and fan coils that served medium-rise commercial buildings, shopping malls, other retail and entertainment buildings, institutional applications and other field-engineered applications. We manufactured heating and cooling products in several locations in Europe and marketed these products through both direct and indirect distribution channels.
We operate an engineering and technology organization that focuses on new technology invention, product development, product quality improvements and process enhancements, including our development of next-generation control systems as well as heating and cooling products that include some of the most efficient products in their respective categories. We leverage intellectual property and innovative designs across our businesses.
We operate an engineering and technology organization that focuses on new technology invention, product development, product quality improvements and process enhancements, including our development of next-generation control systems as well as heating, cooling and refrigeration products that include some of the most efficient products in their respective categories. We leverage intellectual property and innovative designs across our businesses.
We regularly conduct anonymous surveys to seek feedback from our employees on a variety of subjects, including safety, communications, inclusion and belonging, management support to succeed within our company, and career growth. 5 Despite these efforts, we have experienced, and could continue to experience, higher employee turnover, particularly in our manufacturing and distribution locations.
We regularly conduct anonymous surveys to seek feedback from our employees on a variety of subjects, including safety, communications, inclusion and belonging, management support to succeed within our company, and career growth. Despite these efforts, we have experienced, and could continue to experience, higher employee turnover, particularly in our manufacturing and distribution locations.
Joe Nassab has been Executive Vice President & President of our Building Climate Solutions business since 2022. He joined LII in 2010 as Vice President and General Manager of Allied Air. Before joining LII, Mr. Nassab worked for 20 years at General Electric Company in a variety of general management, product management, and marketing leadership roles. Mr.
Joe Nassab has been Executive Vice President & President of our Building Climate Solutions business since May 2022. He joined LII in 2010 as Vice President and General Manager of Allied Air. Before joining LII, Mr. Nassab worked for 20 years at General Electric Company in a variety of general management, product management, and marketing leadership roles. Mr.
The goal of the strategic sourcing group is to develop global 3 strategies for a given component group that focuses on developing long-term relationships that provide significant value to our businesses. Our strategic sourcing group is focused on selecting partners that offer a competitive total cost, industry leading quality, and consistent on time delivery.
The goal of the strategic sourcing group is to develop global strategies for a given component group that focuses on developing long-term relationships that provide significant value to our businesses. Our strategic sourcing group is focused on selecting partners that offer a competitive total cost, industry leading quality, and consistent on time delivery.
We are an active participant in the ongoing international and domestic dialogue on this subject and are well positioned to react in a timely manner to changes in the regulatory landscape. In 2020, in response to a global agreement to reduce greenhouse gasses, the bipartisan American Innovation and Manufacturing Act gave the U.S.
We are an active participant in the ongoing international and domestic dialogue on this subject and believe we are well positioned to react in a timely manner to changes in the regulatory landscape. In 2020, in response to a global agreement to reduce greenhouse gasses, the bipartisan American Innovation and Manufacturing Act gave the U.S.
All HVACR products and certain components of such products are potentially subject to these types of requirements. We are not uniquely affected as compared to other manufacturers. We actively monitor the development and evolution of such requirements and believe we are well positioned to comply with such directives in the required time frames.
All HVACR products and certain components of such products are potentially subject to these types of requirements. We are not uniquely affected as compared to other manufacturers. We actively monitor the development and evolution of such requirements and believe we are 6 well positioned to comply with such directives in the required time frames.
We own or license several trademarks and service marks we consider important in the marketing of our products and services, and we protect our marks through national registrations and common law rights. Competition Substantially all markets in which we participate are competitive.
We own or license several trademarks and service marks we consider important in the marketing of our products and services, and we protect our marks through national registrations and common law rights. 4 Competition Substantially all markets in which we participate are competitive.
Prior to 2014 he had served as Director, Finance for the Company’s Lennox Stores business and Director of the Company’s Financial Shared Services function. Prior to joining Lennox, he worked for Ernst & Young. He holds a bachelor’s degree in accounting from Texas A&M University. He is also a Certified Public Accountant.
Prior to 2014 he had served as Director, Finance for the Company’s Lennox Stores business and Director of the Company’s Financial Shared Services function. Prior to joining Lennox, he worked for Ernst & Young. He holds a bachelor’s degree in accounting from Texas A&M University. He is also a Certified Public Accountant. Sarah R.
Environmental Protection Agency (“EPA”) authority to regulate HFCs and begin the phase down of refrigerants with a higher global warming potential (“GWP”). Transition to refrigerants with a GWP of 700 or less for most commercial and residential HVAC products was effective January 1, 2025. Remediation Activity .
Environmental Protection Agency (“EPA”) authority to regulate HFCs and begin the phase down of refrigerants with a higher global warming potential (“GWP”). Transition to refrigerants with a GWP of 700 or less for most commercial and residential HVAC products became effective January 1, 2025. Remediation Activity .
The number of hourly workers varies in order to match our labor needs during periods of fluctuating demand. Approximately 4,500 of our employees, including international locations, are represented by unions. We believe we have good relationships with our employees and with the unions representing them. On November 1, 2021, our Marshalltown, Iowa-based union ratified a five-year labor agreement.
The number of hourly workers varies in order to match our labor needs during periods of fluctuating demand. Approximately 3,400 of our employees, including international locations, are represented by unions. We believe we have good relationships with our employees and with the unions representing them. On November 1, 2021, our Marshalltown, Iowa-based union ratified a five-year labor agreement.
In October 2023, we completed the acquisition of AES Industries, Inc. and AES Mechanical Service Group, Inc. (collectively, “AES”) to the Building Climate Solutions segment. AES is a company dedicated to service and sustainability in the light commercial markets across North America.
In October 2023, we completed the acquisition of AES Industries, Inc. and AES Mechanical Service Group, Inc. (collectively, “AES”), which is included in our Building Climate Solutions segment. AES is a company dedicated to service and sustainability in the light commercial markets across North America.
We believe the success of our products is attributable to their efficiency, impact to the environment, design flexibility, total cost of ownership, ease of service, and advanced control technology. National Account Services . National Account Service (“NAS”) provides installation, service and preventive maintenance for commercial HVAC national account customers in the United States and Canada. AES .
We believe the success of our products is attributable to their efficiency, impact to the environment, design flexibility, total cost of ownership, ease of service, and advanced control technology. National Account Services . National Account Services (“NAS”) provides installation, service and preventive maintenance for commercial HVAC national account customers in the U.S. and Canada. AES .
He had previously served as Vice President, Business Analysis and Planning for the Company since 2016. He also had served as Vice President, Finance and Controller and Director of Finance for the Company’s North America Commercial Business from 2015 to 2016 and Director, Financial Planning and Analysis for the Company’s Residential Business Unit from 2014 to 2015.
He also had served as Vice President, Finance and Controller and Director of Finance for the Company’s North America Commercial Business from 2015 to 2016 and Director, Financial Planning and Analysis for the Company’s Residential Business Unit from 2014 to 2015.
(Rheem, Ruud); Johnson Controls, Inc. (York); Daikin Industries, Ltd. (Goodman, McQuay); and AAON, Inc. • Refrigeration Products - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products Group)); Emerson Electric Co. (Copeland); Carrier Global Corporation (Carrier); GEA Group (Kuba, Searle, Goedhart); Alfa Laval; Guntner GmbH; Kelvion - Profroid (Carrier); Panasonic Corp. (Sanyo); Technotrans; and Deltatherm.
(Rheem, Ruud); CSW Industrials, Inc.; Daikin Industries, Ltd. (Goodman, McQuay); and AAON, Inc. • Refrigeration Products - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products Group)); Emerson Electric Co. (Copeland); Carrier Global Corporation (Carrier); GEA Group (Kuba, Searle, Goedhart); Alfa Laval; Guntner GmbH; Kelvion - Profroid (Carrier); Panasonic Corp. (Sanyo); Technotrans; and Deltatherm.
Some facilities are impacted by seasonal production demand, and we manufacture both heating and cooling products in those facilities to balance production and maintain a relatively stable labor force. We may also hire temporary employees to meet changes in demand.
Some facilities are impacted by seasonal production demand, and we manufacture a mix of heating, cooling and refrigeration products in those facilities to balance production and maintain a relatively stable labor force. We may also hire temporary employees to meet changes in demand.
Segment Products & Services Product and Brand Names 2024 Net Sales (in millions) Home Comfort Solutions Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies Lennox, Dave Lennox Signature Collection, Armstrong Air, Ducane, AirEase, Concord, MagicPak, ADP Advanced Distributor Products, Allied, Elite Series, Merit Series, Comfort Sync, Healthy Climate, Healthy Climate Solutions, iComfort, ComfortSense and Lennox Stores $ 3,577.1 Building Climate Solutions Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products, curb, curb adapters, drop box diffusers, HVAC recycling and salvage service, condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks Lennox, Model L, CORE, Enlight, Xion, Energence, Prodigy, Strategos, Raider, Lennox VRF, Lennox National Account Services, Allied Commercial, Elite, AES Industries, AES Mechanical, AES Recycle, Heatcraft Worldwide Refrigeration, Bohn, MAGNA, Larkin, Climate Control, Chandler Refrigeration, IntelliGen and Interlink 1,764.2 Total $ 5,341.3 Products and Services Home Comfort Solutions Heating & Cooling Products .
Segment Products & Services Product and Brand Names 2025 Net Sales (in millions) Home Comfort Solutions Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies Lennox, Dave Lennox Signature Collection, Armstrong Air, Ducane, AirEase, Concord, MagicPak, ADP Advanced Distributor Products, Allied, Supco, LINEBACKER, Elite Series, Merit Series, Comfort Sync, Healthy Climate, Healthy Climate Solutions, iComfort, ComfortSense and Lennox Stores $ 3,343.4 Building Climate Solutions Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products, curb, curb adapters, drop box diffusers, HVAC recycling and salvage service, condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, replacement parts and supplies Lennox, Model L, CORE, Enlight, Xion, Energence, Prodigy, Strategos, Raider, Lennox VRF, Lennox National Account Services, Allied Commercial, Elite, Duro Dyne, Dyna-Tite, DuroZone, AES Industries, AES Mechanical, AES Recycle, Heatcraft Worldwide Refrigeration, Bohn, MAGNA, Larkin, Climate Control, Chandler Refrigeration, IntelliGen and Interlink 1,851.9 Total $ 5,195.3 Products and Services Home Comfort Solutions Heating & Cooling Products .
Employee Health and Safety. As part of our effort to attract and retain a competitive workforce, we are committed to ensuring that every employee returns home safe at the end of each day. Safety is our top priority and our safety programs are succeeding in identifying and reducing risks across our operations. Inclusion and Belonging.
Employee Health and Safety. As part of our effort to attract and retain a competitive workforce, we are committed to ensuring that every employee returns home safe at the end of each day. Safety is our top priority and our safety programs are designed to identify and reduce risks across our operations. Inclusion and Belonging.
(Rheem, Ruud, Weather King, Friedrich, Nortek); Johnson Controls, Inc. (York, Luxaire, Coleman, Champion); Daikin Industries, Ltd. (Daikin, Goodman, Amana, GMC); and Melrose Industries PLC (Maytag, Westinghouse, Frigidaire, Tappan, Philco, Kelvinator, Gibson, Broan, NuTone). 4 Building Climate Solutions • Heating & Cooling Products - Carrier Global Corporation (Carrier, ICP Commercial); Trane Technologies plc (Trane); Paloma Industries, Inc.
(Rheem, Ruud, Weather King, Friedrich, Nortek); The Bosch Group (York, Luxaire, Coleman, Champion); Daikin Industries, Ltd. (Daikin, Goodman, Amana, GMC); and Madison Industries (Maytag, Westinghouse, Frigidaire, Tappan, Philco, Kelvinator, Gibson, Broan, NuTone). Building Climate Solutions • Heating & Cooling Products - Carrier Global Corporation (Carrier, ICP Commercial); Trane Technologies plc (Trane); Paloma Industries, Inc.
We distribute our “Armstrong Air,” “Ducane,” “Air-Ease,” “Concord,” “MagicPak” and “ADP Advanced Distributor Products” brands through the traditional independent distribution process pursuant to which we sell our products to distributors who, in turn, sell the products to installing contractors. We also sell our products through our Lennox Stores.
We distribute our “Armstrong Air,” “Ducane,” “Air-Ease,” “Concord,” “MagicPak,” “ADP Advanced Distributor Products,” “Duro Dyne,” and “Supco” brands through the traditional independent distribution process pursuant to which we sell our products to distributors 3 who, in turn, sell the products to installing contractors. We also sell our products through our Lennox Stores.
Sessa 60 Executive Vice President, Chief Human Resources Officer John D. Torres 66 Executive Vice President Alok Maskara joined Lennox International Inc. as Chief Executive Officer on May 9, 2022. Most recently he served for five years as CEO of Luxfer Holdings PLC, an international industrial company focused on advanced materials. Mr.
Sessa 61 Executive Vice President, Chief Human Resources Officer Alok Maskara joined Lennox International Inc. as Chief Executive Officer in May 2022. Most recently he served for five years as CEO of Luxfer Holdings PLC, an international industrial company focused on advanced materials. Mr.
We operate a network of Lennox Stores across the United States and Canada. These stores provide an easy access solution for contractors and independent dealers to obtain universal service and replacement parts, supplies, convenience items, tools, Lennox equipment and OEM parts.
These stores provide an easy access solution for contractors and independent dealers to obtain universal service and replacement parts, supplies, convenience items, tools, Lennox equipment and OEM parts.
Samsung JV . We own a 49.9% interest in a joint venture with Samsung that distributes Samsung ductless AC and heat pump products in the U.S. and Canada as well as "Lennox powered by Samsung" branded products through Lennox stores and direct-to-dealer network. Results are reported in either Home Comfort Solutions or Building Climate Solutions based on product type.
Ariston is reporting in our Home Comfort Solutions segment. Samsung JV . We own a 49.9% interest in a joint venture with Samsung that distributes Samsung ductless AC and heat pump products in the U.S. and Canada as well as "Lennox powered by Samsung" branded products through Lennox Stores and direct-to-dealer network.
Corporate and Other was excluded from the table below as there were no sales in 2024. Segment financial data for 2024, 2023 and 2022, including financial information about foreign and domestic operations, is included in Note 3 of the Notes to our Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” and is incorporated herein by reference.
Segment financial data for 2025, 2024 and 2023, including financial information about foreign and domestic operations, is included in Note 3 of the Notes to our Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” and is incorporated herein by reference.
Bedard 60 Executive Vice President & President, Home Comfort Solutions Prakash Bedapudi 58 Executive Vice President, Chief Technology Officer Monica M. Brown 52 Executive Vice President, Chief Legal Officer, and Secretary Chris A. Kosel 57 Vice President, Chief Accounting Officer, and Controller Joe Nassab 57 Executive Vice President & President, Building Climate Solutions Daniel M.
Brown 53 Executive Vice President, Chief Legal Officer and Secretary Chris A. Kosel 58 Vice President, Chief Accounting Officer, and Controller Sarah R. Martin 52 Executive Vice President & President, Home Comfort Solutions Joe Nassab 58 Executive Vice President & President, Building Climate Solutions Daniel M.
Corporate and Other Prior to 2024, our Corporate and Other segment included the results of our European operations. We manufactured and sold unitary HVAC products, which ranged from 2 to 70 tons of cooling capacity, and applied systems with up to 200 tons of cooling capacity.
Results are reported in either Home Comfort Solutions or Building Climate Solutions based on product type. Corporate and Other Prior to 2024, Corporate and Other included the results of our European operations. We manufactured and sold unitary HVAC products, which ranged from 2 to 70 tons of cooling capacity, and applied systems with up to 200 tons of cooling capacity.
In 2000, he earned an MBA from the Kellogg School of Management at Northwestern University. Michael Quenzer became Executive Vice President and Chief Financial Officer effective January 1, 2024 . Previously, he served as LII’s Vice President, Financial Planning & Analysis and Investor Relations.
In 2000, he earned an MBA from the Kellogg School of Management at Northwestern University. Michael Quenzer was appointed Executive Vice President and Chief Financial Officer in January 2024 .
Management strives to maintain the right number of employees with the necessary skills to match the expected demand for the products and services we deliver. As of December 31, 2024, we employed approximately 14,200 people. Of these employees, approximately 5,200 were salaried and 9,000 were hourly.
Management strives to maintain the right number of employees with the necessary skills to match the expected demand for the products and services we deliver. As of December 31, 2025, we employed approximately 12,900 people, primarily in the U.S. (approximately 8,500 employees) and Mexico (approximately 3,200 employees). Of these employees, approximately 5,400 were salaried and 7,500 were hourly.
Our two business segments, Home Comfort Solutions and Building Climate Solutions, the key products, services and well-known product and brand names within each segment and net sales in 2024 by segment are shown in the table below. The Corporate and Other segment previously held our European operations, which were successfully divested in the fourth quarter of 2023.
Our two business segments, Home Comfort Solutions and Building Climate Solutions, the key products, services and well-known product and brand names within each segment and net sales in 2025 by segment are shown in the table below.
We believe that by maintaining a broad product line marketed under multiple brand names, we can address different market segments and penetrate multiple distribution channels. 1 The “Lennox” business and brands (“Dave Lennox Signature Collection,” “Elite Series,” “Merit Series,” “iComfort,” “ComfortSense” and “Healthy Climate Solutions”) are sold directly to independent installing dealers, making us one of the largest wholesale distributors of residential heating, ventilation, and air conditioning products in North America.
The “Lennox” business and brands (“Dave Lennox Signature Collection,” “Elite Series,” “Merit Series,” “iComfort,” “ComfortSense” and “Healthy Climate Solutions”) are sold directly to independent installing dealers, making us one of the 1 largest wholesale distributors of residential heating, ventilation, and air conditioning products in North America. We operate a network of Lennox Stores across the U.S. and Canada.
Additionally, we are focused on improving the fulfillment rate of HVAC equipment and driving higher attachment rates for parts and accessories, delivering a seamless and comprehensive solution that enhances customer satisfaction. Resilient Profit Margins .
We are investing in our sales force to expand customer touchpoints, enhancing the overall customer experience through digital innovations and output from our new commercial HVAC factory in Mexico. Additionally, we are focused on improving the fulfillment rate of HVAC equipment and driving higher attachment rates for parts and accessories, delivering a seamless and comprehensive solution that enhances customer satisfaction.
These products are available in a variety of designs and efficiency levels and at a range of price points, and are intended to provide a complete line of home comfort solutions.
These products are available in a variety of designs and efficiency levels and at a range of price points, and are intended to provide a complete line of home comfort solutions. We believe that by maintaining a broad product line marketed under multiple brand names, we can address different market segments and penetrate multiple distribution channels.
He had previously served as Vice President, Global Engineering and Program Management for Trane Inc. Commercial Systems from 2006 through 2008, and as Vice President, Engineering and Technology for Trane’s Residential Systems division from 2003 through 2006. Prior to his career at Trane, Mr.
Commercial Systems from 2006 through 2008, and as Vice President, Engineering and Technology for Trane’s Residential Systems division from 2003 through 2006. Prior to his career at Trane, Mr. Bedapudi served in senior engineering leadership positions for GE Transportation Systems, a division of General Electric Company, and for Cummins Engine Company.
Prior to starting at Lennox in 2012, she practiced commercial litigation at Jones Day, a multinational law firm, for almost 13 years. She received her bachelor’s degree in mathematics from Howard University and has a juris doctor from the University of Texas. Chris A. Kosel was appointed Vice President, Chief Accounting Officer and Controller in May 2017.
She received her bachelor’s degree in mathematics from Howard University and has a juris doctor from the University of Texas. Chris A. Kosel was appointed Vice President, Chief Accounting Officer and Controller in May 2017. He had previously served as Vice President, Business Analysis and Planning for the Company since 2016.
He holds a bachelor of arts in law and society from the State University of New York at Binghamton and a juris doctor from the Hofstra University School of Law. John D. Torres served as Chief Legal Officer and Secretary through December 31, 2024, and plans to retire from LII effective February 28, 2025.
He holds a bachelor of arts in law and society from the State University of New York at Binghamton and a juris doctor from the Hofstra University School of Law.
The information on our web site is not a part of, or incorporated by reference into, this Annual Report on Form 10-K.
The information on our web site is not a part of, or incorporated by reference into, this Annual Report on Form 10-K. The Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Lennox, that file electronically with the Securities and Exchange Commission.
Bedapudi served in senior engineering leadership positions for GE Transportation Systems, a division of General Electric Company, and for Cummins Engine Company. He holds a bachelor of science in mechanical/automotive engineering from Karnataka University, India and a master’s of science in mechanical/aeronautical engineering from the University of Cincinnati. Monica M.
He holds a bachelor of science in mechanical/automotive engineering from Karnataka University, India and a master’s of science in mechanical/aeronautical engineering from the University of Cincinnati. 7 Monica M. Brown was appointed Executive Vice President, Chief Legal Officer and Secretary in January 2025 . Previously, she served as LII’s Vice President, Deputy General Counsel, and Assistant Secretary.
He received his bachelor’s degree in finance from Coastal Carolina University and has an MBA and master’s of science in accounting from the University of Texas at Dallas. Gary S. Bedard was appointed Executive Vice President & President of LII’s Home Comfort Solutions business segment in January 2023.
He holds a bachelor’s degree in finance from Coastal Carolina University and an MBA and master’s degree in accounting from the University of Texas at Dallas. Prakash Bedapudi was appointed Executive Vice President, Chief Technology Officer in July 2008. He had previously served as Vice President, Global Engineering and Program Management for Trane Inc.
The Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Lennox, that file electronically with the Securities and Exchange Commission. 6 Information about our Executive Officers Our executive officers, their present positions and their ages are as follows as of February 2, 2025: Name Age Position Alok Maskara 53 Chief Executive Officer Michael Quenzer 47 Executive Vice President, Chief Financial Officer Gary S.
Information about our Executive Officers Our executive officers, their present positions and their ages are as follows as of February 3, 2026: Name Age Position Alok Maskara 54 Chief Executive Officer Michael Quenzer 48 Executive Vice President, Chief Financial Officer Prakash Bedapudi 59 Executive Vice President, Chief Technology Officer Monica M.
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We are investing in our sales force to expand customer touchpoints, enhancing the overall customer experience through digital innovations and anticipating improved output from our new commercial HVAC factory in Mexico.
Added
Duro Dyne and Supco In October 2025, we completed the acquisition of the Duro Dyne Buyer, Inc. (“Duro Dyne”) and Sealed Unit Parts Buyer, Inc. (“Supco”) businesses and brands (“Duro Dyne,” “Dyna-Tite,” “DuroZone,” “Supco,” and “LINEBACKER”).
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Prior to that, he was the chief financial officer for LII’s Commercial segment from November 2016 until January 2023. Mr. Quenzer has served in various capacities of increasing responsibility within LII’s Finance department since 2004.
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Duro Dyne and Supco manufacture and sell a robust portfolio of HVAC parts and supplies that complement our existing residential and commercial offerings, such as air distribution accessories, switches and controls, and other engineered components and accessories with HVACR applications.
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Most recently, he served as Executive Vice President & President of LII's Worldwide Refrigeration business, a position he held since October 2017. Prior to that, Mr. Bedard served as Vice President and General Manager, LII Residential Heating & Cooling for 10 years.
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Duro Dyne is reported in our Business Climate Solutions segment, and Supco is reported in our Home Comfort Solutions segment. 2 Joint Ventures Ariston JV . We own a 49.9% interest in a joint venture with Ariston Group that will manufacture and distribute water heaters through Lennox Stores and our direct-to-dealer network.
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He has also held the positions of Vice President, Residential Sales, Vice President, Residential Product Management, Director of Brand and Product Management, and District Manager for Lennox Industries’ New York District. Before joining LII in 1998, Mr.
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He joined Lennox in 2004 and has held key leadership roles including Vice President, Investor Relations and Financial Planning and Analysis and Vice President of Finance for the Lennox Building Climate Solutions (Commercial) business segment. Before joining Lennox, he worked at Morningstar Inc.
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Bedard spent eight years at York International in product management and sales leadership roles for commercial applied and unitary systems as well as residential systems. Mr. Bedard has a bachelor’s degree in engineering management from the United States Military Academy at West Point. Mr.
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Martin was appointed Executive Vice President & President of LII’s Home Comfort Solutions business segment in April 2025. Previously, she served 13 years in various roles at Honeywell International Inc., including as president of Honeywell Sensing & Safety Technologies and Honeywell Advanced Sensing Technologies.
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Bedard serves on the Board of Directors of the AHRI, the trade association for the HVACR and water heating equipment industries. In January 2025, Lennox announced Mr. Bedard’s decision to retire from Lennox. Prakash Bedapudi was appointed Executive Vice President, Chief Technology Officer in July 2008.
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Prior to Honeywell, Martin held various commercial and operational leadership roles at CTS Corporation, a global electronics manufacturing service provider. She holds an MBA from the Edinburgh Business School at Heriot Watt University and her master’s of art in modern languages and business from Heriot Watt University.
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He was appointed Executive Vice President, Chief Legal Officer, and Secretary in December 2008. He previously served as Senior Vice President, General Counsel, and Secretary for Freescale Semiconductor, a semiconductor manufacturer that was originally part of Motorola.
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He joined Motorola’s legal department as Senior Counsel in 1996 and was appointed Vice President, General Counsel of the company’s semiconductor business in 2001. Prior to joining Motorola, Mr. Torres served 13 years in private practice in Phoenix, specializing in commercial law. He holds a bachelor of arts from Notre Dame and a juris doctor from the University of Chicago.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+14 added−3 removed54 unchanged
Biggest changeAlternatively, if we increase our prices in response to increases in the prices or quantities of raw materials or components or if we encounter significant supply interruptions, our competitive position could be adversely affected, which may result in depressed sales and profitability. 10 Additionally, the effects of extreme weather events and natural disasters, long-term changes in temperature levels, water availability, increased cost for decarbonizing process heating, supply costs impacted by increasing energy costs, or energy costs impacted by carbon prices or offsets, as a result of climate change or other factors, may exacerbate supply chain constraints and disruption.
Biggest changeAdditionally, the effects of extreme weather events and natural disasters, long-term changes in temperature levels, water availability, increased cost for decarbonizing process heating, supply costs impacted by increasing energy costs, or energy costs impacted by carbon prices or offsets, as a result of climate change or other factors, may exacerbate supply chain constraints and disruption.
Trade Policy, Including the Imposition of Tariffs and the Resulting Consequences, Could Have an Adverse Effect on Our Results of Operations. The U.S. government has made changes in U.S. trade policy over the past several years.
Changes in U.S. Trade Policy, Including the Imposition of Tariffs and the Resulting Consequences, Could Have an Adverse Effect on Our Results of Operations. The U.S. government has made changes in U.S. trade policy over the past several years.
Even if we believe that intellectual property claims are without merit, they can be time consuming, require significant resources and be costly to defend. Claims of intellectual property infringement also might require us to redesign affected products, pay costly damage awards, or face injunctions prohibiting us from manufacturing, importing, marketing, or selling certain of our products.
Even if we believe that intellectual property claims are without merit, they can be time consuming, require significant resources and be costly to defend. Claims of intellectual property infringement also might require us to redesign affected products, pay costly damage awards, or face injunctions prohibiting us from manufacturing, importing, marketing, or 9 selling certain of our products.
If a supplier is unable or unwilling to meet our supply requirements, including suffering any disruptions at its facilities or in its supply chain, we could experience supply interruptions or cost increases, either of which could have an adverse effect on our results of operations.
If a supplier is unable or unwilling to meet 10 our supply requirements, including suffering any disruptions at its facilities or in its supply chain, we could experience supply interruptions or cost increases, either of which could have an adverse effect on our results of operations.
The tightening, unavailability or increased cost of credit adversely affects the ability of our customers to obtain financing for significant purchases and operations, resulting in a decrease in sales of our products and services and may impact the ability of our customers to make payments to us.
The tightening, unavailability or increased cost of credit adversely affects the ability of our customers to obtain financing for significant purchases and operations, resulting in a decrease in sales of our products and services and may impact the ability of 13 our customers to make payments to us.
If we are unable to satisfy the increasing ESG-related expectations of certain stakeholders, particularly as it relates to climate change, we may suffer reputational harm, which may cause our stock price to decrease or cause certain investors and financial institutions not to purchase our securities or provide us with capital or credit on favorable terms, which may cause our cost of capital to increase.
If we are unable to satisfy the evolving ESG-related expectations of certain stakeholders, particularly as it relates to climate change, we may suffer reputational harm, which may cause our stock price to decrease or cause certain investors and financial institutions not to purchase our securities or provide us with capital or credit on favorable terms, which may cause our cost of capital to increase.
We are regularly subject to audits by tax authorities, and such audits could result in changes in our tax reserves for our historic or future tax positions and transfer pricing policies, which could significantly adversely impact our effective tax rates and financial results. For more information, see Note 12 in the Notes to our Consolidated Financial Statements. Changes in U.S.
We are regularly subject to audits by tax authorities, and such audits could result in 12 changes in our tax reserves for our historic or future tax positions and transfer pricing policies, which could significantly adversely impact our effective tax rates and financial results. For more information, see Note 12 in the Notes to our Consolidated Financial Statements.
We are engaged in various manufacturing rationalization actions designed to achieve our strategic priorities of manufacturing, sourcing, and distribution excellence and of lowering our cost structure. For example, we are continuing to reorganize our North American distribution network in order to better serve our customers’ needs by deploying parts and equipment inventory closer to them.
To remain competitive, we are engaged in various manufacturing rationalization actions designed to achieve our strategic priorities of manufacturing, sourcing, and distribution excellence and of lowering our cost structure. For example, we are continuing to reorganize our North American distribution network in order to better serve our customers’ needs by deploying parts and equipment inventory closer to them.
In addition, our reputation and customer relationships may be damaged as a result of practices that could be associated with ESG, including as it relates to climate-related disclosures. A failure or perceived failure by us in this regard may damage our reputation and adversely affect our results of operations and financial position.
In addition, our reputation and customer relationships may be damaged as a result of practices that could be associated with ESG, including as it relates to climate-related disclosures. A failure or perceived failure by us in this regard may damage our reputation and adversely affect our results of operations and financial condition.
The use of artificial intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
The use of AI can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
We cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.
We cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, tariffs, taxes, non-tariff barriers, or other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.
Warranty claims are not covered by our product liability insurance and certain product liability claims may also not be covered by our product liability insurance. For certain limited products, we provided lifetime warranties. Warranties of such extended lengths pose a risk to us as actual future costs may exceed our current estimates of those costs.
Warranty claims are not covered by our product liability insurance and certain product liability claims may also not be covered by our product liability insurance. For certain limited products, we used to provide lifetime warranties. Warranties of such extended lengths pose a risk to us as actual future costs may exceed our current estimates of those costs.
The Company’s business may be materially and adversely impacted by changes in U.S. or global economic conditions, including recessions, economic downturns, inflation, deflation, interest rates, consumer spending rates, energy availability and commodity prices, and the effects of governmental initiatives to manage economic conditions.
Our business may be materially and adversely impacted by changes in U.S. or global economic conditions, including recessions, economic downturns, inflation, deflation, fluctuations in interest rates, consumer spending rates, energy availability and commodity prices, and the effects of governmental initiatives to manage economic conditions.
Price Volatility for Commodities and Components We Purchase or Significant Supply Interruptions Could Have an Adverse Effect on Our Cash Flow or Results of Operations. We depend on raw materials, such as steel, copper and aluminum, and components purchased from third parties to manufacture our products. Some of these third-party suppliers are located outside of the United States.
Price Volatility for Commodities and Components We Purchase or Significant Supply Interruptions Could Have an Adverse Effect on Our Cash Flow or Results of Operations. We depend on raw materials, such as steel, copper and aluminum, and components purchased from third parties to manufacture our products. Some of these third-party suppliers are located outside of the U.S.
Any breach of data security could result in a disruption of our services or improper disclosure of personal data or confidential information, which could harm our reputation, require us to expend resources to remedy such a security breach or defend against further attacks or subject us to liability under laws that protect personal data, resulting in increased operating costs or loss of revenue.
Any breach of data security 14 could result in a disruption of our services, improper disclosure of personal data or confidential information, or online fraud or cybertheft, which could harm our reputation, require us to expend resources to remedy such a security breach or defend against further attacks, or subject us to liability under laws that protect personal data, resulting in increased operating costs or loss of revenue.
If any of the following risks or those disclosed in our other SEC filings occurs, our business, financial condition or results of operations could be materially adversely affected. Business and Operational Risks We May Not be Able to Compete Favorably in the Competitive HVACR Business. Substantially all of the markets in which we operate are competitive.
If any of the following risks or those disclosed in our other Securities and Exchange Commission filings occurs, our business, financial condition or results of operations could be materially adversely affected. Business and Operational Risks We May Not be Able to Compete Favorably in the Competitive HVACR Business. Substantially all of the markets in which we operate are competitive.
Our intellectual property rights could be challenged, invalidated, infringed, circumvented, or be insufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States.
Our intellectual property rights could be challenged, invalidated, infringed, circumvented, or be insufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the U.S.
Artificial Intelligence Technologies Could Present Business, Compliance, and Reputational Risks. Recent technological advances in artificial intelligence (“AI”) and machine-learning technology both present opportunities and pose risks to us. If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer.
Recent technological advances in artificial intelligence (“AI”) and machine-learning technology both present opportunities and pose risks to us. If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer.
The introduction of these technologies, particularly generative AI, into internal processes, customer engagements, and/or new and existing product offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.
We have begun to incorporate AI capabilities into our operations and the introduction of these technologies, particularly generative AI, into internal processes, customer engagements, and/or new and existing product offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.
Our product warranty liability was $158.4 million as of December 31, 2024. We maintain strict quality controls and procedures. However, we cannot be certain that these controls and procedures will reveal defects in our products or their component parts or raw materials, which may not become apparent until after the products have been placed in use in the market.
Our product warranty liability was $167.2 million as of December 31, 2025. We maintain strict quality controls and procedures. However, we cannot be certain that these controls and procedures will reveal defects in our products or their component parts or raw materials, which may not become apparent until after the products have been placed in use in the market.
Changes in Tax Laws and Interpretations Could Adversely Impact our Effective Tax Rates and Financial Results. We are subject to income taxes in the United States as well as certain foreign jurisdictions.
Changes in Tax Laws and Interpretations Could Adversely Impact our Effective Tax Rates and Financial Results. We are subject to income taxes in the U.S. as well as certain foreign jurisdictions.
The success of these transactions will depend, in part, on our ability to timely identify those relationships, negotiate and close the transactions and then integrate, manage, and operate those businesses profitably.
The success of this and any other transactions will depend, in part, on our ability to timely identify those relationships, negotiate and close the transactions and then integrate, manage, and operate those businesses profitably.
The extent to which any extraordinary event impacts us depends on numerous factors and future developments that we are not able to predict, including the duration and scope of the event; governmental, business, and individuals’ actions in response to the event; our ability to maintain sufficient qualified personnel; global supply chain disruptions caused by the event; and the impact on economic activity, including financial market instability. 13 Our International Operations Subject Us to Risks Related to Foreign Currencies Fluctuations and Other Risks.
The extent to which any extraordinary event impacts us depends on numerous factors and future developments that we are not able to predict, including the duration and scope of the event; governmental, business, and individuals’ actions in response to the event; our ability to maintain sufficient qualified personnel; global supply chain disruptions caused by the event; and the impact on economic activity, including financial market instability.
In addition to the currency exchange risks inherent in operating in foreign countries, our international sales and operations are also sensitive to changes in foreign national priorities, including government budgets, as well as to geopolitical and economic instability. Net sales outside of the United States comprised approximately 6% of our total net sales in 2024.
In addition to the currency exchange risks inherent in operating in foreign countries, our international sales and operations are also sensitive to changes in foreign national priorities, including government budgets, as well as to geopolitical and economic instability. Net sales outside of the U.S. comprised approximately 7% of our total net sales in 2025.
Conflicts, wars, natural disasters (the nature and severity of which may be impacted by climate change), public health crises, or terrorist acts may cause significant damage or disruption to our operations, employees, facilities, systems, suppliers, supply chain, distributors, resellers, or customers in the United States and internationally for extended periods of time and could also affect demand for our products.
External disruptions, including, but not limited to, conflicts, wars, natural disasters (the nature and severity of which may be impacted by climate change), public health crises, terrorist acts, or other civil or political disruptions, may cause significant damage or disruption to our operations, employees, facilities, systems, suppliers, supply chain, distributors, resellers, or customers in the U.S. and internationally for extended periods of time and could also affect demand for our products.
We May Not be Able to Successfully Integrate and Operate Businesses that We May Acquire nor Realize the Anticipated Benefits of Strategic Relationships We May Form. From time to time, we may seek to complement or expand our businesses through strategic acquisitions, joint ventures, and strategic relationships.
We May Not be Able to Successfully Integrate and Operate Businesses that We May Acquire nor Realize the Anticipated Benefits of Strategic Relationships We May Form. From time to time, we may seek to complement or expand our businesses through strategic acquisitions, joint ventures, and strategic relationships. For example, in 2025, we completed the acquisition of Duro Dyne and Supco.
In December 2022, the European Council attained a consensus on Pillar Two to implement a global minimum corporate tax rate of 15%, and many European Union and G20 countries have specified their plan to adhere to the OECD guidelines starting in 2024. Our effective tax rate for 2024 incorporates our estimated Pillar Two tax liability.
In December 2022, the European Council attained a consensus on Pillar Two to implement a global minimum corporate tax rate of 15%, and many European Union and G20 countries began incorporating and implementing OECD guidelines in 2024. Our effective tax rate for 2025 incorporates our estimated Pillar Two tax liability.
Negative media reports about us or our businesses, whether accurate or inaccurate, could damage our reputation and relationships with our customers and suppliers, cause customers and suppliers to terminate their relationship with us, or impair our ability to effectively compete, which could adversely affect our business, financial condition, results of operations and cash flows. 8 If We Cannot Successfully Develop and Market New Products or Execute Our Business Strategy, Our Results of Operations Could be Adversely Impacted.
Negative media reports about us or our businesses, 8 whether accurate or inaccurate, could damage our reputation and relationships with our customers and suppliers, cause customers and suppliers to terminate their relationship with us, or impair our ability to effectively compete, which could adversely affect our business, financial condition, results of operations and cash flows.
Our inability or delay in developing or marketing products that match customer demand while also meeting applicable LRPs may negatively impact our results. There continues to be a lack of consistent climate legislation and regulations, which creates economic and regulatory uncertainty. Such regulatory uncertainty could adversely impact the demand for energy efficient buildings and could increase costs of compliance.
Our inability or delay in developing or marketing products that match customer demand while also meeting applicable LRPs may negatively impact our financial condition and results of operations. There continues to be a lack of consistent climate legislation and regulations, which creates economic and regulatory uncertainty.
Our inability to meet our customers’ demand for our products could have a material adverse effect on our business, financial condition, and results of operations. Conversely, reduced demand for our products and services could unfavorably impact our absorption of fixed costs. Any of these results could materially and adversely affect our business, financial condition, results of operations and cash flows.
Conversely, reduced demand for our products and services could unfavorably impact our absorption of fixed costs. Any of these results could materially and adversely affect our business, financial condition, results of operations and cash flows.
We earn revenue, pay expenses, own assets, and incur liabilities in countries using currencies other than the U.S. dollar including the Canadian dollar, the Mexican peso, and the Euro.
Our International Operations Subject Us to Risks Related to Foreign Currencies Fluctuations and Other Risks. We earn revenue, pay expenses, own assets, and incur liabilities in countries using currencies other than the U.S. dollar including the Canadian dollar, the Mexican peso, and the Euro.
Also, the establishment of manufacturing operations in low-cost countries could provide cost advantages to existing and emerging competitors. Some of our competitors may have greater financial resources than we have, allowing them to invest in more extensive research and development and/or marketing activity and making them better able to withstand adverse HVACR market conditions.
Some of our competitors may have greater financial resources than we have, allowing them to invest in more extensive research and development and/or marketing activity and making them better able to withstand adverse HVACR market conditions.
If we are unable to successfully do those things, we may not realize the anticipated benefits associated with such transactions, which could adversely affect our business and results of operations.
If we are unable to successfully complete these actions, we may not realize the anticipated benefits associated with such transactions, which could adversely affect our business and results of operations. Item 1B. Unresolved Staff Comments None.
These changes include renegotiating and terminating certain existing bilateral or multi-lateral trade agreements, such as the U.S.-Mexico-Canada Agreement, and initiating tariffs on certain foreign goods from a variety of countries and region s.
These changes include renegotiating and terminating certain existing bilateral or multi-lateral trade agreements, such as the U.S.-Mexico-Canada Agreement (“USMCA”), and initiating tariffs on certain foreign goods from a variety of countries. In addition, the U.S. presidential administration has imposed increased tariffs on imports from Canada and Mexico for goods not covered by the USMCA.
Attempts have been made to attack our information systems, but we do not believe that material harm has resulted. While we have implemented controls and taken other preventative actions to strengthen these systems against future attacks, we can give no assurance that these controls and preventative actions will be effective.
While we have implemented controls and taken other preventative actions to strengthen these systems against future attacks, we can give no assurance that these controls and preventative actions will be effective.
If we are unable to continue to timely and successfully develop and market new products, achieve technological advances, or extend our business model and technological advances into international markets, our business and results of operations could be adversely impacted.
If we are unable to continue to timely and successfully develop and market new products, achieve technological advances, or extend our business model and technological advances into new markets, our business and results of operations could be adversely impacted. Lennox operates a direct-to-dealer network, meaning we manufacture products and sell them directly to select, independent home service companies.
The continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, results of operations, and financial condition. 12 Our Reputation, Ability to Do Business, and Results of Operations Could be Impaired By Improper Conduct By Any of Our Employees, Agents, or Business Partners.
The continuing adoption or expansion of trade restrictions, the occurrence of trade tensions, or other governmental actions related to tariffs or trade agreements or trade policies, may negatively affect demand for our products, costs, customers, suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, results of operations, and financial condition.
Other factors that affect competition in the HVACR market include the development and application of new technologies, reputation of our company and brands, global supply chain constraints, and new product introductions. We may not be able to adapt to market changes as quickly or effectively as our current and future competitors.
Other factors that affect competition in the HVACR market include the development and application of new technologies, reputation of our company and brands, global supply chain constraints, and new product introductions.
In addition, as of December 31, 2024, approximately 32% of our core workforce locations were unionized. Our Marshalltown, Iowa-based union ratified a five-year labor agreement on 9 November 1, 2021; however, the results of future negotiations with unions are uncertain. If we are unsuccessful in meeting these challenges, our results of operations could be materially impacted.
Our Marshalltown, Iowa-based union ratified a five-year labor agreement on November 1, 2021; however, the results of future negotiations with unions are uncertain. If we are unsuccessful in meeting these challenges, our results of operations could be materially impacted. Artificial Intelligence Technologies Could Present Business, Compliance, and Reputational Risks.
We are committed to attracting, motivating, developing, and retaining our employees to remain an employer of choice. Despite our efforts, we have experienced, and could continue to experience, employee turnover, particularly in our manufacturing and distribution locations. A number of factors may adversely affect the labor force available or increase labor costs, including high employment levels and related competition.
We are committed to attracting, motivating, developing, and retaining our employees to remain an employer of choice. Despite our efforts, we have experienced, and could continue to experience, employee turnover, particularly in our manufacturing and distribution locations.
We cannot predict the likelihood, duration, or severity of any future disruption in financial markets or any adverse economic conditions in the U.S. and other countries. Extraordinary Events Beyond our Control, Including Conflicts, Wars, Natural Disasters, Public Health Crises, or Terrorist Acts, Could Negatively Impact our Business, Which May Affect our Financial Condition, Results of Operations or Cash Flows.
Extraordinary Events Beyond our Control, Including Conflicts, Wars, Natural Disasters, Public Health Crises, Terrorist Acts, or Other Civil or Political Disruptions, Could Negatively Impact our Business, Which May Affect our Financial Condition, Results of Operations or Cash Flows.
Further, our business depends on the strong brand reputations we have developed. If a reputation is damaged due to actual, potential, or perceived product and service quality issues, we may face difficulty maintaining our market share and pricing with respect to some of our products, which could reduce our sales and profitability.
If a reputation is damaged due to actual, potential, or perceived product and service quality issues, we may face difficulty maintaining our market share and pricing with respect to some of our products, which could reduce our sales and profitability. 11 Legal, Tax, and Regulatory Risks Changes in Environmental and Climate-Related Legislation, Government Regulations, or Policies Could Have an Adverse Effect on Our Results of Operations.
Our future success depends on our continued investment in research and new product development as well as our ability to commercialize new HVACR technological advances in domestic and global markets.
If We Cannot Successfully Develop and Market New Products or Execute Our Business Strategy, Our Results of Operations Could be Adversely Impacted. Our future success depends on our continued investment in research and new product development as well as our ability to commercialize new HVACR technological advances in domestic and global markets.
Likewise, a failure to comply with any current or future sustainability-related reporting requirements, as established by U.S. and international regulators, may 11 result in loss of business, regulatory penalties, litigation, and/or reputational damage. Further, we may face adverse reputational risks due to our products and manufacturing operations consuming energy or using refrigerants and hydroflurocarbons.
Because these laws are subject to change, we are unable to predict the future costs resulting from environmental compliance. Likewise, a failure to comply with any current or future sustainability-related reporting requirements, as established by U.S. and international regulators, may result in loss of business, regulatory penalties, litigation, and/or reputational damage.
Further, even with all of our facilities running at full production, we could potentially be unable to fully meet demand during an unanticipated period of exceptionally high demand. This inability to fully meet demand would be exacerbated if a single-location production facility is disrupted due to a climate-related disaster, pandemic, geopolitical political instability, or war, among other things.
Further, even with all of our facilities running at full production, we could potentially be unable to fully meet demand during an unanticipated period of exceptionally high demand.
Additionally, the extensive and frequently changing legislation and regulations could impose increased liability for remediation costs and civil or criminal penalties in cases of non-compliance. Because these laws are subject to change, we are unable to predict the future costs resulting from environmental compliance.
Such regulatory uncertainty could adversely impact the demand for energy efficient buildings and could increase costs of compliance. Additionally, the extensive and frequently changing legislation and regulations could impose increased liability for remediation costs and civil or criminal penalties in cases of non-compliance.
The sales, gross margins, and profitability for each of our segments could be directly impacted by changes in tariffs and trade agreements.
These changes in U.S. trade policy have led, and may again lead, to foreign governments enacting responsive trade policies that increase the difficulty or cost of doing international business or trade. As a consequence, the sales, gross margins, and profitability for each of our segments could be directly impacted by changes in tariffs and trade agreements.
Stakeholders are increasingly scrutinizing environmental, social and governance (“ESG”) practices, and stakeholders’ expectations regarding ESG practices are diverse and rapidly changing.
Further, we may face adverse reputational risks due to our products and manufacturing operations consuming energy or using refrigerants and hydroflurocarbons. Stakeholders are increasingly scrutinizing environmental, social and governance (“ESG”) practices, and stakeholders’ expectations regarding ESG practices are diverse, rapidly changing, and sometimes in conflict.
Removed
Legal, Tax, and Regulatory Risks Changes in Environmental and Climate-Related Legislation, Government Regulations, or Policies Could Have an Adverse Effect on Our Results of Operations.
Added
In some of the markets in which we compete, such as parts and supplies, distribution, and service of commercial heating and cooling equipment, barriers to entry are lower, which has led to highly competitive markets consisting of various-sized entities, ranging from small or local operators to large regional businesses.
Removed
In addition, the new presidential administration has articulated that it may impose substantial new or increased tariffs on foreign imports into the U.S., particularly from Canada and Mexico.
Added
We may not be able to adapt to market changes as quickly or effectively as our current and future competitors. Also, the establishment of manufacturing operations in low-cost countries could provide cost advantages to existing and emerging competitors.
Removed
These changes in U.S. trade policy have historically resulted in, and may continue to result in, one or more foreign governments adopting responsive trade policies that make it more di fficult or costly for us to do business in or import or export our products or components from those countries.
Added
The integration of any such new products or technologies into our business may also require the development of new processes and the expenditure of significant financial and operational resources.
Added
We rely on our direct sales channel for a substantial portion of our revenue. Our direct-to-dealer network also creates a large installed base of HVACR equipment, and creates opportunities for longer term service, monitoring, solutions, and retrofit revenue.
Added
If we are unable to continue to execute our strategy, whether due to changes in economic conditions, a failure to anticipate changing customer needs, entry of new competitors into the low-barrier distribution business, or for any other reason, our revenue could decline, which could in turn adversely impact our product pull-through and our ability to grow revenue.
Added
This inability to fully meet demand would be exacerbated if a single-location production facility is disrupted due to external factors including, but not limited to, a climate-related disaster, pandemic or epidemic, geopolitical instability, or war. Our inability to meet our customers’ demand for our products could have a material adverse effect on our business, financial condition, and results of operations.
Added
A number of factors may adversely affect the labor force available or increase labor costs, including labor shortages from high employment levels and related competition or labor stoppages due to disputes or strikes. In addition, as of December 31, 2025, approximately 26% of our core workforce locations were unionized.
Added
Finally, multiple jurisdictions have either already put in place laws and regulations governing the use of AI, or are considering such laws and regulations. Compliance with these laws, regulations, and industry frameworks may limit our ability to leverage AI or require us to substantially revise our approach to its use.
Added
Alternatively, if we increase our prices in response to increases in the prices or quantities of raw materials or components or if we encounter significant supply interruptions, our competitive position could be adversely affected, which may result in depressed sales and profitability.
Added
Further, our business depends on the strong brand reputations we have developed.
Added
The USMCA is subject to review and renewal in 2026, and there can be no assurance that any newly negotiated terms in the USMCA will not adversely affect our business or operations.
Added
Our Reputation, Ability to Do Business, and Results of Operations Could be Impaired By Improper Conduct By Any of Our Employees, Agents, or Business Partners.
Added
We cannot predict the likelihood, duration, or severity of any future disruption in financial markets or any adverse economic conditions in the U.S. and other countries.
Added
Further, as AI technologies advance, new and increasingly sophisticated attack methods are emerging, including fraud involving impersonation technologies or other forms of generative AI that enhance the scale, frequency, and effectiveness of cyber threats. Attempts have been made to attack our information systems, but we do not believe that material harm has resulted.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese cybersecurity policies and procedures include an IT security and privacy incident response plan to notify the appropriate parties, including our Chief Technology Officer, our Disclosure Committee, and our Board of Directors, in a timely manner.
Biggest changeThese cybersecurity policies and procedures include an IT security and privacy incident response plan to notify the appropriate parties, including our Chief Technology Officer, our Disclosure Committee, and our Board of Directors, in a timely manner. 15 Our Chief Technology Officer has served in the role since 2008, and has more than 15 years of experience in developing and executing large enterprise data privacy and cyber security roadmaps at publicly-traded companies.
Our Vice President, Information Technology, has served in the role since 2003, and has more than 35 years of cybersecurity experience. He holds an undergraduate degree in computer science. 15
He holds undergraduate and graduate degrees in engineering. Our Vice President, Information Technology, has served in the role since 2003, and has more than 35 years of cybersecurity experience. He holds an undergraduate degree in computer science. 16
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Our Chief Technology Officer has served in the role since 2008, and has more than 15 years of experience in developing and executing large enterprise data privacy and cyber security roadmaps at publicly-traded companies. He holds undergraduate and graduate degrees in engineering.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(In thousands) Owned/Leased Saltillo, Mexico Home Comfort Solutions Manufacturing & Distribution 1,081 Owned Marshalltown, IA Home Comfort Solutions Manufacturing & Distribution 1,000 Owned & Leased Orangeburg, SC Home Comfort Solutions Manufacturing & Distribution 900 Owned & Leased Grenada, MS Home Comfort Solutions Manufacturing & Distribution 395 Owned & Leased Romeoville, IL Home Comfort Solutions Distribution & Office 697 Leased Glendale, AZ Home Comfort Solutions Distribution 342 Leased McDonough, GA Home Comfort Solutions Distribution 254 Leased Grove City, OH Home Comfort Solutions Distribution 279 Leased Concord, NC Home Comfort Solutions Distribution 248 Leased Pittston, PA Home Comfort Solutions Distribution 144 Leased Harahan, LA Home Comfort Solutions Distribution & Office 83 Leased North Kansas City, MO Home Comfort Solutions Distribution & Office 59 Leased West Columbia, SC Home Comfort Solutions Research & Development 63 Owned DFW Airport, TX Home Comfort Solutions & Building Climate Solutions Distribution 580 Leased Eastvale, CA Home Comfort Solutions & Building Climate Solutions Distribution 377 Leased Brampton, Canada Home Comfort Solutions & Building Climate Solutions Distribution 251 Leased Houston, TX Home Comfort Solutions & Building Climate Solutions Distribution 204 Leased Orlando, FL Home Comfort Solutions & Building Climate Solutions Distribution 173 Leased Middletown, PA Home Comfort Solutions & Building Climate Solutions Distribution 166 Leased Lenexa, KS Home Comfort Solutions & Building Climate Solutions Distribution 147 Leased East Fife, WA Home Comfort Solutions & Building Climate Solutions Distribution 112 Leased Calgary, Canada Home Comfort Solutions & Building Climate Solutions Distribution 145 Leased Saltillo, Mexico Building Climate Solutions Manufacturing & Distribution 820 Owned Stuttgart, AR Building Climate Solutions Manufacturing 750 Owned Stone Mountain, GA Building Climate Solutions Manufacturing & Business Unit Headquarters 139 Owned Tifton, GA Building Climate Solutions Manufacturing & Distribution 825 Owned & Leased Jessup, PA Building Climate Solutions Distribution 130 Leased Indianapolis, IN Building Climate Solutions Distribution 69 Leased Medley, FL Building Climate Solutions Distribution 70 Leased Norcross, GA Building Climate Solutions Distribution & Office 95 Leased Tallassee, AL Building Climate Solutions Distribution & Office 81 Leased Richardson, TX Corporate and Other Corporate Headquarters 375 Owned Carrollton, TX Corporate and Other Research & Development 323 Owned & Leased Chennai, India Corporate and Other Research & Development & Office 265 Leased 16 In addition to the properties described above, we lease numerous facilities in the U.S. and worldwide for use as sales offices, service offices, district and regional warehouses, and Lennox Stores.
Biggest change(In thousands) Owned/Leased Saltillo, Mexico Home Comfort Solutions Manufacturing & Distribution 1,081 Owned Marshalltown, IA Home Comfort Solutions Manufacturing & Distribution 1,000 Owned & Leased Orangeburg, SC Home Comfort Solutions Manufacturing & Distribution 900 Owned & Leased Grenada, MS Home Comfort Solutions Manufacturing & Distribution 395 Owned & Leased Romeoville, IL Home Comfort Solutions Distribution & Office 697 Leased Annville, PA Home Comfort Solutions Distribution 453 Leased Glendale, AZ Home Comfort Solutions Distribution 342 Leased McDonough, GA Home Comfort Solutions Distribution 254 Leased Grove City, OH Home Comfort Solutions Distribution 279 Leased Concord, NC Home Comfort Solutions Distribution 248 Leased Denver, CO Home Comfort Solutions Distribution 144 Leased Harahan, LA Home Comfort Solutions Distribution & Office 83 Leased West Columbia, SC Home Comfort Solutions Research & Development 63 Owned North Kansas City, MO Home Comfort Solutions Distribution & Office 59 Leased Mendota Heights, MN Home Comfort Solutions Distribution 59 Leased DFW Airport, TX Home Comfort Solutions & Building Climate Solutions Distribution 580 Leased Eastvale, CA Home Comfort Solutions & Building Climate Solutions Distribution 377 Leased Brampton, Canada Home Comfort Solutions & Building Climate Solutions Distribution 251 Leased Bayshore, NY Home Comfort Solutions & Building Climate Solutions Manufacturing & Distribution 232 Leased Houston, TX Home Comfort Solutions & Building Climate Solutions Distribution 204 Leased Orlando, FL Home Comfort Solutions & Building Climate Solutions Distribution 173 Leased Calgary, Canada Home Comfort Solutions & Building Climate Solutions Distribution 145 Leased East Fife, WA Home Comfort Solutions & Building Climate Solutions Distribution 112 Leased Huntersville, NC Home Comfort Solutions & Building Climate Solutions Distribution & Office 61 Owned Tifton, GA Building Climate Solutions Manufacturing & Distribution 825 Owned & Leased Saltillo, Mexico Building Climate Solutions Manufacturing & Distribution 820 Owned Edgerton, KS Building Climate Solutions Distribution 763 Leased Stuttgart, AR Building Climate Solutions Manufacturing 750 Owned Stone Mountain, GA Building Climate Solutions Manufacturing & Business Unit Headquarters 139 Owned Jessup, PA Building Climate Solutions Distribution 130 Leased Norcross, GA Building Climate Solutions Distribution & Office 95 Leased Tallassee, AL Building Climate Solutions Distribution & Office 81 Leased Medley, FL Building Climate Solutions Distribution 70 Leased Indianapolis, IN Building Climate Solutions Distribution 69 Leased 17 Location Segment Type or Use of Facility Approx.
Item 2. Properties The following chart lists our principal domestic and international manufacturing, distribution and office facilities as of December 31, 2024 and indicates the business segment that uses such facilities, the approximate size of such facilities and whether such facilities are owned or leased. Also included in the chart are large warehouses that hold significant inventory balances.
Item 2. Properties The following chart lists our principal domestic and international manufacturing, distribution and office facilities as of December 31, 2025 and indicates the business segment that uses such facilities, the approximate size of such facilities and whether such facilities are owned or leased. Also included in the chart are large warehouses that hold significant inventory balances.
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(In thousands) Owned/Leased Wheeling, WV Building Climate Solutions Manufacturing 67 Leased Richardson, TX Corporate and Other Corporate Headquarters 375 Owned Carrollton, TX Corporate and Other Research & Development 323 Owned & Leased Chennai, India Corporate and Other Research & Development & Office 172 Leased In addition to the properties described above, we lease numerous facilities in the U.S. and worldwide for use as sales offices, service offices, district and regional warehouses, and Lennox Stores.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn the fourth quarter of 2024, we purchased shares of our common stock as follows: Total Number of Shares Purchased Average Price Paid per Share (including fees) Total Number of Shares Purchased As Part of Publicly Announced Plans Approximate Dollar Value of Shares that may yet be Purchased under our Share Repurchase Plans (in millions) (1) October 1 through October 31 24,000 $ 602.59 24,000 $ 518.0 November 1 through November 30 20,000 $ 631.85 20,000 $ 505.4 December 1 through December 31 21,000 $ 645.42 21,000 $ 491.8 65,000 65,000 (1) Since the inception of the Company’s share repurchase program in 2008, the Board has authorized share repurchases in an amount not to exceed $4.0 billion (the "Share Repurchase Plans").
Biggest changeIn the fourth quarter of 2025, we purchased shares of our common stock as follows: Total Number of Shares Purchased Average Price Paid per Share (including fees) Total Number of Shares Purchased As Part of Publicly Announced Plans Approximate Dollar Value of Shares that may yet be Purchased under our Share Repurchase Plans (in millions) (1) October 1 through October 31 200,052 $ 499.56 200,052 $ 1,059.6 November 1 through November 30 106,151 $ 471.03 106,151 $ 1,009.6 December 1 through December 31 — $ — — $ 1,009.6 306,203 306,203 (1) Since the inception of the Share Repurchase Plans in 2008, the Board has authorized share repurchases in an amount not to exceed $5.0 billion.
The Share Repurchase Plans do not have an expiration date. See Note 6 in the Notes to the Consolidated Financial Statement for further details. Item 6. [ Reserved ]
The Share Repurchase Plans do not have an expiration date. See Note 6 in the Notes to the Consolidated Financial Statements for further details. Item 6. [ Reserved ]
Comparison of Total Stockholder Return The following graph compares the cumulative total retur ns of LII’ s common stock with the cumulative total returns of the Standard & Poor’s Midcap 400 Index, a broad index of mid-size U.S. companies, Standard & Poor’s 500 Index of which the Company is a part beginning in 2024, a broad index of large U.S. companies, and with a peer group of U.S. industrial manufacturing and service companies in the HVACR businesses.
Comparison of Total Stockholder Return The following graph compares the cumulative total retur ns of LII’ s common stock with the cumulative total returns of the Standard & Poor’s 500 Index, a broad index of large U.S. companies of which the Company is a part, and with a revised peer group of U.S. industrial manufacturing and service companies in the HVACR businesses.
Our Purchases of Company Equity Securities Since the inception of the Company’s share repurchase program in 2008, our Board of Directors has authorized a total of $4 billion to repurchase shares of our common stock (collectively referred to as the “Share Repurchase Plans”), including an incremental $1.0 billion share repurchase authorization in July 2021.
Our Purchases of Company Equity Securities Since the inception of our share repurchase program in 2008, our Board of Directors has authorized a total of $5 billion to repurchase shares of our common stock (collectively referred to as the “Share Repurchase Plans”), including an incremental $1.0 billion share repurchase authorization in May 2025.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is listed for trading on the New York Stock Exchange under the symbol “LII.” Holders of Common Stock As of the close of business on February 4, 2025, approximatel y 4 88 holders of record held our common stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is listed for trading on the New York Stock Exchange under the symbol “LII.” Holders of Common Stock As of the close of business on February 3, 2026 , approximately 459 holders of record held our common stock.
Our peer group includes AAON, Inc., Carrier Global Corp., Johnson Controls International plc, Trane Technologies plc, and Watsco, Inc. 17 This performance graph and other information furnished under this Comparison of Total Stockholder Return section shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
The change from the Old Peer Group to the New Peer Group is being made to better reflect companies relevant to our current business. 18 This performance graph and other information furnished under this Comparison of Total Stockholder Return section shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
The Share Repurchase Plans authorize open market repurchase transactions and do not have a stated expiration date. As of December 31, 2024, $492 million is available to repurchase shares under the Share Repurchase Plans.
The Share Repurchase Plans permit shares to be repurchased in a variety of methods, including open market purchases, accelerated share repurchases, or other privately negotiated transactions. As of December 31, 2025, $1,009.6 million is available to repurchase shares under the Share Repurchase Plans.
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The graph assumes that $100 was invested on December 31, 2019, with dividends reinvested.
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The graph assumes that $100 was invested on December 31, 2020, with dividends reinvested. Our revised peer group includes AAON, Inc., Carrier Global Corp., CSW Industrials, Inc., Trane Technologies plc, and Watsco, Inc. (“New Peer Group”). AAON, Inc., Carrier Global Corp., Johnson Controls International plc, Trane Technologies plc, and Watsco, Inc. represent our previous peer group (“Old Peer Group”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table provides a summary of our financial results, including information presented as a percentage of net sales (dollars in millions): For the Years Ended December 31, 2024 2023 2022 Dollars Percent Dollars Percent Dollars Percent Net sales $ 5,341.3 100.0 % $ 4,981.9 100.0 % $ 4,718.4 100.0 % Cost of goods sold 3,569.4 66.8 % 3,434.1 68.9 % 3,433.7 72.8 % Gross profit 1,771.9 33.2 % 1,547.8 31.1 % 1,284.7 27.2 % Selling, general and administrative expenses 730.6 13.7 % 705.5 14.2 % 627.2 13.3 % Losses (gains) and other expenses, net 12.9 0.2 % 8.5 0.2 % 4.9 0.1 % Restructuring charges — — % 3.1 0.1 % 1.5 — % Impairment on assets held for sale — — % 63.2 1.3 % — — % Loss (gain) on sale of businesses 1.5 — % (14.1) (0.3) % — — % Income from equity method investments (7.9) (0.1) % (8.5) (0.2) % (5.1) (0.1) % Operating income $ 1,034.8 19.4 % $ 790.1 15.9 % $ 656.2 13.9 % Net income $ 806.9 15.1 % $ 590.1 11.8 % $ 497.1 10.5 % Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 - Consolidated Results Net Sales Net sales increased 7% in 2024 compared to 2023 as higher sales volumes of 8%, favorable price and mix of 3% and an increase of sales volumes of 1% from our AES acquisition were partially offset by a 5% reduction in sales due to the fourth quarter 2023 sale of our European businesses. 20 Gross Profit Gross profit margins for 2024 increased 210 basis points (“bps”) to 33.2% compared to 31.1% in 2023.
Biggest changeOur Building Climate Solutions segment saw an increase in net sales of 5% and a $33 million increase in segment profit in 2025 compared to 2024, primarily due to favorable price and mix. 21 Results of Operations The following table provides a summary of our financial results, including information presented as a percentage of net sales (dollars in millions): For the Years Ended December 31, 2025 2024 2023 Dollars Percent Dollars Percent Dollars Percent Net sales $ 5,195.3 100.0 % $ 5,341.3 100.0 % $ 4,981.9 100.0 % Cost of goods sold 3,460.5 66.6 % 3,563.8 66.7 % 3,432.7 68.9 % Gross profit 1,734.8 33.4 % 1,777.5 33.3 % 1,549.2 31.1 % Selling, general and administrative expenses 681.4 13.1 % 730.6 13.7 % 705.5 14.2 % Losses (gains) and other expenses, net 12.0 0.2 % 12.9 0.2 % 8.5 0.2 % Restructuring charges 6.8 0.1 % — — % 3.1 0.1 % Impairment on assets held for sale — — % — — % 63.2 1.3 % Loss (gain) on sale of businesses (0.9) — % 1.5 — % (14.1) (0.3) % Income from equity method investments (6.0) (0.1) % (7.9) (0.1) % (8.5) (0.2) % Operating income $ 1,041.5 20.0 % $ 1,040.4 19.5 % $ 791.5 15.9 % Net income $ 805.8 15.5 % $ 811.1 15.2 % $ 591.2 11.9 % Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 - Consolidated Results Net Sales Net sales decreased 3% in 2025 compared to 2024 as lower sales volumes of 13% were partially offset by favorable price and mix of 9% and a 1% increase in sales volumes due to our fourth quarter acquisition of Duro Dyne and Supco.
In the third quarter of 2023, we recorded a $22.6 million impairment of property, plant and equipment related to our agreement to sell our European commercial HVAC and refrigeration businesses. 21 Income from Equity Method Investments Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting.
In the third quarter of 2023, we recorded a $22.6 million impairment of property, plant and equipment related to our agreement to sell our European commercial HVAC and refrigeration businesses. Income from Equity Method Investments Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting.
If any event of default occurs and is continuing, the administrative agent, or lenders with a majority of the aggregate commitments may require the administrative agent to, terminate our right to borrow under our Credit Agreement and accelerate amounts due under our Credit Agreement (except for a bankruptcy event of default, in which case such amounts will automatically become due and payable and the lenders’ commitments will automatically terminate).
If any event of default occurs and is continuing, the administrative agent, or lenders with a majority of the aggregate commitments, may require the administrative agent to terminate our right to borrow under our Credit Agreement and accelerate amounts due under our Credit Facilities (except for a bankruptcy event of default, in which case such amounts will automatically become due and payable and the lenders’ commitments will automatically terminate).
In addition to weather, demand for our products and services is influenced by national and regional economic and demographic factors, such as interest rates, the availability of financing, regional population and employment trends, new construction, general economic conditions and 19 consumer spending habits and confidence.
In addition to weather, demand for our products and services is influenced by national and regional economic and demographic factors, such as interest rates, the availability of financing, regional population and employment trends, new construction, general economic conditions and consumer spending habits and confidence.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the other sections of this report, including the Consolidated Financial Statements and related Notes to the Consolidated Financial Statements in Item 8, “Other Financial Statement Details,” of this Annual Report on Form 10-K. 18 Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act that are based on information currently available to management as well as management’s assumptions and beliefs as of the date hereof.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the other sections of this report, including the Consolidated Financial Statements and related Notes to the Consolidated Financial Statements in Item 8, “Other Financial Statement Details,” of this Annual Report on Form 10-K. 19 Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act that are based on information currently available to management as well as management’s assumptions and beliefs as of the date hereof.
Financial Statements and Supplementary Data.” Product Warranties and Product-Related Contingencies The estimate of our liability for future warranty costs requires us to make assumptions about the amount, timing and nature of future product-related costs.
Financial Statements and Supplementary Data.” 32 Product Warranties and Product-Related Contingencies The estimate of our liability for future warranty costs requires us to make assumptions about the amount, timing and nature of future product-related costs.
A cross default under our credit facility could occur if: • We fail to pay any principal or interest when due on any other indebtedness or receivables securitization exceeding $75.0 million; or • We are in default in the performance of, or compliance with any term of any other indebtedness in an aggregate principal amount exceeding $75.0 million, or any other condition exists which would give the holders the right to declare such indebtedness due and payable prior to its stated maturity.
A cross default under our Credit Facilities could occur if: • We fail to pay any principal or interest when due on any other indebtedness or receivables securitization exceeding $75.0 million; or • We are in default in the performance of, or compliance with any term of any other indebtedness in an aggregate principal amount exceeding $75.0 million, or any other condition exists which would give the holders the right to declare such indebtedness due and payable prior to its stated maturity.
The three-level fair value hierarchy for disclosure of fair value measurements is defined as follows: 29 Level 1 - Quoted prices for identical instruments in active markets at the measurement date.
The three-level fair value hierarchy for disclosure of fair value measurements is defined as follows: Level 1 - Quoted prices for identical instruments in active markets at the measurement date.
The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements: • competition in the HVACR business; • our ability to successfully develop and market new products or execute our business strategy, including the implementation of price increases for products and services; • our ability to meet and anticipate customer demands; • our ability to continue to license or enforce our intellectual property rights; • our ability to attract, motivate, develop and retain our employees, as well as labor relations problems; • artificial intelligence technologies; • a decline in new construction activity and related demand for our products and services; • the impact of weather on our business; • the impact of higher raw material prices and significant supply interruptions; • product liability, warranty claims, or recalls; • changes in environmental and climate-related legislation or government regulations or policies; • changes in tax legislation; • the impact of new or increased trade tariffs; • improper conduct by any of our employees, agents, or business partners; • litigation risks; • general economic conditions in the United States and abroad; • extraordinary events beyond our control, such as conflicts, wars, natural disasters, public health crises, or terrorist acts; • risks associated with our international operations; • cyber attacks and other disruptions or misuse of information systems; and • our ability to successfully realize, complete and integrate acquisitions.
The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements: • competition in the HVACR business; • our ability to successfully develop and market new products or execute our business strategy, including the implementation of price increases for products and services; • our ability to meet and anticipate customer demands; • our ability to continue to license or enforce our intellectual property rights; • our ability to attract, motivate, develop and retain our employees, as well as labor relations problems; • artificial intelligence technologies; • a decline in new construction activity and related demand for our products and services; • the impact of weather on our business; • the impact of higher raw material prices and significant supply interruptions; • product liability, warranty claims, or recalls; • changes in environmental and climate-related legislation or government regulations or policies; • changes in tax legislation; • the impact of new or increased trade tariffs; • improper conduct by any of our employees, agents, or business partners; • litigation risks; • general economic conditions in the U.S. and abroad; • extraordinary events beyond our control, such as conflicts, wars, natural disasters, public health crises, terrorist acts, or other civil or political disruptions; • risks associated with our international operations; • cyber attacks and other disruptions or misuse of information systems; and • our ability to successfully realize, complete and integrate acquisitions.
From time to time, we may use an interest rate swap hedging strategy to eliminate the variability of cash flows in a portion of our interest payments. This strategy, when employed, allows us to fix a portion of our interest payments when interest rates are low. As of December 31, 2024 and 2023, no interest rate swaps were in effect.
From time to time, we may use an interest rate swap hedging strategy to eliminate the variability of cash flows in a portion of our interest payments. This strategy, when employed, allows us to fix a portion of our interest payments when interest rates are low. As of December 31, 2025 and 2024, no interest rate swaps were in effect.
Our Credit Agreement contains customary events of default. These events of default include nonpayment of principal or other amounts, material inaccuracy of representations and warranties, breach of covenants, default on certain other indebtedness or receivables securitizations (cross default), certain voluntary and involuntary bankruptcy events and the occurrence of a change in control.
Our Credit Facilities contains customary events of default. These events of default include nonpayment of principal or other amounts, material inaccuracy of representations and warranties, breach of covenants, default on certain other indebtedness or receivables securitizations (cross default), certain voluntary and involuntary bankruptcy events and the occurrence of a change in control.
If a cross default under our Credit Agreement or our senior unsecured notes were to occur, it could have a wider impact on our liquidity than might otherwise occur from a default of a single debt instrument or lease commitment.
If a cross default under our Credit Facilities or our senior unsecured notes were to occur, it could have a wider impact on our liquidity than might otherwise occur from a default of a single debt instrument or lease commitment.
A 10% adverse movement in the levels of interest rates across the entire yield curve would have resulted in an increase to pre-tax interest expense of approximately $0.9 million, $2.3 million and $1.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.
A 10% adverse movement in the levels of interest rates across the entire yield curve would have resulted in an increase to pre-tax interest expense of approximately $1.1 million, $0.9 million and $2.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Segment profit in 2024 increased $56 million compared to 2023 primarily due to $44 million from higher sales volumes, $39 million from price and mix benefit, and $15 million from our AES acquisition.
Segment profit in 2024 increased $61 million compared to 2023 primarily due to $44 million from higher sales volumes, $39 million from price and mix benefit, and $15 million from our AES acquisition.
A 10% change in foreign exchange rates would have had an estimated $2.6 million, $5.6 million and $3.5 million impact to net income for the years ended December 31, 2024, 2023 and 2022, respectively. We seek to mitigate the impact of currency exchange rate movements on certain short-term transactions by periodically entering into foreign currency forward contracts.
A 10% change in foreign exchange rates would have had an estimated $5.8 million, $2.6 million and $5.6 million impact to net income for the years ended December 31, 2025, 2024 and 2023, respectively. We seek to mitigate the impact of currency exchange rate movements on certain short-term transactions by periodically entering into foreign currency forward contracts.
Liquidity We believe our cash and cash equivalents of $415 million, future cash generated from operations and available future borrowings are sufficient to fund our operations, planned capital expenditures, future contractual obligations, share repurchases, anticipated dividends and other needs in the foreseeable future.
Liquidity We believe our cash and cash equivalents of $34.2 million, future cash generated from operations and available future borrowings are sufficient to fund our operations, planned capital expenditures, future contractual obligations, share repurchases, anticipated dividends and other needs in the foreseeable future.
The Credit Agreement will expire and outstanding loans will be required to be repaid in July 2026, unless maturity is extended by the lenders pursuant to two one-year extension options that we may request under the Credit Agreement.
The Credit Agreement will expire and outstanding loans will be required to be repaid in May 2030, unless maturity is extended by the lenders pursuant to two one-year extension options that we may request under the Credit Agreement.
In addition, the Credit Agreement contains a financial covenant requiring us to maintain, as of the last day of each fiscal quarter for the four prior fiscal quarters, a Total Net Leverage Ratio of no more than 3.50 to 1.00 (or, at our election, on up to two occasions following a material acquisition, 4.00 to 1.00).
In addition, the Credit Facilities each contain a financial covenant requiring us to maintain, as of the last day of each fiscal quarter for the four prior fiscal 29 quarters, a Total Net Leverage Ratio of no more than 3.50 to 1.00 (or, at our election, on up to two occasions following a material acquisition, 4.00 to 1.00).
Information about our exposure to metal commodity price market risks and a sensitivity analysis related to our metal commodity hedges is presented below (in millions): Notional amount (pounds of aluminum and copper) 105.9 Carrying amount and fair value of net asset $ (0.4) Change in fair value from 10% change in forward prices $ 10.6 Refer to Note 9 of the Notes to the Consolidated Financial Statements for additional information regarding our commodity futures contracts.
Information about our exposure to metal commodity price market risks and a sensitivity analysis related to our metal commodity hedges is presented below (in millions): Notional amount (pounds of aluminum and copper) 87.6 Carrying amount and fair value of net asset $ 23.6 Change in fair value from 10% change in forward prices $ 13.2 Refer to Note 9 of the Notes to the Consolidated Financial Statements for additional information regarding our commodity futures contracts.
Building Climate Solutions The following table presents our Building Climate Solutions segment’s net sales and profit for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ 1,764.2 $ 1,511.4 $ 252.8 17 % Profit $ 396.9 $ 340.8 $ 56.1 16 % % of net sales 22.5 % 22.5 % Net sales increased 17% in 2024 compared to 2023 primarily due to a 9% increase in sales volumes, a 3% increase in higher price and favorable mix, and a 5% increase in sales volumes from our AES acquisition.
Building Climate Solutions The following table presents our Building Climate Solutions segment’s net sales and profit for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ 1,764.2 $ 1,511.4 $ 252.8 17% Segment profit $ 401.7 $ 340.8 $ 60.9 18% % of net sales 22.8 % 22.5 % Net sales increased 17% in 2024 compared to 2023 primarily due to a 9% increase in sales volumes, a 3% increase in higher price and favorable mix, and a 5% increase in sales volumes from our AES acquisition.
Included in our cash and cash equivalents as of December 31, 2024 was $14 million of cash held in foreign locations, although that amount can fluctuate significantly depending on the timing of cash receipts and payments.
Included in our cash and cash equivalents as of December 31, 2025 was $9 million of cash held in foreign locations, although that amount can fluctuate significantly depending on the timing of cash receipts and payments.
Goodwill We performed a qualitative impairment analysis and noted no indicators of goodwill impairment for the year ended December 31, 2024. Refer to Note 9 in the Notes to the Consolidated Financial Statements for more information on goodwill.
For more information on our restructuring activities, see Note 7 in the Notes to the Consolidated Financial Statements. Goodwill We performed a qualitative impairment analysis and noted no indicators of goodwill impairment for the year ended December 31, 2024. Refer to Note 9 in the Notes to the Consolidated Financial Statements for more information on goodwill.
Income from equity method investments was $8 million in 2024 consistent with 2023. Interest Expense, net Net interest expense of $39 million in 2024 decreased from $52 million in 2023 primarily due to decreased borrowings on our revolving credit facility as a result of increased cash flow.
Income from equity method investments was $8 million in 2024 consistent with 2023. Interest Expense, net Net interest expense of $39 million in 2024 decreased from $52 million in 2023 primarily due to decreased borrowings as a result of increased cash flow.
Income Taxes The income tax provision was $187 million in 2024 compared to $147 million in 2023, and the effective tax rate was 18.8% in 2024 compared to 20.0% in 2023. The 2024 and 2023 effective tax rates differ from the statutory rate of 21% primarily due to lower foreign tax rates.
Income Taxes The income tax provision was $188 million in 2024 compared to $148 million in 2023, and the effective tax rate was 18.8% in 2024 compared to 20.0% in 2023. The 2024 and 2023 effective tax rates differ from the statutory rate of 21% primarily due to foreign taxes.
During 2024, 2023 and 2022, net sales from outside the U.S. represented 6.0%, 11.3% and 11.4%, respectively, of our total net sales. For the years ended December 31, 2024, 2023, and 2022, foreign currency transaction gains and losses did not have a material impact to our results 30 of operations.
During 2025, 2024 and 2023, net sales from outside the U.S. represented 7%, 6% and 11%, respectively, of our total net sales. For the years ended December 31, 2025, 2024, and 2023, foreign currency transaction gains and losses did not have a material impact to our results of operations.
Our book value of debt-to-total-capital ratio decreased to 57% at December 31, 2024 compared to 82% at December 31, 2023. 27 As of December 31, 2024, our senior credit ratings were Baa2 with a positive outlook, and BBB with a stable outlook, by Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Rating Group (“S&P”), respectively.
Our book value of debt-to-total-capital ratio decreased to 54% at December 31, 2025 compared to 57% at December 31, 2024. As of December 31, 2025, our senior credit ratings were Baa1 with a stable outlook, and BBB with a stable outlook, by Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Rating Group (“S&P”), respectively.
Goodwill We performed a qualitative impairment analysis and noted no indicators of goodwill impairment for the year ended December 31, 2023. Refer to Note 9 in the Notes to the Consolidated Financial Statements for more information on goodwill.
For more information on our restructuring activities, see Note 7 in the Notes to the Consolidated Financial Statements. Goodwill We performed a qualitative impairment analysis and noted no indicators of goodwill impairment for the year ended December 31, 2025. Refer to Note 9 in the Notes to the Consolidated Financial Statements for more information on goodwill.
Segment profit in 2024 increased $150 million compared to 2023 primarily due to $122 million from higher price and favorable mix, $90 million from higher sales volumes and $10 million from factory productivity and favorable product costs, including LIFO.
Segment profit in 2024 increased $149 million compared to 2023 primarily due to $122 million from higher price and favorable mix, $90 million from higher sales volumes and $9 million from factory productivity and favorable product costs.
Our cash and cash equivalents held in foreign locations is generally available for use in our U.S. operations and could be subject to foreign withholding taxes and U.S. state taxes. No contributions are required to be made to our U.S. defined benefit plans in 2025. No contributions were made to our pension plans in 2024.
Our cash and cash equivalents held in foreign locations is generally available for use in our U.S. operations and could be subject to foreign withholding taxes and U.S. state taxes. No contributions are required to be made to our U.S. defined benefit plans in 2026. We made $7.6 million in total contributions to our pension plans in 2025.
Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the CP Notes outstanding under the Program at any time not to exceed $500.0 million. The CP Notes will have maturities of up to 397 days from the date of issue.
Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the CP Notes outstanding under the Program at any time not to exceed $500.0 million.
We issued two series of senior unsecured notes on July 30, 2020 for $300.0 million each, which will mature on August 1, 2025 (the "2025 Notes") and August 1, 2027 (the "2027 Notes") with interest being paid semi-annually in February and August at 1.35% and 1.70% respectively, per annum (the 2025 Notes, the 2027 Notes, and the 2028 Notes, collectively the “Notes”).
In July 2020, we issued senior unsecured notes for $300.0 million, which will mature on August 1, 2027 (the "2027 Notes" and collectively with the 2028 Notes, the "Notes") with interest being paid semi-annually in February and August at 1.70% per annum.
Capital expenditures were $164 million, $250 million and $101 million in 2024, 2023 and 2022, respectively. Capital expenditures in 2024 and 2023 were primarily related to the expansion of our manufacturing capacity including investments in our commercial HVAC factory in Mexico, equipment, and investments in systems and software to support the overall enterprise.
Capital expenditures were $119 million, $164 million and $250 million in 2025, 2024 and 2023, respectively. Capital expenditures in 2025 were primarily related to the expansion of our manufacturing capacity equipment and investments in systems and software to support the overall enterprise.
We expect capital expenditures of approximately $150 million in 2025 for general capital improvement projects .
We expect capital expenditures of approximately $250 million in 2026 for general capital improvement projects .
Restructuring Charges There were no restructuring charges in 2024 compared to $3.1 million in 2023. Charges in 2023 were related to the reorganization or removal of duplicative headcount and infrastructure. For more information on our restructuring activities, see Note 7 in the Notes to the Consolidated Financial Statements.
Refer to Note 5 in the Notes to the Consolidated Financial Statements for more information on litigation, including asbestos-related litigation, and environmental liabilities. Restructuring Charges There were no restructuring charges in 2024 compared to $3.1 million in 2023. Charges in 2023 were related to the reorganization or removal of duplicative headcount and infrastructure.
We also evaluate our debt-to-capital and debt-to-EBITDA ratios to determine, among other considerations, the appropriate targets for c apital expenditures and share repurchases under our Share Repurchase Plans.
We consider various other financing alternatives and may, from time to time, access the capital markets. We also evaluate our debt-to-capital and debt-to-EBITDA ratios to determine, among other considerations, the appropriate targets for c apital expenditures and share repurchases under our Share Repurchase Plans.
Statement of Cash Flows The following table summarizes our cash flow activity for the years ended December 31, 2024, 2023 and 2022 (in millions): 2024 2023 2022 Net cash provided by operating activities $ 945.7 $ 736.2 $ 302.3 Net cash used in investing activities $ (174.4) $ (319.7) $ (103.0) Net cash used in financing activities $ (418.6) $ (406.2) $ (174.1) Net Cash Provided By Operating Activities - Net cash provided by operating activities activities increased $210 million to $946 million in 2024 compared to $736 million in 2023.
Statement of Cash Flows The following table summarizes our cash flow activity for the years ended December 31, 2025, 2024 and 2023 (in millions): 2025 2024 2023 Net cash provided by operating activities $ 757.6 $ 945.7 $ 736.2 Net cash used in investing activities $ (655.6) $ (174.4) $ (319.7) Net cash used in financing activities $ (465.7) $ (418.6) $ (406.2) Net Cash Provided By Operating Activities - Net cash provided by operating activities decreased $188 million to $758 million in 2025 compared to $946 million in 2024.
Dividend payments were $160 million in 2024 compared to $153 million in 2023. On May 20, 2024, our Board of Directors approved a 4.5% increase in our quarterly dividend on common stock from $1.10 to $1.15 per share effective with the July 2024 dividend payment.
Dividend payments were $173 million in 2025 compared to $160 million in 2024. On May 22, 2025, our Board of Directors approved a 13% increase in our quarterly dividend on common stock from $1.15 to $1.30 per share effective with the July 2025 dividend payment.
Financial Covenants related to our Debt The Credit Agreement is guaranteed by certain of our subsidiaries and contains customary covenants applicable to us and our subsidiaries including limitations on indebtedness, liens, dividends, stock repurchases, mergers and sales of all or substantially all of our assets.
Financial Covenants related to our Debt The Credit Agreement and Term Credit Agreement (the “Credit Facilities”) are guaranteed by the Guarantor Subsidiaries (as defined below) and contain customary covenants applicable to us and our subsidiaries including limitations on indebtedness, liens, dividends, stock repurchases, mergers and sales of all or substantially all of our assets.
Net Cash Used In Financing Activities - Net cash used in financing activities was $419 million in 2024 and $406 million in 2023. The increase was primarily due to share repurchases in 2024, offset by decreased net debt repayments. We repurchased $54 million as part of our Share Repurchase Plans, as compared to no repurchases in 2023.
Net Cash Used In Financing Activities - Net cash used in financing activities was $466 million in 2025 and $419 million in 2024. The increase was primarily due to share repurchases in 2025, offset by higher net debt borrowings. We repurchased $482 million and $54 million in 2025 and 2024, respectively, as part of our Share Repurchase Plans.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 - Results by Segment Home Comfort Solutions The following table presents our Home Comfort Solutions segment’s net sales and profit for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ 3,577.1 $ 3,222.9 $ 354.2 11% Profit $ 759.7 $ 610.2 $ 149.5 25% % of net sales 21.2 % 18.9 % Net sales increased 11% in 2024 compared to 2023 due to a 7% increase in volume and a 4% increase in price and mix.
Refer to Note 12 in the Notes to the Consolidated Financial Statements for more information on income taxes. 25 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 - Results by Segment Home Comfort Solutions The following table presents our Home Comfort Solutions segment’s net sales and profit for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ 3,577.1 $ 3,222.9 $ 354.2 11% Segment profit $ 760.5 $ 611.6 $ 148.9 24% % of net sales 21.3 % 19.0 % Net sales increased 11% in 2024 compared to 2023 due to a 7% increase in volume and a 4% increase in price and mix.
Income from Equity Method Investments Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting. Income from equity method investments was $8 million in 2023 compared to $5 million in 2022. The increase is due to better operating results at the investees.
Income from Equity Method Investments Investments over which we do not exercise control but have significant influence are accounted for using the equity method of accounting. Income from equity method investments was $6 million in 2025 as compared to $8 million in 2024.
The following combined Parent and Guarantor Subsidiaries financial information is presented as of December 31, 2024 and December 31, 2023 and for the year ended December 31, 2024 (in millions): December 31, 2024 December 31, 2023 Current assets $ 1,713.9 $ 1,291.0 Non-current assets 6,995.0 5,737.1 Current liabilities 1,084.9 843.3 Non-current liabilities 1,266.8 1,477.3 Amounts due to non-guarantor subsidiaries (536.8) (472.3) For the Years Ended December 31, 2024 2023 Net Sales $ 5,265.6 $ 4,626.8 Gross Profit 1,363.8 1,157.8 Net Income 1,792.5 1,331.1 Off Balance Sheet Arrangements We have no off-balance sheet arrangements that we believe may have a material current or future effect on our financial condition, liquidity or results of operations.
The following combined Parent and Guarantor Subsidiaries financial information is presented as of December 31, 2025 and for the year ended December 31, 2025 (in millions): December 31, 2025 Current assets $ 1,676.4 Non-current assets 1,824.9 Current liabilities 1,000.7 Non-current liabilities 1,689.4 Amounts due to non-Guarantor Subsidiaries (463.7) 30 For the Year Ended December 31, 2025 Net sales $ 5,113.8 Gross profit 1,324.4 Net income 406.3 Off Balance Sheet Arrangements We have no off-balance sheet arrangements that we believe may have a material current or future effect on our financial condition, liquidity or results of operations.
Environmental liabilities and special legal contingency charges in 2024 relate to estimated remediation costs at some of our facilities and outstanding legal settlements including asbestos. Refer to Note 5 in the Notes to the Consolidated Financial Statements for more information on litigation, including asbestos-related litigation, and environmental liabilities.
For more information on our derivatives, see Note 9 in the Notes to the Consolidated Financial Statements. Foreign currency exchange losses increased in 2024 primarily due to changes in foreign exchange rates in our primary markets. Environmental liabilities and special litigation charges in 2024 relate to estimated remediation costs at some of our facilities and outstanding legal settlements including asbestos.
Losses (Gains) and Other Expenses, Net Losses (gains) and other expenses, net for 2024 and 2023 included the following (in millions): For the Years Ended December 31, 2024 2023 Realized losses on settled future contracts $ — $ 0.1 Foreign currency exchange losses (gains) 7.7 (4.3) Gain on disposal of fixed assets (2.1) (0.5) Other operating (income) loss 0.5 (1.6) Net change in unrealized losses (gains) on unsettled futures contracts — (0.1) Environmental liabilities and special litigation charges 6.8 15.6 Other items, net — (0.7) Losses and other expenses, net (pre-tax) $ 12.9 $ 8.5 The net change in unrealized (gains) losses on unsettled futures contracts was due to changes in commodity prices relative to the unsettled futures contract prices.
Losses and Other Expenses, Net Losses and other expenses, net for 2025 and 2024 included the following (in millions): For the Years Ended December 31, 2025 2024 Foreign currency exchange (gains) losses (10.5) 7.7 Loss (gain) on disposal of fixed assets 1.1 (2.1) Acquisition costs 10.3 — Other operating loss 0.2 0.5 Environmental liabilities and special litigation charges 10.9 6.8 Losses and other expenses, net (pre-tax) $ 12.0 $ 12.9 Foreign currency exchange gains increased in 2025 primarily due to changes in foreign exchange rates in our primary markets.
Fluctuations in metal commodity prices impact the value of the futures contracts that we hold. When metal commodity prices rise, the fair value of our futures contracts increases. Conversely, when commodity prices fall, the fair value of our futures contracts decreases.
These contracts are for quantities equal to or less than quantities expected to be consumed in future production. Fluctuations in metal commodity prices impact the value of the futures contracts that we hold. When metal commodity prices rise, the fair value of our futures contracts increases. Conversely, when commodity prices fall, the fair value of our futures contracts decreases.
In fourth quarter 2023, we completed the sale of our European businesses. The European businesses were presented with the Corporate and Other business segment until their divestiture. We sell our products and services through a combination of direct sales, distributors and company-owned stores. The demand for our products and services is seasonal and can be significantly impacted by the weather.
We sell our products and services through a combination of direct sales, distributors and company-owned stores. The demand for our products and services is seasonal and can be significantly impacted by the weather.
Partially offsetting these increases were $33 million in expenses from higher factory inefficiencies, which includes costs related to the ramp up of our new facility in Mexico, and slightly higher product costs, which includes LIFO, and $9 million of inflationary wage impacts. 22 Corporate and Other The following table presents our Corporate and Other segment’s net sales and loss for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ — $ 247.6 $ (247.6) (100) % Loss $ (120.3) $ (93.9) $ (26.4) 28 % Net sales decreased $248 million and segment loss increased $26 million in 2024 as compared to 2023.
Corporate and Other The following table presents our Corporate and Other segment’s net sales and loss for 2024 and 2023 (dollars in millions): For the Years Ended December 31, 2024 2023 Difference % Change Net sales $ — $ 247.6 $ (247.6) (100) % Loss $ (120.3) $ (93.9) $ (26.4) 28 % Net sales decreased $248 million and segment loss increased $26 million in 2024 as compared to 2023.
Losses (Gains) and Other Expenses, Net Losses (gains) and other expenses, net for 2023 and 2022 included the following (in millions): For the Years Ended December 31, 2023 2022 Realized losses (gains) on settled futures contracts $ 0.1 $ 0.1 Foreign currency exchange gains (4.3) (1.3) Gain on disposal of fixed assets (0.5) (1.0) Other operating income (1.6) (1.0) Net change in unrealized losses on unsettled futures contracts (0.1) 0.4 Environmental liabilities and special litigation charges 15.6 7.5 Charges incurred related to COVID-19 pandemic — 0.8 Other items, net (0.7) (0.6) Losses (gains) and other expenses, net $ 8.5 $ 4.9 The net change in unrealized (gains) losses on unsettled futures contracts was due to changes in commodity prices relative to the unsettled futures contract prices.
As a percentage of net sales, SG&A expenses decreased 50 bps from 14.2% to 13.7% in the same periods, primarily due to higher employee-related costs including increased incentive compensation, which was partially offset by a $62 million reduction in SG&A expenses from our 2023 divestiture of our European businesses. 24 Losses and Other Expenses, Net Losses and other expenses, net for 2024 and 2023 included the following (in millions): For the Years Ended December 31, 2024 2023 Realized losses on settled futures contracts $ — $ 0.1 Foreign currency exchange losses (gains) 7.7 (4.3) Gain on disposal of fixed assets (2.1) (0.5) Other operating income (loss) 0.5 (1.6) Net change in unrealized gains on unsettled futures contracts — (0.1) Environmental liabilities and special litigation charges 6.8 15.6 Other items, net — (0.7) Losses and other expenses, net $ 12.9 $ 8.5 The net change in unrealized (gains) losses on unsettled futures contracts was due to changes in commodity prices relative to the unsettled futures contract prices.
Gross profit margin increased 250 bps from higher price and favorable mix, which was partially offset by 40 bps from higher freight and distribution costs. Selling, General and Administrative Expenses SG&A expenses increased by $25 million in 2024 compared to 2023.
Gross Profit Gross profit margins for 2024 increased 220 bps to 33.3% compared to 31.1% in 2023. Gross profit margin increased 250 bps from higher price and favorable mix, which was partially offset by 30 bps from higher freight and distribution costs and product costs.
Working capital needs are generally greater in the first and second quarters due to the seasonal nature of our business cycle.
Liquidity and Capital Resources Our working capital and capital expenditure requirements are generally met through internally generated funds, bank lines of credit and our commercial paper program. Working capital needs are generally greater in the first and second quarters due to the seasonal nature of our business cycle.
Valuation adjustments to reflect either party’s creditworthiness and ability to pay were incorporated into our valuations, where appropriate, as of December 31, 2024 and 2023, the measurement dates. See Note 16 of the Notes to the Consolidated Financial Statements for more information on the assets and liabilities measured at fair value.
Valuation adjustments to reflect either party’s creditworthiness and ability to pay were incorporated into our valuations, where appropriate, as of December 31, 2025 and 2024, the measurement dates.
See Note 9 of the Notes to Consolidated Financial Statements for more information on our derivatives and Note 3 of the Notes to the Consolidated Financial Statements for more information on our segments and for a reconciliation of segment profit to operating income. 25 Liquidity and Capital Resources Our working capital and capital expenditure requirements are generally met through internally generated funds, bank lines of credit and our commercial paper program.
See Note 9 of the Notes to Consolidated Financial Statements for more information on our derivatives and Note 3 of the Notes to the Consolidated Financial Statements for more information on our segments and for a reconciliation of segment profit to operating income.
The increase was primarily attributable to an increase in net income of $217 million. Net Cash Used In Investing Activities - Net cash used in investing activities decreased $145 million from 2023 to 2024 primarily due to lower capital expenditures and $95 million related to our acquisition of AES in the fourth quarter of 2023 .
The decrease was primarily attributable to an increase in net working capital of $217 million. Net Cash Used In Investing Activities - Net cash used in investing activities increased $481 million from 2024 to 2025 primarily due to $545 million related to our acquisition of Duro Dyne and Supco, which was partially offset by lower capital expenditures.
Our European businesses, which were sold in 2023, generated net sales of $248 million and a profit of $7 million in 2023. Excluding our European business, Corporate and Other costs increased $19 million in 2024 as compared to 2023 primarily due to higher incentive compensation and other employee costs and wage inflation.
Excluding our European business, Corporate and Other costs increased $19 million in 2024 as compared to 2023 primarily due to higher incentive compensation and other employee costs and wage inflation. 26 Accounting for Futures Contracts Realized gains and losses on settled futures contracts are a component of segment profit (loss).
We also partially mitigate volatility in the prices of these commodities by entering into futures contracts and fixed forward contracts.
We also partially mitigate volatility in the prices of these commodities by entering into futures contracts and fixed forward contracts. In the fourth quarter of 2025, we changed the method of accounting for our inventories from last-in-first-out (“LIFO”) to first-in-first-out (“FIFO”).
Environmental liabilities and special legal contingency charges in 2023 relate to estimated remediation costs at some of our facilities and outstanding legal settlements including asbestos. Refer to Note 5 in the Notes to the 23 Consolidated Financial Statements for more information on litigation, including the asbestos-related litigation, and the environmental liabilities.
Acquisition costs are related to the acquisition of Duro Dyne and Supco. The acquisition occurred in the fourth quarter 22 of 2025. The Environmental liabilities and special litigation charges in 2025 relate to estimated remediation costs at some of our facilities and outstanding legal settlements including asbestos.
All the Notes are guaranteed, on a senior unsecured basis, by certain of our subsidiaries that guarantee indebtedness under our Credit Agreement.
The notes are guaranteed, on a senior unsecured basis, by the Guarantor Subsidiaries.
Financial Leverage We periodically review our capital structure, including our primary bank facility, to ensure the appropriate levels of liquidity and leverage and to take advantage of favorable interest rate environments or other market conditions. We consider various other financing alternatives and may, from time to time, access the capital markets.
On August 1, 2025, we repaid upon maturity $300.0 million of our 1.35% senior unsecured notes due in 2025 that were originally issued in 2020. Financial Leverage We periodically review our capital structure, including our primary bank facility, to ensure the appropriate levels of liquidity and leverage and to take advantage of favorable interest rate environments or other market conditions.
Financial Highlights • Net sales increased $359 million, or 7%, to $5,341 million in 2024 from $4,982 million in 2023. • Operating income in 2024 was $1,035 million compared to $790 million in 2023. • Net income in 2024 increased to $807 million from $590 million in 2023. • Diluted earnings per share was $22.54 per share in 2024 compared to $16.54 per share in 2023. • We generated $946 million of cash flow from operating activities in 2024 compared to $736 million in 2023. • We returned $160 million to shareholders through dividend payments in 2024.
Financial Highlights • Net sales decreased $146 million, or 3%, to $5,195 million in 2025 from $5,341 million in 2024. • Operating income in 2025 was $1,042 million compared to $1,040 million in 2024. • Net income in 2025 decreased to $806 million from $811 million in 2024. • Diluted earnings per share was $22.79 per share in 2025 compared to $22.66 per share in 2024. • We generated $758 million of cash flow from operating activities in 2025 compared to $946 million in 2024. • We returned $173 million to shareholders through dividend payments and repurchased $482 million as part of our Share Repurchase Plans in 2025.
As a percentage of net sales, SG&A expenses decreased 50 bps from 14.2% to 13.7% in the same periods, primarily due to higher employee-related costs including increased incentive compensation, which was partially offset by a $62 million reduction in SG&A expenses from our 2023 divestiture of our European businesses.
Selling, General and Administrative Expenses SG&A expenses decreased by $49 million in 2025 compared to 2024. As a percentage of net sales, SG&A expenses decreased 60 bps from 13.7% to 13.1% in the same periods, primarily due to lower employee-related costs including reduced incentive compensation and reduced discretionary expenses.
The CP Notes will rank pari passu with all of our other unsecured and unsubordinated indebtedness. The net proceeds of the issuances of the CP Notes are expected to be used for general corporate purposes. We plan to use our revolving credit facility as a liquidity backstop for the repayment of CP Notes outstanding under the Program.
The CP Notes have maturities of up to 397 days from the date of issue and rank pari passu with all of our other unsecured and unsubordinated indebtedness. The net proceeds from issuances of the CP Notes are typically used for general corporate purposes.
We had no outstanding borrowings as well as $1.7 million committed to standby letters of credit as of December 31, 2024. Subject to covenant limitations, $1,098.3 million was available for future borrowings. The revolving credit facility includes a subfacility for swingline loans of up to $65.0 million.
Subject to covenant limitations, $772.3 million was available for future borrowings after taking into consideration outstanding borrowings under the Program. The Credit Agreement includes a subfacility for swingline loans of up to $65.0 million.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 - Consolidated Results Net Sales Net sales increased 6% in 2023 compared to 2022 as favorable mix of 5% and favorable price of 5% were partially offset by unfavorable sales volume of 4%.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 - Consolidated Results Net Sales Net sales increased 7% in 2024 compared to 2023 as higher sales volumes of 8%, favorable price and mix of 3% and an increase of sales volumes of 1% from our AES acquisition were partially offset by a 5% reduction in sales due to the fourth quarter 2023 sale of our European businesses.
Commercial Paper Program On October 25, 2023, we established a commercial paper program (the “Program”), as a replacement to our Asset Securitization Program which expired in November 2023, pursuant to which we may issue short-term, unsecured commercial paper notes (the “CP Notes”) under the exemption from registration contained in Section 4(a)(2) of the Securities Act.
We also returned $173 million to shareholders through dividend payments in 2025. 27 Debt Position The following table details our lines of credit and financing arrangements as of December 31, 2025 (in millions): Outstanding Borrowings Commercial paper: $ 226.0 Current maturities of long-term debt: Finance lease obligations $ 18.3 Total current maturities of long-term debt $ 18.3 Long-term debt: Finance lease obligations $ 50.6 Term loan 300.0 Senior unsecured notes 800.0 Debt issuance costs (6.5) Total long-term debt $ 1,144.1 Total debt $ 1,388.4 Commercial Paper Program On October 25, 2023, we established a commercial paper program (the “Program”), as a replacement to our Asset Securitization Program which expired in November 2023, pursuant to which we may issue short-term, unsecured commercial paper notes (the “CP Notes”) under the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Building Climate Solutions The following table presents our Building Climate Solutions segment’s net sales and profit for 2023 and 2022 (dollars in millions): For the Years Ended December 31, 2023 2022 Difference % Change Net sales $ 1,511.4 $ 1,286.3 $ 225.1 18% Profit $ 340.8 $ 162.9 $ 177.9 109% % of net sales 22.5 % 12.7 % Net sales increased 18% in 2023 compared to 2022 primarily due to an 11% increase in price, a 4% increase in product mix, a 2% increase in sales volume and 1% from our acquisition of AES.
Partially offsetting these decreases was $256 million in favorable price and mix and $47 million from improvement in other costs, including selling expenses. 23 Building Climate Solutions The following table presents our Building Climate Solutions segment’s net sales and profit for 2025 and 2024 (dollars in millions): For the Years Ended December 31, 2025 2024 Difference % Change Net sales $ 1,851.9 $ 1,764.2 $ 87.7 5 % Segment profit $ 434.2 $ 401.7 $ 32.5 9 % % of net sales 23.4 % 22.8 % Net sales increased 5% in 2025 compared to 2024 due to an 8% increase in favorable price and mix and a 2% increase in sales volumes from our Duro Dyne acquisition, which were partially offset by a 5% decrease in sales volumes.
Market Risk Commodity Price Risk We enter into commodity futures contracts to stabilize prices expected to be paid for raw materials and parts containing high copper and aluminum content. These contracts are for quantities equal to or less than quantities expected to be consumed in future production.
See Note 16 of the Notes to the Consolidated Financial Statements for more information on the assets and liabilities measured at fair value. 31 Market Risk Commodity Price Risk We enter into commodity futures contracts to stabilize prices expected to be paid for raw materials and parts containing high copper and aluminum content.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 - Results by Segment Home Comfort Solutions The following table presents our Home Comfort Solutions segment’s net sales and profit for 2023 and 2022 (dollars in millions): For the Years Ended December 31, 2023 2022 Difference % Change Net sales $ 3,222.9 $ 3,198.3 $ 24.6 1% Profit $ 610.2 $ 596.9 $ 13.3 2% % of net sales 18.9 % 18.7 % Net sales increased 1% in 2023 compared to 2022 as a 6% increase in product mix and a 2% increase in price were partially offset by a 7% decrease in sales volume. 24 Segment profit in 2023 increased $13 million compared to 2022 primarily due to $82 million from favorable mix, $72 million from higher price, $35 million from lower commodity costs, $5 million from favorable freight, $5 million from lower other product costs including LIFO and $7 million from miscellaneous other items.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 - Results by Segment Home Comfort Solutions The following table presents our Home Comfort Solutions segment’s net sales and profit for 2025 and 2024 (dollars in millions): For the Years Ended December 31, 2025 2024 Difference % Change Net sales $ 3,343.4 $ 3,577.1 $ (233.7) (7)% Segment profit $ 728.5 $ 760.5 $ (32.0) (4)% % of net sales 21.8 % 21.3 % Net sales decreased 7% in 2025 compared to 2024 as a 17% decrease in sales volumes was partially offset by a 10% increase in price and mix.
Overview of Results The Home Comfort Solutions segment experienced an 11% increase in net sales and a $150 million increase in segment profit in 2024 compared to 2023 primarily driven by favorable price and mix and higher sales volumes.
We continue to evaluate the future impact of the OBBBA for those provisions that are effective after fiscal year 2025. Overview of Results The Home Comfort Solutions segment experienced a 7% decrease in net sales and a $32 million decrease in segment profit in 2025 as compared to 2024 primarily driven by lower sales volumes.
The 2023 and 2022 effective tax rates differ from the statutory rate of 21% primarily due to foreign taxes. Refer to Note 12 in the Notes to the Consolidated Financial Statements for more information on income taxes.
Income Taxes The income tax provision was $191 million in 2025 compared to $188 million in 2024, and the effective tax rate was 19.2% in 2025 compared to 18.8% in 2024. The 2025 and 2024 effective tax rates differ from the statutory rate of 21% primarily due to foreign taxes.
There were no CP Notes outstanding under the Program as of December 31, 2024. Credit Agreement In August 2023, we entered into the Second Amendment (the “Second Amendment”) to our existing Credit Agreement, dated as of July 14, 2021 (as amended, the "Credit Agreement"), with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.
Credit Agreement On May 9, 2025, we entered into an Amendment and Restatement Agreement (the “Credit Agreement”) to our existing unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.
Corporate and Other The following table presents our Corporate and Other segment’s net sales and loss for 2023 and 2022 (dollars in millions): For the Years Ended December 31, 2023 2022 Difference % Change Net sales $ 247.6 $ 233.7 $ 13.9 6 % Loss $ (93.9) $ (94.0) $ 0.1 — % % of net sales (37.9) % (40.2) % Net sales increased 6% in 2023 as compared to 2022 due to revenue growth in our European businesses.
Corporate and Other The following table presents our Corporate and Other segment’s net sales and loss for 2025 and 2024 (dollars in millions): For the Years Ended December 31, 2025 2024 Difference % Change Net sales $ — $ — $ — N/A Loss $ (105.0) $ (120.3) $ 15.3 (13) % Corporate and Other costs decreased $15 million in 2025 as compared to 2024, primarily due to lower employee costs, including reduced incentive compensation, as well as improved productivity in consultant spending.
Partially offsetting these margin increases were 70 bps from higher distribution costs, 50 bps from higher other product costs including LIFO and 30 bps from higher component costs. Selling, General and Administrative Expenses SG&A expenses increased by $78 million in 2023 compared to 2022.
Selling, General and Administrative Expenses SG&A expenses increased by $25 million in 2024 compared to 2023.
Restructuring Charges Restructuring charges were $3.1 million in 2023 compared to $1.5 million in 2022. Charges in 2023 were related to the reorganization or removal of duplicative headcount and infrastructure. For more information on our restructuring activities, see Note 7 in the Notes to the Consolidated Financial Statements.
Refer to Note 5 in the Notes to the Consolidated Financial Statements for more information on litigation, including asbestos-related litigation, and environmental liabilities. Restructuring Charges There were $6.8 million in restructuring charges in 2025 to realize SG&A and distribution efficiencies. There were no charges in 2024.
Removed
Our Building Climate Solutions segment saw an increase in net sales of 17% and a $56 million increase in segment profit in 2024 compared to 2023, primarily due to favorable price and mix. As a result of the transition to low GWP refrigerants, customers pre-purchased R-410A equipment, which is estimated to have positively impacted revenue by $125 million.
Added
In the fourth quarter of 2023, we completed the sale of our European businesses. The European businesses were presented with the Corporate and Other business segment until their divestiture. 20 In October 2025, we completed the acquisition of Duro Dyne and Supco, a robust portfolio of HVAC parts and supplies that complement our existing residential and commercial offerings.
Removed
For more information on our derivatives, see Note 9 in the Notes to the Consolidated Financial Statements. Foreign currency exchange losses increased in 2024 primarily due to changes in foreign exchange rates in our primary markets.
Added
Duro Dyne is reported in our Business Climate Solutions segment, and Supco is reported in our Home Comfort Solutions segment. In October 2023, we completed the acquisition of AES, which is included in our Building Climate Solutions segment. AES is a company dedicated to service and sustainability in the light commercial markets across North America.
Removed
Gross Profit Gross profit margins for 2023 increased 390 bps to 31.1% compared to 27.2% in 2022. Gross profit margin increased 340 bps from favorable price, 100 bps from favorable mix, 90 bps from lower commodity costs and 10 bps from miscellaneous other items.
Added
We believe the FIFO method is preferable because it more closely matches the physical flow of materials through purchasing, receiving, warehousing, production and order fulfillment, it results in a more consistent method to value inventory across the Company, and it improves comparability with industry peers.
Removed
As a percentage of net sales, SG&A expenses increased 90 bps from 13.3% to 14.2% in the same periods primarily due to higher discretionary expenditures.

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